Why the U.S. Can’t Afford Its Health Care Policy

James Capretta succinctly describes the what is arguably the biggest single problem with American health care policy:

The fundamental problem in American health care is that the federal government is providing open-ended financial support for health insurance coverage. Most Americans get their insurance through Medicare, Medicaid, or employer-sponsored insurance. And in each case, the federal government’s support for that coverage increases commensurately with costs. So when costs or premiums rise by an extra dollar, the federal treasury is picking up a sizeable portion of the added expense, thus substantially undermining the incentive for economizing by those enrolled in the coverage or those providing the services.

The solution is an across-the-board move toward more fixed federal financial support for coverage.

This is why our federal government’s current health care commitments are unsustainable. If the government is to have a role in subsidizing the provision or coverage of health care, that role cannot be unlimited. Advocates of more expansive service might point to European systems, but even those have limits. Certain expensive drugs and treatments are not included; high-tech, high-cost equipment is more scarce; and even for services that are covered, patients frequently end up paying with their time in the form of extended waiting periods.

So you end up with two choices: Control spending bureaucratically, through some system of essentially centralized decision making about what to cover, or explicitly cap the taxpayer commitment to care in advance and let individuals, providers, and in some cases perhaps local officials, sort the rest out amongst themselves. It’s the difference between giving a teenager a fixed allowance and an AmEx.

Capretta’s explanation comes in the midst of a piece on a recent proposal by Rep. Paul Ryan and founding Congressional Budget Office director Alice Rivlin, both of whom are also members of the president’s deficit commission, that would move the health system toward recognizing, and attempting to manage, its limits.

First, it would shift Medicare toward a voucher system in which the federal government gives each recipient a fixed amount to pay for insurance. This puts the onus on the individual consumer to figure out what level of coverage is best, and what they’re willing to pay for.

Second, it would block grant Medicaid money for states. Up until now, the federal government provided matched funds for each dollar a state spent on the program, giving the states little incentive to control spending. Giving states a fixed amount and letting them figure out the best way to use it would both help contain the federal commitment to the program and encourage states to find creative ways to administer the program rather than simply racking up more and more expenses.

That’s not to endorse the entirety of the Rivlin-Ryan proposal. As Capretta notes, “It is largely silent on ObamaCare, which would push the health system in precisely the wrong direction by extending open-ended entitlement promises to millions of new people...Moreover, the new law leans heavily on price controls to cut costs, which only distort the marketplace and undermine the quality of American medicine.” In other words, the passage of the PPACA will make restructuring these two mammoth entitlements even more difficult than it was a year ago. That’s unfortunate, but also a fact of life at this point.

Still, the proposed overhauls of Medicare and Medicaid would at least take a step toward recognizing what current health policy tries so hard to ignore: That there are limits to what federal health care policy can afford to do.

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  • Patriot Mike||

    Hope and change, all the way to insolvency.

  • ||

    Lotsa words to say when somebody else is buying lunch, I am going to a high end stripper club, buying bottles of champagne for everyone, and puting hundred dollar bills in the g-strings. And you don't want to know what the tab for the lap dances is gonna be...

  • Almanian||

    With the usual disclaimers, IF the government is to be involved in health insurance/care (it is, and this seems unlikely to change), I very much prefer the fixed-amount/block grant approach to the matching-dollar and "pay for what you spend" approach we have now.

    Offers people more choice, and should reduce the bureaucracy required to administer the program(s).

    Stop laughing! I'm serious!

  • noyuo||

    "Certain expensive drugs and treatments are not included; high-tech, high-cost equipment is more scarce; and even for services that are covered, patients frequently end up paying with their time in the form of extended waiting periods."

    Well, let's see. Right now, I have absolutely zero health coverage. If I fall down and break my arm, or get some kind of one-in-a-million cancer, I'm fucked either way. The million-dollar drugs are off limits in either case. So why should I care? At least my broken arm will be taken care of without driving me to bankruptcy.

  • ||

    How much do you think it costs to fix a broken arm?

  • Warty||

    You must be some kind of insurance parasite, you monster. Why do you want this guy's arm to stay broken?

  • ||

    I'm serious. I see this shit all the time with my student workers. They equate health coverage and health care all the time. i.e. with out health insurance, no health care is available. Hell, I sometimes suspect that they cannot even conceive of paying out of pocket for health care.

    I had full-blown diabetes for a decade without any sort of health insurance or coverage whatsoever, and all while going to college on my own dime. It didn't even come near to bankrupting me.

  • Warty||

    I have a broken finger right now. Fuck! I'd better get started on my bankruptcy filing.

  • SIV||

    A hell of a lot less than you'll be charged in our state-licensed, regulated and subsidized. "health care system".

  • ||

    I seem to recall the world's greatest deliberative body addressing the issue of mammograms in a similar way. If a woman wanted a mammogram more frequently than the standard recommendation, she had no option but to die of breast cancer or something. Paying a few hundred dollars out of pocket was deemed heartless and outrageous.

  • ||

    it would shift Medicare toward a voucher system in which the federal government gives each recipient a fixed amount to pay for insurance.

    And there will inevitably be people for whom the best use of the funds represented by that voucher would be to forego "insurance" and pay directly for health care. Which would be strictlyverboten.

  • sevo||

    They'll become just one more form of currency, discounted as the market requires for a certain transaction.
    You can stand a block or two from Glide Church this afternoon and watch 'free' turkeys magically turn into dope.

  • T||

    The market ain't magic, sevo, even though most leftists act like it is.

  • sevo||

    ^What mean?

  • ||

    How much do you think it costs to fix a broken arm?

    American medicine is so far behind the rest of the civilized world, the preferred option is euthanasia.

  • Warty||

  • Progressive Talking Point||

    But healthcare doesn't act like normal markets. And stuff.

  • ||

    "..puts the onus on the individual consumer..."

    WHAT ?!

  • ||

    I'm not sure when the anti-Medicare folks are going to wake-up.

    The reason we cannot afford Medicare is due to the cost of the 2 wars we are fighting.

  • Paul||

    When it go down to only two?

    I count:

    The Iraq War
    The War in Afghanistan
    The War on Drugs
    The War on Salt
    The War on Obesity
    The War on Poverty
    The War on Caffeinated Drinks Mixed With Alcohol
    The War on Terrah (with its requisite subwars: The War on Liquids and Shoes. The War on Skirts, Baggy Clothing and Gel Soles...)

  • ||

    "This puts the onus on the individual consumer to figure out what level of coverage is best, and what they’re willing to pay for."

    And there's the rub.

    People have already given up freedom of choice for freedom from choice. The trick is to make them want to make choices for themselves--otherwise they'll just make the same swap again.

    It is so hard to convince people that they'd do better if they made their own choices. Doctors, mechanics, stock brokers, music critics, et. al...they all bank a fortune on that.

    *Hat tip to Mothersbaugh.

  • Liberals||

    puts the onus on the individual consumer

    Witch/Warlock!!! Burn her/him!!!

  • ||

    Medicare A and medicare part b deductibles go up almost every year, plus the amount you are charged for part b medicare Medicare supplements, also known as medigap insurance get more expensive too, as well the part d drug coverage. Just this last July I changed my medicare supplemental insurance plan to another Company, Gerber through National Medicare Supplements at http://www.nationalmedicaresupplements.com/ it lowered my bank draft monthly amount to 124.00, saving almost 80 a month total. and I just last Monday changed my part D to a new one that Humana / Walmart offer for 14.80 through American Seniors Insurance at http://www.americanseniors.com/

  • ||

    Another one to learn the latest news on medicare is http://wwwmedicaresupplementnews.com

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  • ||

    All parties, from the government to insurers to individuals to drug companies, have a role to play in helping to control health care costs. Check out Whatstherealcost.org for what you can do and what the health care system should be doing.

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