Tyler Cowen writing in The New York Times:
MEDICARE expenditures threaten to crush the federal budget, yet the Obama administration is proposing that we start by spending more now so we can spend less later.Read the whole thing.
This runs the risk of becoming the new voodoo economics. If we can’t realize significant savings in health care costs now, don’t expect savings in the future, either.
It’s not the profits of the drug companies or the overhead of the insurance companies that make American health care so expensive, but the financial incentives for doctors and medical institutions to recommend more procedures, whether or not they are effective. So far, the American people have been unwilling to say no...
It sounds harsh to suggest that the Obama administration cut areas of Medicare spending, but, too often, increased expenditures and coverage are confused with good health care outcomes. The reality is that our daily environment, our social status and our behavior — including diet and exercise — have more to do with good health than does health care more narrowly defined.
The demand for universal coverage sounds like a moral imperative to “take care of everybody,” but in reality it would make only a marginal difference when it comes to the overall health of the American population. The sober reality is that universal coverage is another way to spend money, which may or may not be a good idea.
The most likely possibility is that the government will spend more on health care today, promise to realize savings tomorrow and never succeed in lowering costs. It is rare that governments successfully cut costs by first spending more money.
Mr. Obama has pledged to be a fiscally responsible president. This is the biggest chance so far to see whether he means it.