What Do Government Subsidies Provide? Higher Prices And More Overhead, Mostly

Investor's Business Daily ^ | 5/3/2016 | John Merline

[IBD editorial writer]

Former Sen. Phil Graham once quipped that “if you think health care is expensive now, wait until it’s free.”

He said that when President Clinton was, unsuccessfully, trying to get his wife’s Health Security Act through Congress in 1993.

Graham was right. While Clinton didn’t get his plan enacted, health care has become increasingly “free” to consumers, as the share they pay out-of-pocket dropped from 47% in 1960, to 23% by 1980 to less than 11% today.

This trend has been driven almost entirely by government policies — either through government programs like Medicare and Medicaid, or because of distortions caused by the tax code, which heavily subsidizes generous employer-provided insurance. And because health care looks like a bargain, this trend has fueled health care spending, which has outstripped growth in the economy for decades.

The problem is that much of this extra health care spending didn’t buy better health care. Much of it went instead to increased overhead costs, as doctors and hospitals were forced to cope with increasing paperwork demands from Medicare, Medicaid, managed care plans, and other third-party payers — paperwork that, by the way, was supposed to hold down costs

[SoFloFreeper]

John Merline,

I think you need to check that. You probably mean Senator Phil GRAMM.

I don’t think one is being a grammar cop by expecting basic spelling of proper nouns to be correct.