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Why We Need More Government in Health Care

A Commentary by Froma Harrop

Tuesday, October 11, 2011

"Home-Health Firms Blasted." The headline refers to a Senate Finance Committee finding that major providers of home-based services to Medicare patients were bilking the government program. Big time.

Paying for nurse and therapist visits to patients' homes was supposed to cut down on high hospital charges. But the three biggest home-health giants have been abusing the system by gaming the number of visits and pushing unnecessary care. "At worst, they may be examples of for-profit companies defrauding" the taxpayers, the committee report said.

A good-news story lurks under the distasteful details. If the program for the elderly and disabled is so rife with waste, fraud and abuse, then its rising costs could be curbed without dismantling what people like about it. The Republican alternative (already passed in the House) would turn Medicare into a voucher system: Beneficiaries would be given a set sum with which to buy coverage from a private insurer. The voucher payments would not keep up with projected hikes in health care prices. This would let for-profit interests decide what benefits the elderly would receive.

Forget that. We can control Medicare spending while leaving the program's basic guarantees intact -- but only if there's more, not less, government intervention. (Taxpayers footing the bills should also have the right to monitor how their money is being spent.) Under the current Medicare setup, government pays then lets private entities do much as they please.

That bad combo underlies the Republicans' Medicare drug benefit -- a huge giveaway to private insurers and the pharmaceutical industry. The law forbids Medicare to negotiate prices for drugs. That's partly why Medicare pays 40 percent more for medicines than does the Department of Veterans Affairs, which does bargain on price. Who's paying for that differential? Patients and taxpayers.

America spends twice as much per capita for health care as the rich-country average, while leaving millions of people uninsured and underinsured. We are talking here about rich countries that don't skimp on deluxe care and whose doctors make good money. Think of how our overspending on health care has burdened patients, taxpayers and employers.

Clearly, a lighter government hand in health care does not translate into savings for ordinary people. Bruce Bartlett, an economist who worked in the Reagan administration, did some numbers and found this:

In other rich countries, the government pays an average 72 percent of all health care costs. In the United States, it pays 46.5 percent but limits subsidized coverage mainly to the poor, the elderly and disabled. The rest of us pay for health coverage through lower pay (as our employers deduct the cost of our medical plans from our paychecks) or directly out of pocket.

"In short," Bartlett concludes, "a substantial portion of the higher tax burden that Europeans pay is really illusory. They are really just paying their health insurance premiums through their taxes rather than through lower wages, as we do."

Many of us -- we in the mirror -- don't appreciate this point. When we count pennies at the end of the month, it shouldn't matter whether those spent on health care came out of our taxes or out of pocket. If government did its bit to cut wasteful spending, we'd have more pennies.

Many ideologues regard unfettered free markets as a religion, so practical considerations don't count. Under that mindset, we should take the government out of health care altogether and let consumers of all ages deal directly with the medical-industrial complex. Millions would suffer or die prematurely because they were unlucky in business or health -- or simply outlived their savings -- but too bad.

The only serious cost-cutting alternative to the free-market jungle is letting government put more order into American health care. Take your pick.

COPYRIGHT 2011 THE PROVIDENCE JOURNAL CO.

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