Matt Kibbe; August 25
President Obama and members of Congress claim they can realize billions of dollars in cost savings simply by gaining control over the medical industry. They cannot. Despite its longstanding ability to fix prices through legislation and market dominance, the government has not and cannot effectively control the rising cost of health care.
We know this because a public option along the lines of what is being proposed in Congress already exists. It is called Medicare and the federal government has failed to rein in its costs for nearly five decades. Even with below market reimbursement rates for doctors and hospitals, between 1997 and 2005 total Medicare spending per enrollee grew almost three percent faster than did spending on patients insured by the private sector.
And that was despite the artificially high prices for privately insured patients made necessary just to offset losses from government programs. Similarly rapid cost inflation has resulted in Medicare taxes being hiked several different times since the program’s inception.
This will almost certainly continue with the introduction of another massive entitlement.
In fact, according to a recent nonpartisan Congressional Budget Office (CBO) report, the plans being discussed in Congress don’t reflect the “fundamental changes that would be necessary to reduce the trajectory of federal health spending by a significant amount.” On the contrary, the CBO report notes that “the creation of a new subsidy for health insurance…would by itself increase the federal responsibility for health care that raises federal spending on health care.” Simply put, “it raises the amount of activity that is [already] growing at this unsustainable rate…”
So, why can’t the government control its health care costs?
Government Power and Control (PDF); Heritage Foundation