John Kerry delivered his most important economic-policy address of the post-convention presidential campaign on Wednesday, two days after a highly respected think tank issued an authoritative analysis that obliterated the low-ball cost estimates of the Kerry-Edwards health-care proposal.
    On Monday, the American Enterprise Institute (AEI) issued a report detailing how the Kerry-Edwards health plan would increase federal budget outlays by more than $1.5 trillion over a 10-year (2006-2015) period. That amount was significantly higher than the initial $890 billion estimate, which accompanied the May 16, 2003, unveiling of Mr. Kerry's plan in Des Moines, Iowa. When the $890 billion price tag proved to be politically unpalatable, Mr. Kerry's estimators finagled several hundred billion dollars in "savings" and revised the net cost downward to $653 billion.

 AEI's analysis, however, found that the saving provisions of the Kerry plan were vastly overestimated and its spending provisions were even more egregiously underestimated. On the spending side of the ledger, for example, AEI found that the costs for Medicaid and the State Children's Health Insurance Program would be more than $200 billion higher. The same is true for the costs of Mr. Kerry's premium rebate provision, which would offer massive federal subsidies to employers for costs incurred by catastrophically ill patients. While the Kerry plan envisions saving nearly $200 billion through disease management and health information technology, the AEI analysis concluded that such savings would be smaller than $200 million.