For example, in his inaugural address, Obama pointed out that our health‐care system is “too costly,” and called for reform that will “raise health care’s quality and lower its cost.” But, how does Obama expand coverage, increase covered treatments and control costs, all at the same time?
Sure, there are efficiency savings to be had here and there. But even Obama’s new budget director, Peter Orszag, just told Congress that savings from things like greater emphasis on preventive care are unlikely to be realized for years, if at all. In reality, any health‐care reform will have to confront the fact that the biggest single reason costs keep rising is that the American people keep buying more and more health care.
At its most basic, no one wants to die. If a treatment can save our lives, or increase quality of life, we want it. This problem becomes even more acute when someone else is paying. Right now, consumers pay only about 15 cents out of every dollar spent on health care in this country. The rest is paid by government (50 percent) or insurers (35 percent).
One study by MIT’s Amy Finkelstein suggests that the prevalence of insurance itself has roughly doubled the cost of health care. So, if Obama succeeds in expanding insurance coverage, it’s very likely to increase the cost of care.
Ultimately, controlling costs requires someone to say “no,” whether the government (as in single‐payer systems with global budgets), insurers (managed care) or health‐care consumers themselves (by desire or ability to pay). No matter, someone’s bound to be unhappy.