For the past several months, Washington has exhausted every possible method to pass a health care bill designed to increase government’s control over health care. They haven’t been successful yet, but that may not matter: even without Obamacare, government health spending is set to increase far faster than private health expenditures, surpassing the private sector as soon as 2012.
Today the Centers for Medicare and Medicaid Services released its projections of national health expenditures for the next ten years. The report shows that spending by the public sector grew much faster in 2009 at 8.7 percent, compared to the private sector which only grew at 3.0 percent. Though public spending was heightened by the recession, as unemployment caused more Americans to lose employer-sponsored coverage and enroll in Medicaid, the trend is expected to continue into the next decade.
What is more, the report bases its projections on current law. In the case of Medicare, this underestimates future spending. Under current law, Medicare is set to reduce physician reimbursement rates by 21.3 percent in 2010. This would lead to growth in Medicare spending of just 1.5 percent in 2010. However, the likelihood of these cuts coming to fruition is slim to none, as every year, Congress votes to suspend them. 2010 will likely be no different. A report by Health Affairs cites that, if physician payment rates are held constant, the more likely growth in Medicare will be 5.1 percent in 2010. Whether or not these physician cuts occur is no small matter—with them, overall health spending growth would be 3.9 percent. Under the more likely scenario, health spending growth would be 4.7 percent.
Thus far, the debate on health care reform has focused on increasing government spending to reduce the number of uninsured. But government spending should be moving in the opposite direction. With government spending growing at a fast clip, rather than overhaul the entire system, lawmakers should channel reform towards high-cost (and largely cost-inefficient) government programs, like Medicare and Medicaid.
Medicare, Medicaid, and Social Security, the three entitlements big spenders, are duly in need of attention from Congress. These programs will be responsible for unsustainable growth in government spending in the years to come, and will quickly become insolvent. By reforming entitlement programs, Congress could kill two birds with one stone: achieve long sought-after health care reform and bend the cost curve in health care spending, all the while addressing the fiscal crisis facing the nation due to out-of-control spending.
Rather than increase government’s role in the health care system, Congress should see the current trend for what it is: a cry for reform of existing government health care programs. Getting public health spending under control would have a monumental effect on overall spending, directly and indirectly reducing costs for all Americans.
