Critical Condition

Drunken Sailor + Health Care = Government Spending

Let me get this straight. Current health care entitlements (Medicare and Medicaid) have enormous cost and quality control problems. Check. Medicare alone is trillions of dollars in debt. Check. And so President Obama’s solution to America’s health care woes is to…create new health care entitlements on the theory that if the government spends more, its performance will magically improve?

Check the White House Web site. There’s a bridge in Brooklyn for sale.

My Manhattan Institute colleague and City Journal contributing editor Steve Malanga has an excellent article at RealClearMarkets today puncturing the intellectual slight of hand behind the argument that if government extends its reach into health care markets quality will rise and costs will slow:

The public sector already pays half of all health care bills and has been subject to political manipulation, pressure groups and outright patronage in managing its portion of the health care system so expensively.

One indication of just how much of a culprit government has been in the rapid expansion of U.S. health care costs is a 2005 National Bureau of Economic Research study by economists Laurence Kotlikoff and Christian Hagist which examined the growth in public sector-care spending since 1970 in 10 industrialized countries including the U.S.

The study found that the annualized rate of growth in government spending on health care was not only tops in the U.S., at 6.23 percent, but that the rate of growth here was the fastest relative to increases in gross domestic product among the 10 countries studied. …

Much of this growth, by the way, is not a function of demographic trends like the aging of the population, the economists estimated, but of a constant expansion of benefits by government. That accounted for nearly 90 percent of the increase in spending over the years.

Read the whole thing.  ”Reform” isn’t about finding a new, more virtuous committee of experts to portion out tax dollars.  As long as health care lobbies like the AARP and hospital workers unions can feed directly on transfer payments from Uncle Sam our health care sector will remain inefficient and bloated.  Call it Lobby-a-palooza.

Fix health care?  Fix Medicare first, and then let’s talk.