Politics & Policy

Bill Richardson’s Health Care Boondoggle

Market Democrat? Think again.

Bill Richardson has often claimed to be a “market Democrat.” Indeed, he has cut both income taxes and capital-gains taxes as governor of New Mexico, much to the delight of folks at the Cato Institute and the Wall Street Journal. Unfortunately, Richardson has not avoided the siren song of “universal” health care that has charmed all the Democratic challengers for president.

Richardson assures voters that his plan for universal coverage “does not believe in creating new bureaucracies.” That is basically true; he would simply expand existing ones. The Richardson plan would extend Medicare to include those in the 55 to 64 age group. It would further expand Medicaid and SCHIP to include even more lower-income families. It would mandate that existing family coverage include young adults up to age 25. And it would create something called a “Heroes Health Card” for veterans.

The bill for taxpayers, meanwhile, is an estimated $110 billion. Thus, Richardson has managed to lay out a plan with costs similar to the plans of Barack Obama and John Edwards that relies on many of the same inefficient and frustrating bureaucracies (Medicaid, Medicare, SCHIP, and the Veterans administration) that doctors and patients know and hate.

While Richardson’s plan may not create any “new” bureaucracies, it is anything but “market-based.” Adding beneficiaries to broken programs will do nothing for the long-term prospects of those programs — especially Medicare, which is under-funded by as much as $28 trillion. Indeed, the Titanic that is Medicare is already sinking; Richardson’s plan would only submerge it faster.

Richardson appears blind to all this, and he also seems not to realize that certain parts of his plan are at odds with other parts.

Richardson claims that by covering all Americans, his plan will “save the average family up to 10 percent off their private coverage.” Yet by expanding Medicare, Medicaid, and SCHIP, Richardson will add to the phenomenon known as “cost shifting.” Cost shifting occurs when hospitals and doctors charge more to private insurance companies to compensate for the low reimbursement rates of Medicare, Medicaid, and SCHIP. That makes private insurance more expensive. An expansion of those government programs will only worsen cost shifting, making Richardson’s goal of reducing private health insurance bills by 10 percent unachievable.

Even if the Richardson plan didn’t expand Medicare, Medicaid, and SCHIP, the 10 percent claim would remain dubious. This claim is based on getting the uninsured covered, and thereby reducing the amount of uncompensated care they receive:

Moreover, though uninsured people often delay or skip the care they need, the care they do get — which is often in more expensive settings — amounts to nearly $100 billion annually, and much of the cost is covered by health care providers, taxpayers, and insured individuals via higher premiums. In fact, if we don’t act to cover all Americans, the average family will be paying an extra $1,502 for their own health insurance by 2010 in order to pay for the cost of the uninsured.

That $1,502 figure, which comes from a Families USA study, is an overstatement, and Richardson isn’t alone in making it. When California governor Arnold Schwarzenegger unveiled his health care plan last year, he made a similar claim about the burdens of uncompensated care on private insurers. Based on a study from the New American Foundation, Schwarzenegger maintained that uncompensated care in California raised premiums for private insurance by an average of $1,186 annually. Yet a later study by the California Chamber of Commerce put the amount much closer to $166.

Importantly, the Chamber of Commerce study accounts for the cost shifting of Medicare and Medicaid, while the New America and Families USA studies do not. Using the Chamber of Commerce estimates, Richardson’s plan would roughly save only 2 percent on private insurance premiums. And that still doesn’t account for the effects of expanding Medicare, Medicaid, and SCHIP.

Richardson’s universal health-coverage plan is a mess, which puts him in good company with Democrats on the presidential campaign trail. In fact, if there is one thing all the Democratic contenders can agree on, a massive, taxpayer-funded takeover of the nation’s health-care system is it. But we’d come to expect more from a man the Cato Institute called “Bar none, the best Democratic governor in the nation and among the best new governors (as of 2004) of either party.”

– David Hogberg is an adjunct scholar with, and Paul Gessing is president of, the Rio Grande Foundation.

Most Popular

Elections

On Kamala Harris

Joe Biden has named his 2020 running mate: authoritarianism. American prosecutors wield awesome and terrible powers that lend themselves easily to abuse, and Senator Kamala Harris, formerly the attorney general of California, is an enthusiastic abuser of them. Harris was a leader in the junta of Democratic ... Read More
Elections

On Kamala Harris

Joe Biden has named his 2020 running mate: authoritarianism. American prosecutors wield awesome and terrible powers that lend themselves easily to abuse, and Senator Kamala Harris, formerly the attorney general of California, is an enthusiastic abuser of them. Harris was a leader in the junta of Democratic ... Read More
Elections

Kamala Harris’s Anti-Catholic Bigotry

Someone might want to remind Joe Biden, who’s just picked progressive California senator Kamala Harris as his running mate, that his vice-president-to-be believes Catholics are unfit to serve in our nation’s courts. (Biden, of course, as I considered at length on the homepage today, has spent his entire ... Read More
Elections

Kamala Harris’s Anti-Catholic Bigotry

Someone might want to remind Joe Biden, who’s just picked progressive California senator Kamala Harris as his running mate, that his vice-president-to-be believes Catholics are unfit to serve in our nation’s courts. (Biden, of course, as I considered at length on the homepage today, has spent his entire ... Read More
U.S.

Bloc Heads

Welcome to The Tuesday, a cheery little weekly newsletter about the existential despair Irving Kristol indicated when he noted that Western civilization is collapsing “but it’ll take a long time, and, meanwhile, it’s still possible to live well.” The Bloc Party Right-leaning writers hawking books about ... Read More
U.S.

Bloc Heads

Welcome to The Tuesday, a cheery little weekly newsletter about the existential despair Irving Kristol indicated when he noted that Western civilization is collapsing “but it’ll take a long time, and, meanwhile, it’s still possible to live well.” The Bloc Party Right-leaning writers hawking books about ... Read More
Elections

Wait, Joe Biden Picked That Kamala Harris?

Kamala Harris? Joe Biden picked Kamala Harris? Out of all of Biden's options, he chose the rival whose presidential campaign is best remembered for her attack on him, contending he opposed busing? The rival who said the way he described his relationship with old segregationists was “hurtful”! The woman ... Read More
Elections

Wait, Joe Biden Picked That Kamala Harris?

Kamala Harris? Joe Biden picked Kamala Harris? Out of all of Biden's options, he chose the rival whose presidential campaign is best remembered for her attack on him, contending he opposed busing? The rival who said the way he described his relationship with old segregationists was “hurtful”! The woman ... Read More
Immigration

Did the DACA Ruling Bury Constitutionalism?

In reacting to President Trump's recent executive orders, Jim Geraghty asks “Do Americans Even Care If There's a Constitution?" He reluctantly suggests that the answer is “no.” This didn't happen all at once -- Woodrow Wilson was probably the first notable to explicitly express the progressive ... Read More
Immigration

Did the DACA Ruling Bury Constitutionalism?

In reacting to President Trump's recent executive orders, Jim Geraghty asks “Do Americans Even Care If There's a Constitution?" He reluctantly suggests that the answer is “no.” This didn't happen all at once -- Woodrow Wilson was probably the first notable to explicitly express the progressive ... Read More