Sticker Shock May Erode Public Support for Health Care Overhaul

Published August 5, 2009

The Senate Health, Education, Labor, and Pensions Committee’s draft health care bill may be in danger of collapsing under the weight of its own price tag, as “sticker shock” could cause what support there is for the government-centric health care transformation to ebb considerably.

“Americans are by and large in favor of health care reform as long as they believe they won’t have to pay for it,” said David R. Henderson, a research fellow on health care policy at the Hoover Institution and professor of economics at the Naval Postgraduate School. “Price tags like the one associated with this bill could well cause that support to dry up very quickly.

“Increasing taxes and increasing spending will not improve health care, and the American people know that,” Henderson added. “That’s why a price tag like the $1.6 trillion on the Health Committee’s bill is so likely to turn the public off to what Congress and the administration are trying to do.”

Situation May Worsen

Henderson notes the Congressional Budget Office estimated the cost of the American Health Choices Act at $1.6 trillion over 10 years, but he says “that is most likely an incredibly optimistic estimate.”

John R. Graham, director of health care policy at the Pacific Research Institute, agrees the proposal will cost much more than advertised.

“What we are alarmed about right now is nothing if the Obama administration succeeds with its public health insurance company [‘public option’] proposal,” said Graham. “We will look back 10 years from now and what we now consider ‘sticker shock’ we will see was actually an underbid. Indeed, if you look back to when Medicare was passed, the cost estimates for that program were overtaken dramatically.”

Henderson says the congressional proposal is the wrong approach altogether.

“Real health care reform will not cost more money, but less money, and we will achieve it by giving health care dollars back to the people and taking it away from employers and the government,” Henderson said.

‘Typical’ Mindset

The HELP Committee’s proposal “represents a typical big-government mindset,” said Graham. “What the Democrats are doing here is saying, ‘We will spend more [now] and save more money later.’

“The mindset is, ‘Save money on prevention, save money on electronic record-keeping, and in years to come we will garner significant savings from these items so we should spend lots of money on them now,'” Graham continued. “Well, if these items actually saved money, the private sector would have already implemented them.”

Political Pressure Increasing

Henderson thinks one of the reasons U.S. businesses have not raised more alarm over the high cost of the HELP overhaul proposal is “the tremendous pressure they are feeling from the Obama administration.

“The Obama administration has more leverage over lots of companies now since the bailout, and they are probably using that to their advantage against Corporate America,” Henderson said. “Also, a lot of companies are worried about where they will fit in if health care reform does pass. There is a fair amount of intimidation going on, which prevents many companies from fighting this.”

‘Poor Timing’

Henderson says the proposed new health care regulations will place a high cost on the American economy as a whole, in addition to the direct costs of the program.

“The more regulations you throw on your economy, the worse it becomes,” Henderson said. “New regulations and mandates will make it harder for our economy to recover from its current slump.

“Even if more government investment in health care were a good idea, this clearly is not the time,” Henderson continued. “Even economists who are not ardently [for a] free market—and I have spoken to many—are convinced this is poor timing economically.”

Thomas Cheplick ([email protected]) writes from Massachusetts.