Health care reform proposals generally fall into two camps: Those that rely on government to expand access and hold prices down, and those that rely on market competition to lower prices and expand consumer choice.
Proponents of government-heavy reform believe that because the health care problem itself is massive and complex, we need an equally massive and complex solution. Only the government has the requisite scale, infrastructure, and power to deliver that solution, or so goes the thinking.
More than half of all health care provided in this country is already paid for by the government through Medicare, Medicaid, the State Children’s Health Insurance Program (SCHIP), and health insurance programs for veterans, Native Americans, and other specific populations.
To expand coverage, many suggest that lawmakers should just utilize these programs. Such a move, however, would bankrupt the country. These programs are already bloated and on weak financial footing.
Take Medicaid. Originally set up in 1965 as a safety net for the poor, Medicaid has grown into an enormous welfare program for the middle class as well, covering 53 million Americans. In other words, Medicaid already insures some 15 million more people than the 37 million estimated to be living in poverty, and almost 10 million more than Medicare. In 2006, individual states and the federal government paid out an estimated $338 billion for Medicaid patients.
Outlays for Medicaid amount to 22% of state spending and have surpassed even education as the biggest drain on state budgets. And that’s just the national average. In Medicaid-heavy states like Florida, the program is projected to consume nearly 60% of the state’s budget by 2015.
SCHIP, meanwhile, covers about six million children. However, the funding formula gives states an incentive to add middle-income children and even adults to their SCHIP rolls. So in many places, the program has spiraled out of control.
In 14 states, adults are enrolled in SCHIP; nationwide, about 600,000 adults are covered. In six states, more SCHIP money is spent on adults than on kids. Meanwhile, the program has still failed to enroll almost two million children who qualify.
And in October, Hawaii ended the first universal program for children after just seven months. Costs skyrocketed as parents stopped paying for private coverage and switched to the government-funded plan.
Even the government health care offerings for veterans are sub-par. Thus far, the health program administered by the Department of Veterans Affairs (VA) has proved inadequate for the wounded veterans returning home from Iraq and Afghanistan. Better suited to the needs of much older veterans from World War II, Korea, and Vietnam, the VA is simply unable to react with the speed and efficiency needed to treat the injuries of modern warfare.
A claim now takes between 127 and 177 days to process – well above the private industry average of 89.5 days. An appeal takes a staggering 657 days. In House testimony last year, the Government Accountability Office (GAO) reported that the VA is near the breaking point.
With such failures in mind, it’s worth asking why anyone is interested in expanding these government programs.