Morning Bell: Why Government Can Never Lower Health Care Costs
Posted June 12th, 2008 at 9.17am in Health Care.
If current trends continue, Social Security and Medicare spending will jump from 7.5% of GDP today to 13% by 2030. Entitlement spending at those levels will cripple the U.S. economy. The liberal/progressive answer to this problem is to push for government-run health care that will control the meteoric rise in health care costs. The problem is that the federal government has a terrible track record at reducing costs, especially when it cones to health care. Medicare is a great case in point.
The federal government spends billions of dollars every year buying medical equipment like oxygen tanks, wheelchairs and walkers for Medicare recipients. Being the government, the Department of Health and Human Services (HHS) does not buy these goods on the free market, and instead relies on fixed prices and fee schedules. With billions in profits at stake, it should be a surprise to only liberals that medical supply companies spend thousands of dollars on lobbying fees every year trying to protect the profits they “earn” by selling the government medical equipment at inflated prices.
According to the Washington Post, the American Association for Homecare alone has contributed $138,490 to members of Congress since 2002. And what do AAH members get for their generosity? The right to charge U.S. taxpayers $1,825 for a hospital bed anyone else can buy online for $754. In 2003, conservatives in Congress tried to put a stop to this madness by passing a law that required the HHS to phase out its fee schedules in favor of competitive bidding. Now that those fee schedules are about to end, Congress is moving to preserving them.
Senate Finance Chairman Max Baucus (D-Mont.), who received $4,000 from the AAH last year, added a provision to his Medicare legislation yesterday that would delay new HHS regulations creating a competitive bidding system for medical equipment. The new system was scheduled to begin in just 10 metropolitan areas but would have begun saving American taxpayers about $125 million a year. If the competitive bidding plan was taken national, it would save $1 billion annually. Defending Baucus’ legislation, Chesapeake Rehab Equipment President Gary Gilbreti said, “Large numbers of small business in our industry will begin losing money and will be forced to reduce staff or ultimately close.”
And that is why government will never be able to reduce health care costs. Politicians are incapable of turning off the federal spending spigot when their constituents could be harmed. The better solution for controlling health care costs is consumer-driven health care and the only solution for containing Medicare spending is to change the program from an “entitlement” into insurance.
Quick Hits:
- While Americans are spending a larger percentage of their income on gasoline then they did during the oil shock of the 1970s, all energy analysts agree liberal plans to raise taxes on oil companies will do nothing to lower gas prices.
- A new education reform group headed by Al Sharpton is worrying unions since the group supports ideas such as alternative pay grades for teachers, expanded charter schools and moving excellent teachers into needy schools.
- The U.S. military is expanding the “Sons of Iraq” program that was successful in Anbar province into the Iraqi capital’s Sadr City area for the first time.
- The former CEO of the government entity at the center of the mortgage crisis stepped down from Barack Obama’s campaign yesterday.
- Conservatives are dissatisfied with the House GOP’s economic agenda because it doesn’t address earmark reform now and instead calls for an “immediate moratorium” in the future.
- Author: Conn Carroll
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June 12, 2008 Michael Reinemer, VP, American Association for Homecare, Arlington, Va. writes:
Since you’re attacking the organization I work for, I’ll weigh in. This is a difficult topic to understand unless you spend a few minutes on it. Because Medicare rates have been set by an annual fee schedule, home medical equipment companies have historically competed on the basis of service and speed setting up seniors discharged from hospitals, for instance, getting them out of more expensive institutional care into the home setting where they might need oxygen therapy, a hospital bed, etc. The bidding program, promoted for years by both Democrats and Republicans, was supposed to bring market pricing. But has been poorly implemented in a way that actually reduces competition. In fact, both conservative Republicans and Democrats are calling for delay in the program to fix the problems. See www.aahomecare.org to get the full picture. This issue is not partisan and it can’t be twisted into a tired, knee-jerk liberal vs. conservative cartoon. More broadly, using the Internet as the basis for pricing Medicare equipment or services delivered to a frail senior at home is absurd but that’s what critics would have you believe you should be used to set reimbursement for your grandmother’s oxygen therapy or power wheelchair. Home medical or durable medical equipment is the smallest, slowest-growing, and most cost-effective sector of Medicare.