by Christopher Inks

Created on: July 01, 2009   Last Updated: July 02, 2009

The problem with government-sponsored health care, or any government-sponsored program for that matter, is that it is highly inefficient. Under Obama's plan, the government would step in and offer a cheaper form of health insurance based on the current Medicare system, thereby causing private insurance to be more competitive. At least that's the statement from the President. But let's look at the reality of the situation.

In order to support his claim that his plan will work, Obama starts and ends it based on the misconception that Medicare, not private insurance, has kept medical costs down. The truth is actually a lot more depressing. According to the latest Medicare Trustees report, "(Medicare's) projected unfunded liabilities over 75 years, from 2007 to 2082, are about $36 trillion."

This hardly sounds like a model program from which to derive another medical insurance plan. As Shikha Dalmia, senior analyst at the Reason Foundation and writer of a bi-weekly column for Forbes, points out in her article "Snake Oil for Our Health Care Ills," "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." She also goes on to add "the Government Accountability Office lists Medicare as a 'high-risk' program, thanks to its long-term financial problems and its vulnerability to fraud." It's difficult to see how anyone can support the creation of a new program which is based on such a high-risk one.

The reality, however, does not get any better. In fact, it continues to get much worse as one learns that it is precisely because of government programs, such as Medicare and Medicaid, that private insurance is so expensive. Simply telling a company to lower its costs does not make it any less expensive for the company to do business, yet this is exactly what government insurance does.

Unfortunately, someone has to pick up the tab for these underpayments and that someone is the private insurance holder. According to a study performed last December by Milliman Inc., which was referenced in Dalmia's article, "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." That's a heck of a lot of money for you and I to be paying when we're already working as hard as we are just to do what we can to take care of our own families.

Free-market competition is the only true catalyst for efficiency. The resulting fallout from this government-sponsored medical sham is the loss of private insurance and the explosion of costs associated with this loss. Once private insurance is gone, we will all be required to pay into the State's coffers and accept what they choose to give us, which won't be much.

Remember, nothing is truly free. There is always a cost. In this case, the government will require personal information in return for this insurance and once they have this, they will be able to determine who is allowed to use what portion of the medical system at what point. Central planning only begets more central planning. I, for one, would much rather retain my right to choose whom I see, for what, and when.

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