Growls

The independent, nonpartisan Virginia Institute of Public Policy, which is dedicated to liberty, freedom and private property, recently published a study (requires Adobe) of the “effects of proposed national health care reform on Virginia.” The study was conducted by the firm Arduin, Laffer, & Moore Econometrics.

According to the report synopsis:

“Adjusting for the growing U.S. population, the dollar level of expenditures on health care has exceeded the growth in overall consumer prices in the economy every year for nearly the past 50 years. Such a trend can- not continue forever. In 1960, the private sector funded over three-quarters of the nation’s health care expenditures. Individuals paid nearly one-half of the total national health care expenditures through out-of-pocket expenditures.”

The authors list five major consequences for Virginia:

• "Virginia would see reduced economic growth in 2019 by 4.5 percent compared to the baseline scenario.

• “In addition to federally-funded expenditures, the net present value of all Virginia state government expenditures through 2019 that will occur as a result of a federal health care reform is $2.1 billion, or a $275 bill for every man, woman, and child in Virginia.

• “The current net present value of funding health care reform based on President Obama’s priorities will be $4,176 for every person in Virginia. This comes to a total net present value of $32.4 billion in total costs that Virginia residents will have to bear.

• “The source of funding for Medicaid expansion will have a major impact on the Virginia state budget. Because Virginia does not have the option to run trillion dollar deficits, the cost of the additional $0.5 billion in health care expenditures as a percentage of total tax revenues would increase as well. Virginia’s tax collections would have to be 0.9 percent larger in order to cover the additional $0.5 billion in health care expenditures in 2019. This number does not include the additional cost to Virginia of expanding Medicaid if the federal government fails to pick up the tab.

• “The cost on Virginia could be higher, and the national cost lower, if the federal government pushes the fi nancial responsibility for covering the expansion of lower-income individual’s health insurance coverage off to the states. While the federal costs will decline, Virginia’s costs will increase by a total of $6.8 billion (the net present value being $5.2 billion).”

The study lists a number of solutions, focusing on incentives for patients and medical providers and reflecting the free market. For example, leveraging health savings accounts and allowing interstate purchases of insurance.  The study also concludes:

“One of the objectives of reform should be a simpler system. The extraordinary complexity of the current system not only frustrates health care providers and patients alike but also adds to the cost. This complexity is also responsible for much of the waste in the system, which is estimated to be 30 percent of health care spending.”

However, the bureaucratic maze that would be required by the House Democrats Health Plan would add to both the complexity and the cost of health care. (to see the maze of an organizational chart that would be required, see our July 23, 2009 growls).