No Cost Control

The Congressional health care debate reaches its climacteric week, and The Washington Post op-ed page offers two good columns on the topic.

Robert Samuelson, “Obama’s illusions of cost-control“:

Though it seems compelling, covering the uninsured is not the health-care system’s major problem. The big problem is uncontrolled spending, which prices people out of the market and burdens government budgets. Obama claims his proposal checks spending. Just the opposite. When people get insurance, they use more health services. Spending rises. By the government’s latest forecast, health spending goes from 17 percent of the economy in 2009 to 19 percent in 2019. Health “reform” would probably increase that.

Unless we change the fee-for-service system, costs will remain hard to control because providers are paid more for doing more. Obama might have attempted that by proposing health-care vouchers (limited amounts to be spent on insurance), which would force a restructuring of delivery systems to compete on quality and cost. Doctors, hospitals and drug companies would have to reorganize care. Obama refrained from that fight and instead cast insurance companies as the villains.

Rep. Paul Ryan (R-WI), “Rep. Paul Ryan on what real health reform should look like“:

Through any analytical lens, the legislation will not address the central problem of skyrocketing health-care costs. The Congressional Budget Office estimates that families’ premiums could rise 10 to 13 percent; private-sector actuarial estimates top these already high numbers. The higher costs are driven by federalizing the regulation of insurance, narrowing consumers’ options and reducing competition among providers. The health-care market would be dominated by government programs and the largest insurance companies, operating as de facto government utilities.

Rather than tackle the drivers of health inflation, the legislation chases the ever-increasing premiums with huge new subsidies. Already, Washington has no idea how to pay for the unfunded promises in Medicare, Medicaid and Social Security — and creating this new entitlement would accelerate our path to fiscal ruin.

The National Association of Manufacturers is a member of the Start Over! business coalition, which outlined its principles and priorities for health care reform in a Feb. 22 letter to President Obama. Cost control and global competitiveness figured prominently:

Central to the discussion among summit attendees must be how reform ideas affect the ability of
our nation’s economy to recover and businesses to create jobs. Even in ideal economic times
imposing costly regulations and taxes on business is a bad idea. A competitive global
environment and an already burdensome tax and regulatory structure offer enough challenges for
businesses of all sizes to invest and create jobs. We should be looking for ways to streamline
and modernize these structures, rather than layering additional costs on job creators. Moreover,
the dismal state of our nation’s fiscal house requires that proposals be weighed against the threat
that large-scale spending poses to long-term economic stability and competitiveness.

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