CBO’s Health Estimates: The High Cost of Spending Other People’s Money

Dennis Smith / June 24, 2009

Congress is, once again, confronted with the reality that when someone can spend someone else’s money, the cost goes up. The Congressional Budget Office estimates of spending and enrollment are not really surprising. So Congress is trying to shoehorn policies to meet the budget score. As a result, decisions are made for budget reasons – which does not necessarily mean they make good or consistent policy.

Everyone knows the cost of expanding insurance coverage is high, yet few are asking the right questions as to why. What does the CBO score really mean?

Costs of Compulsion: The CBO is basically telling us that to convince someone to do something they are not otherwise willing to do or capable of doing on their own —  in this case, buy health insurance — government has to find the right price point to change behavior. How much will it take to lure the young, healthy people to join the insurance pool? CBO obviously has a model for predicting this amount, so they should just tell the taxpayers what that amount is. Is it $5,000 for a family? $10,000? $15,000?

Then the American people will have the right information to decide if they want to go along with the deal. It is a pretty straightforward question—how much are you willing to spend to convince your neighbor to do something he won’t do for himself? If you don’t spend “enough,” then fewer people will be enrolled. (more…)