"...America's health-care system has important strengths that must not be overlooked. Most notable among these are an openness to medical innovation that is absent from more centrally planned systems and a network of clinics and hospitals capable of offering the most advanced care found anywhere in the world. The vast majority of Americans (almost 80%) have ready access to this high level of care through third-party insurance arrangements, obtaining coverage from their employers or from federal programs like Medicare and Medicaid. Another 10% have individually purchased coverage. But for all its considerable strengths, the system suffers from pervasive weaknesses as well. The most serious of these is rapidly rising costs. According to the Congressional Budget Office, between 1975 and 2005, annual per-person health spending in the United States rose, on average, 2 percentage points faster than per-person economic growth. In other words, the escalation of health costs has far outpaced the rise in our national income. This has left more and more people unable to afford insurance, and it now poses significant problems for government budgets: Both federal and state governments spend an enormous amount on health care, but government's revenue base for taxation grows along with the economy, not with health-care costs. So as government spending on health care has surged, tax collection has not kept pace — yielding the primary driver of today's deficits and mounting debt.
Of course, government health-care programs and policies are largely responsible for these rising costs in the first place. To begin, the design of Medicare is terribly flawed: Because the program pays providers of care based on the volume of their services, it creates a massive incentive for inefficiency and overuse. And because Medicare is the biggest payer in most health-care markets in America, that incentive badly distorts the economics of the entire sector. Furthermore, the Medicaid program inflates costs by (among other policies) having states control how the program is run while the federal government pays most of the bills. The result is that neither party has both the incentive and ability to keep costs in check.
The third driver is the tax exclusion for employer-provided insurance: The federal government does not count the amount that employers spend on health insurance for their employees toward workers' taxable income. This tax exclusion inflates costs by effectively rewarding higher-premium plans and by encouraging employer-purchased insurance, thereby preventing a real consumer market in coverage. The people who use the insurance (workers) are not the people who buy it (employers); many Americans thus have no idea how much is spent for the health care they receive. As a result, there is no clear relationship between cost and value, without which there can be no real prices, no real incentives for efficiency and quality, and thus no limitations on the growth of costs..."
"...This is, of course, a gross mischaracterization of what Obamacare actually does. Among other features, the law implements a massive expansion of taxpayer obligations. It adds two new entitlement programs at an expense of at least $1 trillion over a decade. In that same period, it raises taxes by more than $500 billion. It cuts Medicare payments to those providing medical services by roughly $500 billion, and sets up an unaccountable board — the Independent Payment Advisory Board — to enforce new caps on future Medicare growth through specific payment cuts to Medicare providers. Most egregiously, it puts the federal government in command of the health sector, giving bureaucrats immense new power to decide matters ranging from what services must be covered in every American's insurance plan to how doctors and hospitals organize themselves and do business..."
"If past experience is any guide, Obamacare's new entitlement and massive expansions of Medicaid could cost several times more than the official estimate (about $1 trillion over a decade)"
economics21.org
|
