Obama knows that Americans will not agree to spend a trillion dollars over the next ten years to provide health care to 1/3 of Americans who don’t have it today. That, of course, will be the result of his plan according to the Congressional Budget Office. Therefore he has been marketing his plan as the means to reduce costs for all Americans. He argues that, by building a government plan based on Medicare, he will drive down costs and, therefore, expenses for all of us.
‘First, the rising cost of health care must be brought down.” That’s what President Obama recently declared when outlining the basic principles of his health care plan.
His supporters have echoed his emphasis. The New York Times writes that, when it comes to health policy, “The president’s main focus is on starting to reduce the soaring cost of health care.”
That the government will drive down costs with a program based on Medicare isn’t just difficult to believe, it is contrary to the facts. Medicare has, since 1970, increased spending per patient at a much faster rate than the private sector.
A new study I’ve completed, published by the Pacific Research Institute, takes all health-care spending in the United States and subtracts the costs of the two flagship government-run programs, Medicare and Medicaid. It then takes that remaining spending and compares its cost increases over time with Medicare’s cost increases over time.
The results are clear: Since 1970 — even without the prescription drug benefit — Medicare’s costs have risen 34% more, per patient, than the combined costs of all health care in America apart from Medicare and Medicaid, the vast majority of which is purchased through the private sector.
Since 1970, the per-patient costs of all health care apart from Medicare and Medicaid have risen from $364 to $7,119, while Medicare’s per-patient costs have risen from $368 to $9,634. Medicare’s costs have risen $2,511 more per patient.
It doesn’t take an economist to see that the private sector is far superior in its ability to control costs than is the government. In fact, that the private sector has had the level of difficulty it has experienced is largely due to government interference and social engineering.
The reality, of course, is that Obamacare has little or nothing to do with controlling costs and everything to do with controlling America.