Posted on Friday at Heartland.org is my new comprehensive study: The Obama Health Plan: Rationing, Higher Taxes, and Lower Quality Care. The study explains in full detail, based on the pending Congressional legislation, exactly how the Obama health plan would impose government rationing that will deny you health care, severely restrict your freedom of choice and control over your health care, raise, not lower, health costs, impose sharp tax increases that would leave America uncompetitive in the world economy, and increase federal spending, deficits and debt.
The rationing begins with the dominant public option government health insurance plan, which is authorized in the legislation to follow the practices of Medicare and Medicaid in sharply underpaying doctors and hospitals. Medicare pays doctors 20% below market rates, and hospitals 30% below market. Medicaid pays 30% to 40% less than Medicare.
This power to underpay medical bills is the most important reason the government public option health insurance plan will eventually drive out the private competitors, leaving you without the choice of keeping your current insurance plan. Any private plans that do manage to survive will be able to do so only by adopting the practice of paying only what the government plan pays. So the government will end up dictating all payments to health providers in any event.
Doctors and hospitals will consequently begin to restrict their care to fit what the government will pay. Their practices will shrink to avoid the more expensive medical services and treatments that the government payments will not sufficiently cover.
These underpayment practices in turn will have dramatic, powerful effects on investment in the health care industry. Investors are not going to finance acquisition of the latest, most advanced equipment and technologies with the government slashing compensation for the services such technologies provide. Investors are also not going to finance expanded or new hospital facilities or clinics, or even the full maintenance of existing ones.
The supply of doctors, surgeons and specialists will also decline, just when demand for their services is soaring under the Obama health plan giveaways. Obama repeatedly says that under his health reform plan if you like your doctor you will be able to keep him or her. But the real question is whether under his reform plan your doctor will be willing to keep you, when the government refuses to pay adequately for the health care services you want and need.
This is how the long waiting lines for diagnostics, surgery, and other referrals begin to develop. This is why in other countries with national health plans or socialized medicine, facilities seem old, aged, and deteriorated.
Vast new realms of possible, innovative, new health services and care opened up by modern science will lag unutilized. Drug companies will also cut back sharply on investment in new, cutting edge, restorative, painsaving, or lifesaving miracle drugs. Many people will suffer or die unnecessarily as a result.
A recent report from President Obama's Council of Economic Advisors (CEA), which he has touted as showing how his health plan would reduce health costs, elaborates even more explicit and comprehensive government rationing of health care.
The CEA report says 30% of American health care is waste, which government bureaucracy is going to eliminate under Obama's health reforms. What is the difference between waste and the health care you want? Answer: a government bureaucrat.
The CEA says the government will reduce health costs by deciding for doctors and hospitals across the country what health care works and what doesn't. Even worse, it will decide what health care is cost effective, which means the government will decide whether your health care is worth the cost, not you and your doctor. This will be enforced through the payments to doctors and hospitals. Those who follow the government's dictates on your health care get paid, those that don't don't get paid.
These are some of the reasons why the public is now protesting so angrily against the Obama health plan in public forums all over the country, and why the polls show the public has turned in decisive opposition to the Obama health plan.
President Obama insists that if you like the health insurance you have today, you will be able to keep it. But under his health plan, if you have employer provided health insurance, that won't be your choice, it will be your employer's choice. Your employer will have every incentive to dump you into the so-called public option, government insurance plan, and pay an 8% payroll tax instead. If the employer's work force averages $50,000 a year in wages, then the employer would only have to pay $4,000 per year per worker under the payroll tax, which would likely be less than what he is paying for your current health coverage.
 The President's Council of Economic Advisors, The Economic Case for Health Reform, June 2, 2009
Peter Ferrara is Director of Entitlement and Budget Policy for the Institute for Policy Innovation, and General Counsel of the American Civil Rights Union. He served in the White House Office of Policy Development under President Reagan, and as Associate Deputy Attorney General of the United States under the first President Bush.
Peter Ferrara formerly served in the White House Office of Policy Development under President Reagan, and as Associate Deputy Attorney General of the United States under President George H.W. Bush. He is presently Senior Fellow for Budget and Entitlement Policy at the Heartland Institute, and at the National Tax Limitation Foundation.