NCPA - National Center for Policy Analysis


January 11, 2008

Democrats claim high medical costs are a "failure of the free market" and they demand a government takeover.  But a new study says the government is to blame.

According to the Hoover Institution:

  • Public health programs account for almost half of the $2 trillion spent on U.S. health care.
  • An astonishing 80 percent or more of all medical-care pricing is based on government reimbursement rates set by Medicare.
  • As for private costs, they would be lower if government didn't interfere in the market. Regulations imposed on the industry cost more than $330 billion a year.


  • Perverse tax policies have created a third-party payer system. 
  • Patients no longer have first-dollar responsibility for medical bills thanks to employer insurance. 
  • Someone else is paying, so inflation goes unchecked and unabated.

"Patients have no idea what their doctor visits, surgeries, diagnostic studies or other medical services -- whether urgent or elective -- will cost until the bill comes weeks later," said Dr. Scott W. Atlas, a senior Hoover fellow and chief of neuroradiology at Stanford University Medical School.

So if Uncle Sam made health care so unaffordable, why do so many voters like Democrats' plans to expand government control of health care?  Because they've bought into the myth that the private sector has failed and begs for government rescue, says Hoover.

The way to control costs isn't to expand a health care bureaucracy that already is divorcing patients from market-price decisions.  The answer is letting them choose between health care and money, says Hoover.

Source: Editorial, "The Truth About Health Costs," Investor's Business Daily, January 10, 2008.


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