The Cost of Health Care Reform

The day after Obama’s major health care address to Congress, it’s anyone’s guess whether last night’s events — and the GOP”s antics — altered the debate over health care reform (and I’m not going to speculate).

But I did notice that both Obama and Charles Boustany, the Louisiana Congressman who gave the GOP response, talked a lot about how much the reform plan is going to cost.

Obama stressed that the plan’s price tag — $900 billion over 10 years — was less than the cost of the wars in Iraq and Afghanistan, and less than the 2001 Bush tax cuts. The president also stressed that implementing a government-run plan (the much-discussed public option) as part of the reform would lower health care costs.

Rep. Boustany, in the GOP response, said just the opposite:

Replacing your family’s current health care with government-run health care is not the answer. In fact, it will make health care much more expensive. That’s not just my personal diagnosis as a doctor or a Republican. It’s the conclusion of the nonpartisan Congressional Budget Office, the neutral scorekeeper that determines the cost of major bills.”

So who’s right?

Mostly Obama is. The whole point of a public plan — which would lack the massive overhead and profit margins of private insurers — is to force down the cost of health insurance. And contrary to Boustany’s claim, the Congressional Budget Office never concluded that a public option would make health care more expensive. What the CBO did report in July is that adding a public option to the health care reform bill would lower the bill’s price tag. A public option would save taxpayers an estimated $150 billion over 10 years. Details on the CBO report here.

The take-home message is this: There are certainly legitimate reasons to oppose the public option, especially if you happen to believe in limited government. But cost isn’t one of them.