For Immediate Release

September 9, 2009

Contact: Tom Steward

952-451-3684

New Study Concludes Minnesota Taxpayers and Economy Pay Steep Price for Washington’s Health Care Proposals

Wrong Medicine: FFM releases report showing “reforms” would cost $4,412 for every Minnesotan

MINNEAPOLIS, MN—Minnesotans would pay a steep price of more than $4,400 for every man, woman and child for the health care proposals currently on the table in Washington, according to a new analysis released today by the Freedom Foundation of Minnesota.

“While our health care system is in need of reform, this report makes a strong case for why the proposals in Congress are the wrong medicine for Minnesotans,” said Annette Meeks, CEO of the Freedom Foundation of Minnesota (FFM). “The economic impact of Obama-style health care on Minnesota would be higher taxes and state budget deficits, lower economic growth and less jobs, while leaving tens of thousands here still without medical coverage. Instead of more government-run health care, the solution is to return decision making and purchasing power to consumers and their providers.”

Prepared by renowned economists Dr. Arthur Laffer, Donna Arduin, and Wayne Winegarden, Prognosis for National Health Insurance: A Minnesota Perspective analyzes the impact of a $1 trillion increase in federal health care outlays on the national and state economy over ten years based on reforms proposed by Congress and President Obama.

The report projects the federal government health subsidies would have the following results:

• Cost $3,900 for every man, woman, and child in the U.S. due to $1.2 trillion in more federal spending driven by higher than otherwise projected medical inflation and government outlaysbr />
• Cost an additional $512 for every person in Minnesota due to $2.7 billion more in state spending for a total cost of $4,412 for every state resident ($3,900 + $512=$4,412)
• Reduce Minnesota’s economic growth 4.8 percent in 2019
• Increase national health care spending by an additional 8.9 percent above expectations by 2019
• Increase total federal spending 5.6 percent more than otherwise projected, adding $285.6 billion to the deficit in 2019
• Increase medical price inflation by 5.2 percent above projected increases by 2019
• Cost $62,500 per person to cover 16 million more Americans, while leaving 30 million uninsured
• Possibly cost Minnesotans even more if the federal government pushes the burden for expanding Medicaid coverage off on the states.

The report emphasizes the need for patient-centered solutions. “By empowering patients and doctors to manage health care decisions, a patient-centered health care reform would directly address the distortions weakening our current health care system and would simultaneously control costs, increase health outcomes, and improve the overall efficiency of the health care system,” according to the report.

The study recommends that reforms should focus on reducing costs by closing the “health care wedge” – a separation of effort and reward by which a patient understands the true costs of their health care and is therefore driven to be more efficient in his or her spending.

“When the government spends money on health care, the patient does not,” the report states. “The patient is then separated from the transaction in the sense that costs are no longer his concern. Health care reform should be based on policies that diminish this wedge rather than increase it.”

The authors urge Congress to work toward a solution that will not penalize the seventy percent of Americans who currently are happy with their health care arrangements.