Can we trust government cost estimates?

No. They are never accurate. War. Peace. Highways. Social Security. CO2. Schools. Even pork (earmarks) aren't accurate. Never. Does the government ever "contain" costs. No. In today's Review and Outlook in the WSJ:

Start with Medicaid, the joint state-federal program for the poor. The House Ways and Means Committee estimated that its first-year costs would be $238 million. Instead it hit more than $1 billion, and costs have kept climbing.

Thanks in part to expansions promoted by California's Henry Waxman, a principal author of the current House bill, Medicaid now costs 37 times more than it did when it was launched—after adjusting for inflation. Its current cost is $251 billion, up 24.7% or $50 billion in fiscal 2009 alone, and that's before the health-care bill covers millions of new beneficiaries.

When our legislators get to Washington, or Columbus, or Springfield, or Albany, or Sacramento, they forget it's real money taxed from real working people. To them it's funny money; Monopoly money. All they can do is pass legislation that will 1) fulfill the dreams of their party's philosophy, and 2) win voters back home, who understandably want some of their money back in exchange for sending that person to Congress. When the Congress person's term is up, they slip into "think-tanks" or become lobbyists, and continue on the government dole. Besides, you can't predict what's going to happen in the medical field. They estimated 11,000 renal patients for Medicare and got almost 400,000. The only thing that has come in below projections is the Bush-Kennedy drug plan. We know competition brings down prices, but Democrats don't want that. We know tax cuts induce investments which provide jobs, but Democrats don't want that. They want control and power.

Health care myths, pt. 2

Can the government do health care cheaper. No, that's a myth, or just a bald face lie. I was really puzzled by a report on rare and neglected diseases (TRND). Seems it costs private drug companies 2-4 years and $10 million to get a candidate molecule through preclinical development. Big hearted Congress is going to appropriate $24 million to work in this preclinical area and then pass it on to the drug companies for clinical trials. Maybe I'm math challenged, but even if the government could do something less costly (costs are probably high due to gov't regs), isn't that 2.5 molecules? Plus it wants "some funding from licensing." Sort of like owning a car company, heh?

And remember you won't pay higher taxes? Well, what is a user fee passed along to the consumer, if not a tax? In the omnibus spending bill for 2009 signed March 11 by Obama, Congress appropriated $1 billion for the FDA to regulate human drugs and biologics, which is made up in part from new user fees paid by the industries (google PDUFA). And I'm only guessing, but we'll still be getting our generics from India and China without the quality controls in order to "cut costs." (Have you forgotten pet food and lead in paint of children's toys?)

Also, a part of the big lie about costs is that what they shave off the federal ledger for health will be shifted to the states--and we all know what great shape Medicaid is in! States pay half of Medicaid now. How far back in time are they planning to go to recover those costs from surviving family members? Five years? Ten years? Also, if there is a profession with more garbled, obfuscation in its flowing prose than politics, it has to be medicine. Please translate into English or dollars

"accessible, comprehensive, integrated care based on healing relationships"

But perhaps the biggest problem with the "cost" lie is that cost is all Americans care about, and it's the most critical measure we have against some mythical, socialist industrialized nation with rationed care. Americans really do care about safety, timeliness, respect, quality, choice, outcomes and efficiency. Also, for every life we save with surgery, new drugs,chemo, or new technology, that's a life that is going to require even more care--very expensive, monitored and lab test care--than before the life-saving event. The person who dies on a waiting list in Europe saves their government a lot of money. Unfortunately, that's the sort of community spirit Obama wants for us.

What you can do with a degree in literature

Or theater. Or art history. Or psychology. First find a job to pay the rent with the government in a field that will not die--like sexually transmitted diseases, then follow the money.

Thomas E. Getzen is Professor of Risk, Insurance and Health Management at Temple University and the founder and Executive Director of iHEA, the International Health Economics Association. After receiving an undergraduate degree in literature from Yale University, he worked for the U.S.P.H.S. Centers for Disease Control Venereal Disease program in New York and Los Angeles, and then obtained an MHA degree in Medical Care Organization and Ph.D. in Economics from the University of Washington. Dr. Getzen’s main research contributions have been in the areas of contracting, price indexes and forecasting of health care spending. His consulting work has included employee benefit negotiations, laboratory diagnostics, risk assessment, and capital financing for managed care. Dr. Getzen has been a visiting professor at the University of York (U.K.), the Wharton School of the University of Pennsylvania, and the Center for Health and Wellbeing of the Woodrow Wilson School at Princeton University. He has served on the boards of Covenant House, a local community health center in Northwest Philadelphia, MSI Inc, a venture-capital financed managed behavioral health care corporation, Catholic Health East (CHE), a multi-institutional health provider system with over 60 hospitals and nursing homes. Dr. Getzen has written more than 80 papers in the field and serves on the editorial board of the journal Health Economics.