NCPA - National Center for Policy Analysis

Patients Should Pay Their Own Bills

November 23, 2010

Blame for increases in health care costs should be placed on the system the government has promoted, says Investor's Business Daily (IBD).

  • The tax code encourages employers to buy health care insurance plans with pretax dollars.
  • Nearly 60 percent of American adults are covered by an employer-based plan.

This arrangement has driven health care spending ever higher.  

  • The cost of medicine increased 98 percent between 1992 and 2008, a period when the consumer price index rose 53 percent.
  • Health care spending now makes up 17 percent of the economy, a far bigger slice than it did before the 1965 creation of Medicare and Medicaid, when it never went beyond 6 percent.

Why has this happened?

"A primary reason why health care costs are soaring is that most of the time when people enter the medical marketplace, they are spending someone else's money," says Devon Herrick, a senior fellow with the National Center for Policy Analysis.

  • According to Herrick, for every dollar of hospital care that is consumed, a patient pays only 3 cents.
  • The rest is paid by a third party, the insurance company.
  • When a patient visits a doctor, less than 10 cents of every dollar of care consumed is paid by the patient -- again, a third party pays the balance.

The third-party payer problem was not addressed by ObamaCare.  In fact, the legislation's chief goal is to increase the role of the third-party payer -- be it the government or an insurance market under the central-planning thumb of Washington.

The appropriate policy solution would be one that puts patients in control of their health care, says IBD.

Source: "Patients Should Pay Their Own Bills," Investor's Business Daily, November 22, 2010.

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