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ObamaCare is a Trojan Horse for Socialized Medicine
...That Medicare is in serious, serious trouble no one can dispute. Its projected unfunded liabilities over 75 years, from 2007 to 2082, are about $36 trillion, according to the latest Medicare Trustees report. If current trends persist, by the end of that time Medicare will be devouring 19% of gross domestic product—or $3 trillion, an amount equal to the entire U.S. budget right now. It will take a heartburn-inducing 135% increase in payroll taxes to bring it into actuarial balance.

Despite Medicare's dismal record, Obama and his comrades hold Medicare up as an example for the private sector. Why? Because between 1997 and 2006, Medicare's health spending per enrollee grew 4.6% annually while that of private plans grew 7.3%. By tapping this 2.7% difference, they argue that they can perform the triple miracle of reining in escalating health care costs, and at the same time extending health insurance to the 46 million uninsured without imposing any extra cost on the economy.

But this is 21st century snake oil.

Medicare hasn't controlled costs by discovering some wonder drug to deliver new efficiencies that the private sector doesn't have. In fact, the Government Accountability Office lists Medicare as a "high-risk" program, thanks to its long-term financial problems and its vulnerability to fraud. Rather, Medicare has cut costs by deploying the economic equivalent of leech-therapy: slashing payments to providers. The only reason providers haven't been bled out of existence is because they have offset these cuts by raising prices charged to private insurance plans. In effect, then, the good performance of Medicare that Obama and Co. tout has been purchased by beggaring the private plans that they deride.

There is a rich literature testifying to this phenomenon. A study last December by Milliman Inc., an independent consulting firm, commissioned by America's Health Insurance Plans, found that underpayment by Medicare and Medicaid accounted for nearly an 11% increase in the health care costs of private plans. This means that on average a privately insured family is forced to pick up about $1,800 extra every year of the government's slack. Private plans, all in all, are subsidizing government programs to the tune of $90 billion annually.

Milliman's findings are far from ground-breaking. They merely confirm previous research, including a 2006 study by Jack Zwanziger and Anil Bamezai in Health Affairs, which found a clear correlation over the years between decreasing government payments and rising insurance premiums in California. They calculated that a 1% relative decrease in the average Medicare price is associated with a 0.17% increase in the corresponding price paid by privately insured patients. ..