Medicine: The High Costs of Political Controls

From Grand Junction’s Free Press:
More political control of medicine comes with higher costs

January 21, 2008

by Linn and Ari Armstrong

The left packages its programs in terms that sound good, even if the claims have little to do with the program itself. Recently some health “reformers” have loudly declared that more political control of medicine will supposedly save you money. Why? The Denver Post claimed on January 8: “Coloradans who have insurance spend an extra $950 each year to cover the costs of those who show up at the hospital without insurance.” The figure itself is fishy, but the broader claim that it allegedly supports is ridiculous.

While details differ, most plans — including several to be touted by Colorado’s “208” Healthcare Commission next week — would force everyone to purchase politically-approved health insurance and impose massive new taxes to expand medical welfare. The proposed tax hike for Colorado starts at over a billion dollars per year and likely would grow to several billion.

The current jargon for skipping out on a hospital bill is “cost shifting.” That is, people who don’t pay their bills shift those costs onto the rest of us. That’s bad, but what is the left-wing “solution” for such cost-shifting? It is to force you to pay more in taxes than you now pay for the cost-shifting. In other words, we are to believe that the way to reduce cost-shifting is to expand it.

On top of that, the figure of $950 of cost-shifting to each insured family is not very credible. The 208 Commission funded a study by the Lewin Group that suggests a much lower figure. The study claims that $239 million will be spent on the uninsured this year that is “free from provider” — much less than proposed tax hikes. (An additional $211 million comes from “public programs,” but this is funded through taxes, not insurance premiums. The rest of the $1.4 billion is covered through out-of-pocket payments, private philanthropy, workers’ compensation, and funds for veterans.) Around 2.8 million Coloradans have private insurance. The first figure divided by the second suggests a cost of around $85 per insured individual. (Brian Schwartz, Ph.D., whose free-market proposal is available at, pointed us to these figures.)

Yet, regardless of the exact figure, the expansion of tax-funded medicine would not address “cost shifting” nearly as well as its supporters pretend. As the health-care experiment in Massachusetts proves, even the most ambitious program cannot force everyone to obtain insurance. Transients, illegal immigrants, and many among the chronically poor would continue to forgo insurance and seek “free” care. Moreover, the expanded tax-funded programs would encourage more use without regard for costs. The left claims that more tax funding would promote primary-care visits and thus reduce long-term costs, but the reality is that many of the highest-cost freeloaders neglect their health (such as by abusing drugs and alcohol) and would continue to do so.

That said, we ought not scapegoat the uninsured as a group. Many among the uninsured maintain their health, and they pay for their health care themselves. According to Lewin’s figures, the uninsured as a group pay 45 percent of their costs, while private charity pays another 14 percent. Yet most of the uninsured pay all of their bills themselves.

Why is health insurance too expensive for some people? Medicare and Medicaid notoriously underpay their health bills, forcing those with private insurance to pick up part of the tab. Health costs in general have skyrocketed because of the tax distortion that promotes employer-paid insurance that encourages use without regard for cost. And a variety of mandated benefits dramatically increase the costs of insurance premiums. The way to expand health insurance is to repeal the political controls that have made it so expensive.

While we’re on the topic of controls, why is it that some people can demand “free” care from hospitals in the first place? After all, people can’t force businesses to give them “free” food or clothing. The reason is that the “Emergency Medical Treatment and Labor Act of 1985… requires that hospitals that accept Medicare patients diagnose and treat anyone who comes within two hundred feet of an emergency room, regardless of whether the person can pay for the treatment” (see the article by Lin Zinser and Paul Hsieh, MD, at We should repeal that unjust law and return to a system of voluntary charity.

Over the coming months, you may often hear claims that massive tax hikes and expanded political control of medicine will save you money. If you value your health and your money, you will recognize such claims for what they are — dishonest spin. Don’t be fooled: expanded medical welfare will cost you plenty, and ever more as the programs grow. In the long term, the only way that politicians can control costs is to impose rationing. The alternative is to repeal the political controls that have created the problems and turn to liberty in medicine.