TL/DR –
The U.S. compulsory healthcare spending, which includes government and mandated private spending, accounts for a larger share of national income than any other country. Writer Michael Cannon argues that major health care programs such as Medicare, Medicaid, and Obamacare were primarily established to solve problems created by previous government interventions. He suggests that these programs have driven up costs without significantly increasing access to healthcare or improving outcomes, pointing out that Medicare and Medicaid resulted in substantial new spending but no overall increase in healthcare, and that Obamacare led to higher premiums and fewer doctor visits while increasing government spending.
Unraveling the Complexities of U.S. Health Care Spending
The common belief among leftists is that America is the only developed country without national health insurance, implying a lack of care towards health care access. However, the U.S. spends more on health care through compulsory methods (government and mandated private spending) than most developed countries with 85% of our health care investment against OECD’s average of 76%. Our national compulsory health care spending also surpasses other nations.
Government’s Role in Health Care
The U.S. government not only has a significant role in health care spending but is also heavily involved in regulation. For instance, the U.S. requires a doctor’s prescription for twice as many drugs as Australia from a select group.
Solving Government-Made Health Care Issues
According to Michael Cannon’s book, major health care programs like Medicare, Medicaid, and Obamacare were established primarily to address issues created by prior government interventions. However, ongoing reform needs arise because these programs typically introduce new problems while trying to resolve old ones.
For instance, before Medicare’s inception in 1965, there were numerous personal insurance plans guaranteed to renew for the beneficiary’s lifetime. Medicare and Medicaid triggered a surge in health care spending, which led to a shift of resources to the elderly and poor but did not increment the overall health care. This induced a price rise due to increased demand without a corresponding supply increase. Post these programs, physician fees and hospital prices skyrocketed, with a significant portion of this spending wasted and no additional senior lives saved during Medicare’s first decade, as estimated by one study.
The Birth of Medicaid
Medicaid was created to address the inability of low-income families to afford medical care due to regulatory limitations on the number of doctors and the services non-doctors can provide. The tax subsidy for employer-provided health insurance is another cause for Medicaid’s existence. Tax subsidies for years motivated middle and upper-income families to over-insure and over-consume care, thereby pushing care away from those at the lower income end. Currently, Medicaid funds 20% of all U.S. health care spending.
The Rationale Behind Obamacare
Obamacare was established due to the fear of discrimination against individuals with pre-existing medical conditions should they leave their employer-provided insurance. However, Obamacare led to a large increase in Medicaid enrolment at the expense of those on Medicaid waiting lists. Despite high government health care spending, there was no increase in nationwide health care under Obamacare.
Obamacare’s Rescue by Congress
To save Obamacare exchanges from a ‘death spiral’, the Democratic Congress introduced ‘enhanced subsidies’. Although, the same Congress didn’t allocate the same funds to address the needs of the developmentally disabled on waiting lists or improve fees for pediatricians serving low-income families.
Michael Cannon proposes giving Medicaid and Medicare funds as cash to beneficiaries and employer payments as Health Savings Accounts to employees as a possible solution, a topic for further discussion.
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