Public Option To Cut Health Costs? Medicare's Record Says Dream On

IBD Editorials ^ | June 19, 2009 | JEFFREY H. ANDERSON

[Kaslin]

"First, the rising cost of health care must be brought down." That's what President Obama recently declared when outlining the basic principles of his health care plan.

His supporters have echoed his emphasis. The New York Times writes that, when it comes to health policy, "The president's main focus is on starting to reduce the soaring cost of health care."

Speaker Pelosi concurs: Health care reform "is about cost — taking down the cost of health care."

But can the president's plan succeed, even on his own terms? If history is any guide, it cannot — and will instead make matters much worse.

But there are nearly 40 years of experience to consult, and they offer a resounding rebuttal. Across the years, Medicare's costs have risen far more than the costs of privately purchased care.

A new study I've completed, published by the Pacific Research Institute, takes all health-care spending in the United States and subtracts the costs of the two flagship government-run programs, Medicare and Medicaid. It then takes that remaining spending and compares its cost increases over time with Medicare's cost increases over time.

[JustTheTruth]

What is clearly missing from this debate are facts about Medicare "costs" vs payment levels.....

On average, Medicare pays about 90% of most hospitals' costs. This means that privately insured patients must pay much more than cost in order for hospitals to break even. Medicaid pays less than 80% of hospital costs in most states. This just SHIFTS cost from the government plans to private insurance plans - a hidden tax. Paying less has not reduced true cost.

This is why hospitals strongly oppose a public plan. Without private HMO /PPO insurance payments, hospitals would soon all be bankrupt; poised for an Obama takeover. This is dead-serious.