Archive for July 17th, 2009

Containing Health Care Costs

Friday, July 17th, 2009

The Congressional Budget Office warned legislators yesterday that the proposals currently being considered to reform the U.S. health care system “would fail to contain costs—one of the primary goals—and could actually worsen the problem of rapidly escalating medical spending,” according to The Wall Street Journal.

Smeal’s Keith Crocker explains that there is really only one way to lower the costs associated with health care—reduce its utilization:

There is no mystery about how to reduce health care costs. You reduce costs by withholding care. Period. Having said that, nobody wants to make that policy because when you talk about withholding care, we all get a bit nervous. Everybody wants to withhold somebody else’s unnecessary care; but if you or someone you know is sick, you want the best care on the planet, and because it’s free for you, you’re not constrained at all by what you demand.

I think the elephant in the room is the fact that there has to be some way of reducing the utilization of health care services to bring costs down. To do that, there are two options: We can either get people to voluntarily choose less or we can put a structure in place that withholds treatment using rationing, administrative rules, or something like that.  As an economist, I believe in markets and I believe in consumer sovereignty; that is, consumers are the best judge of what’s in their best interest. I think the best way to solve a problem like this is to have well-educated consumers guarding their own pocketbooks. The other option is a public plan that has government employees telling us what services we can and cannot utilize.

Tags: Crocker, Health Care, Politics
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