What Role for Government in Health Care?

My remarks will conclude what I would say is more of the "theoretical" approach to the discussion of health care. We need to remember that we are talking about the role of government in health care, not just in health insurance, not even just in health care. What we really should think about in terms of priorities is what is the role of government in what we should care about--your better health or maintaining it. So we sometimes overemphasize the health insurance side of this issue to the exclusion of the more important ones.

We are always going to be somewhere in the middle of a continuum. We are never going to be, in our country, at either extreme. A single payer is dreamed of by some. A much freer, although not a completely free market, is hoped for by others. The equilibrium drifts towards some type of hybrid, but it is always less fuel-efficient. Our politics tends to favor the outward appearance of health care that is privately owned and operated but still kept pretty tightly tethered to political rules and limits; almost, if you will in the insurance sense, a captive insurer. The role of private insurers is to take the blame and allow for plausible deniability regarding what would otherwise be attributed to more fully transparent public and political control.

What the latest legislation was threatening to produce was closer to the regulated utility model, or as some in the private sector prefer, profit-side capitalism and loss-side socialism. We are already well out of balance in getting to where we need to be on this continuum. The actual national health spending breakdown (it is moving a little bit with the latest reported numbers), is not quite a 50/50 split explicitly between what is paid for publicly and what is paid for privately. But if you look at the long-term trends, it is definitely moving toward the public side. The proposed health reform legislation would have pushed it further, at least to the 55% level within the near term and even more when you include the tax subsidies we spend publicly for private health care. It is going to grow in the direction of more public control simply due to the aging of the population--with the programs that serve that population augmented by expansion of the Medicare drug benefit, expansion of Medicaid coverage, and erosion of employers' supplemental health coverage for retirees. . . .

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Thomas P. Miller is a resident fellow at AEI.

 

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