- The Foundry: Conservative Policy News from The Heritage Foundation - http://blog.heritage.org -

Morning Bell: Why Government Can Never Lower Health Care Costs

Posted By Conn Carroll On June 12, 2008 @ 9:17 am In Ongoing Priorities | Comments Disabled

If current trends continue, Social Security and Medicare spending will jump from 7.5% of GDP today to 13% by 2030 [1]. Entitlement spending at those levels will cripple the U.S. economy [2]. 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 [3], 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 [4], 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 [5] and the only solution for containing Medicare spending is to change the program from an “entitlement” into insurance [6].

Quick Hits:


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2008/06/12/morning-bell-why-government-can-never-lower-health-care-costs/

URLs in this post:

[1] 7.5% of GDP today to 13% by 2030: http://www.cbo.gov/ftpdocs/92xx/doc9216/LongtermBudget_Letter-to-Ryan.pdf

[2] Entitlement spending at those levels will cripple the U.S. economy: http://www.foundry.org/2008/05/20/cbo-to-congress-reform-entitlements-now-or-the-economy-dies/

[3] Washington Post: http://www.washingtonpost.com/wp-dyn/content/article/2008/06/09/AR2008060902585_pf.html

[4] who received $4,000 from the AAH last year: http://www.cq.com/document/display.do?docid=2895291&sourcetype=6

[5] consumer-driven health care: http://www.heritage.org/Research/HealthCare/wm1739.cfm

[6] change the program from an “entitlement” into insurance: http://www.heritage.org/Research/Budget/wp021908.cfm

[7] liberal plans to raise taxes on oil companies will do nothing to lower gas prices: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/06/11/MNI6116RIU.DTL

[8] worrying unions: http://www.usatoday.com/news/education/2008-06-11-race-equality_N.htm

[9] successful in Anbar province: http://www.washingtonpost.com/wp-dyn/content/article/2008/06/11/AR2008061103494.html

[10] the government entity at the center of the mortgage crisis: http://www.foundry.org/2008/06/10/morning-bell-fannie-and-freddie-at-core-of-housing-crisis/

[11] stepped down: http://www.nytimes.com/2008/06/12/us/politics/12veep.html?_r=1&ref=todayspaper&oref=slogin

[12] Conservatives are dissatisfied: http://www.redstate.com/stories/congress/conservatives_complain_gops_earmark_plan_doesnt_go_far_enough

Copyright © 2011 The Heritage Foundation. All rights reserved.