At the heart of all of the discussions about the healthcare plan is the Congress and the President promising to do something that will result in healthcare costing less. Setting aside all the arguments and numbers produced by each side in the screaming match (it isn’t a debate and I won’t dignify it by calling it so), let’s look at the other large healthcare program the Federal government ‘manages:’ Medicare.
Medicare was started in 1966, and actually started disbursing significant payments in 1967. So that we get the numbers right here, let’s look at the pertinent numbers for that year:
1967
Population of the US: 198 million
US Gross Domestic Product: $833 Billion
Per Capita GDP: $4207
Medicare Coverage: 19 million citizens
Total Distributed: $3.4 Billion (.4% of GDP)
Receipts: $1.1 Billion
Net Cost: $2.3 Billion
Cost per Capita: $11.62
(This cost represents the total amount per person taken from the general tax revenue to pay for the difference in Medicare outlays)
Per Capita Expense (percent of per capita income) .28%
Over the course of the next three decades Congress changed things and the costs increased a bit. Here are the similar numbers from 2003:
2003
Population of the US: 290 million
US Gross Domestic Product: $10,886 Billion
Per Capita GDP: $37,538
Medicare Coverage: 77 million citizens
Total Distributed: $278 Billion (2.5% of GDP)
Receipts: $28.4 Billion
Net Cost: $249.6 Billion
Cost per Capita: $860.69
Per Capita Expense (percent) 2.3%
So, over the course of nearly 4 decades this program grew from less than ½ of 1 percent of GDP to 2.5% of GDP. So what about the government today convinces us that this time they will bring down the cost or control the spending?
When was the last time the federal government managed to control spending? Even during the last 9 months this Congress and this Administration have lost sight of the money that flowed into the banking industry. If they can’t keep track of money over that short a period of time, what makes us think that they will keep track of this money, doled out over a years and years?
More to the point, what is it about government spending that keeps costs under control? The short answer is: nothing. As federal government involvement in healthcare has increased, so has the size of the healthcare industry. Not only has government involvement in healthcare not worked to control the increases in healthcare costs, government involvement has spurred the increased costs in healthcare. Now we are to believe that somehow, mysteriously, that government involvement will reduce costs and improve healthcare.
Let’s just repeat it one more time: healthcare costs will increase until there is an increase in the total quantity of healthcare. If the number of doctors, nurses, clinics, hospital beds, etc., begins to increase faster than the total population, the costs will eventually start to come down. Any plan that does not increase the supply will not, cannot decrease the costs. In fact, any plan that adds more people to the healthcare system without increasing the supply must increase the cost and reduce the availability of healthcare in order to make the ends meet. And all the promises of all the politicians won’t change that.
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