May 26, 2009
By Robert E. Moffit, Ph.D.
Think about this for a moment: President Barack Obama says that
we spend too much on health care (about $2.4 trillion annually) and
that it's hurting our economy. He also says we need to bend the
curve (downward) on health care spending. So ... we need to spend
even more on health care to save money and "bend the curve."
Taxpayers and households will get what Washington
gives them -- and pay the bills.
Big savings through higher spending? If you're wondering how
this will all work out, then you need to just think happy thoughts.
After all, this isn't about hard-nosed budgeting, or even
economics. Nor is it about access or even quality. It's about power
and control -- who has it, and who exercises it, especially over
the flow of health care dollars.
The president outlined an ambitious health policy agenda. The
Congress has already enacted a large portion of it, largely through
the stimulus bill and other legislation, totaling about $200
billion over 10 years in public-program expansions (SCHIP and
Medicaid), including the creation of Federal Council on Comparative
Effectiveness Research, and a multi-billion taxpayer "investment"
in information technology.
If Congress enacts the rest of Obama's agenda, Washington will
exercise an unprecedented centralization of power and control over
the health care sector of the economy. Already, government controls
almost half of all health care spending. The debate now is about
how the government will control the rest of it.
Now the captains of the giant health industry -- the lobbyists
for the doctors, hospitals, pharmaceuticals, the insurance
industry, medical technology, along with the Service Employees
International Union -- have pledged to knock off 1.5 percent
annually from the nation's health care bill, accumulating roughly
$2 trillion in savings over the next 10 years.
How? Through a series of fashionable initiatives, such as
"administrative simplification" and "standardization" of insurance
claim forms, electronic medical records, and the greater use of
health information technology. (In other words, ensure that all the
transactions driven by today's perverse health care incentives can
be executed more quickly.)
Most of these "savings" initiatives are already embodied in the
Obama budget. But as The Washington Post recently noted, Obama's
health care savings are "phony" and would only cover "a fraction"
of the real cost of his health reform agenda. Without details of
how exactly these changes would be implemented, no reliable
estimate of savings is possible.
The joint PR offensive conducted by the Obama administration and
health industry chiefs highlights a troubling feature of health
care debates, past and present. Health care is one of the most
highly regulated sectors of our economy. That's why an army of
lawyers, lobbyists and consultants routinely descend on Washington
and the state capitols, trying to manipulate the rules and
regulations to micromanage their competitive position at the
expense of other players.
The result: billions of dollars in cost shifting and a giant
national game of "tag" where ordinary Americans are "it." It is
households, not government officials, managed care executives or
employers, who ultimately pay 100 percent of the nation's health
care costs. And if President Obama and his allies in Congress have
their way, ordinary Americans, not just the hated "rich," will be
paying more for less in the form of higher taxation. Sooner or
For prominent liberals, this industry homage to the White House
on health care is good news. New York Times columnist Paul Krugman,
for example, is suspicious of the intentions of the health care
industry, but he considers their pledge to help the president real
progress. Obama and his congressional allies, after all, want to
expand federal control over health care. Krugman likes that.
Perhaps health care industry chiefs think that greater federal
control is inevitable; by playing ball, so to speak, maybe Congress
won't "hurt" them. Or they realize that official Washington is
going to pursue little more than an expansion of the status quo,
public and employment-based third-party payment, with some version
of a new public health plan and another thick layer of federal
The president is asking Congress to budget an additional $634
billion over 10 years in a reserve fund for reform -- without any
details of what that reform would be. But many experts expect the
real 10-year costs would exceed $1 trillion. That presents an
irresistible temptation for Congress and Washington lobbyists to
forgo any heavy health policy lifting, and to figure out how to
divvy up another big chunk of taxpayer money.
In short, taxpayers and households will get what Washington
gives them -- and pay the bills. Forget "bending" the spending
Real health reform would mean real change, a transfer of direct
control over health care dollars to individuals and families in
both public and private health programs. Making plans and providers
directly accountable to individuals and families would ignite a
health care revolution. That, of course, could be dangerous.
Moffit, Ph.D., is Director of the Center for
Health Policy Studies at The Heritage Foundation.
First Appeared in FoxNews.com's "FOX Forum"
Think about this for a moment: President Barack Obama says that we spend too much on health care (about $2.4 trillion annually) and that it's hurting our economy. He also says we need to bend the curve (downward) on health care spending. So ... we need to spend even more on health care to save money and "bend the curve." Huh?
Robert E. Moffit, Ph.D.
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