The PPAHCA (“Obamacare”) is back as daily front-page news now that the Supreme Court will decide its fate. It is important to recall the primary reason why the president claimed we needed this legislation: an unsupportable health scare cost spiral, or as economist Robert Samuelson opined, “health care costs are completely out of control.”
While most of us would hesitate to argue with the president of the U.S. or a Nobel Prize-winner, they are both 180 degrees wrong. Health care costs are under control — very tight control — by Washington.
“Health care” as two words refers to goods and services delivered by hospitals and providers to be consumed by patients. The word “costs,” when referring to what providers and institutions must pay, is determined primarily by government regulation and bureaucracy rather than by labor costs, supplies, or MRI machines. Payments to providers and institutions — what the government calls “costs” — are predetermined by the government. The bill submitted by a provider is generally irrelevant.
Whether you describe excessive national expenditure of money as costs or as payments (reimbursements), spending is controlled by government. It is not “out of control” at all.
When the PPAHCA reduced Medicare “costs” by 21%, it cut Medicare payments (to providers). Thus, such cost-cutting actually cuts services to patients. As Robert Moffit of the Heritage Foundation testified before Congress, “you cannot get more of something by paying less for it.”
Meanwhile, PPAHCA increased the costs of the federal healthcare bureaucracy by six whole new agencies, hundreds (perhaps thousands) of bureaucrats added to the payrolls, and many thousands of new rules and regulations. So the government controls and increases spending to/on itself while controlling and decreasing spending on patients.