Rising Costs — and Whether Government Can Solve Them
Phil Bredesen’s op-ed in the Wall Street Journal last Thursday on employers dropping coverage comes as the outgoing Tennessee Democrat releases a new book outlining his platform for reforming health care. Gov. Bredesen offers his reform platform because he believes the health care law focused largely on expanding health coverage rather than containing costs. Sen. Coburn’s office has prepared a helpful précis of Gov. Bredesen’s criticisms of the health care law, based on quotes from his book.
While Bredesen’s criticisms of the new law are largely consistent with the arguments by Republicans throughout the debate, his solutions are incoherent with the critique. The Governor criticizes the law as creating “yet more complexity, more regulations, and the need for more bureaucracy” – but he then argues that to lower rising health costs (which the law did not do), the government should directly negotiate prices with pharmaceutical companies, and promote a “least costly alternative” plan, whereby the federal government would not pay more for costly but effective treatments and therapies. Those solutions would by definition involve more regulations, more bureaucracy – and, just as important, more government involvement and intrusion into doctors’ relationships with their patients.
The outcomes of existing government micro-management of the health care sector can be clearly seen in an article from this morning’s Wall Street Journal profiling the Relative Value Scale Update Committee, which helps determine the levels at which various physicians and procedures are reimbursed within the Medicare program. The article explains how the committee tries to assess the relative value of thousands of medical procedures, based on minute estimates of input costs: “a subcommittee once debated whether to factor tissues into the payment for a psychoanalysis session.”
Yet despite all these minute, even seemingly absurd, attempts to micro-manage payment levels in the government’s Medicare program, official estimates indicate that the federal program has NOT succeeded in containing costs. In fact, the Congressional Budget Office’s long-term budget outlook earlier this year noted that from 1975 through 2008, excess cost growth in Medicare grew FASTER than costs nationally, by more than half a percentage point per year. (Table 2-1, page 47 of the PDF)
Governor Bredesen is right to note that the additional bureaucracy created in the health care law will not lower skyrocketing health costs. But he veers from the mark in his suggestions that new government involvement in other areas of the health sector will prove an effective tool in solving the nation’s health care woes.