Controlling Healthcare Costs. What Are the Options?

In my last post  I summarized the latest data showing how high and out-of-control American healthcare costs have become, both for individuals (and families) and government.

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For example, the cost of health insurance for the average American family is now $20,576 per year.  Many people without adequate insurance are being forced into bankruptcy.

Even though Medicare recipients pay 60% of their healthcare costs, the remaining 40% paid for by the federal government was $591 billion in 2017.  This enormous federal expense is increasing rapidly and is one of the main drivers of our out-of-control national debt which is now increasing (through annual deficits) at the rate of $1 trillion per year.

Drastic action is needed.  Here are some possible initial steps:

  • Let Medicare negotiate drug prices with pharmaceutical companies. This is currently banned under the ACA and so will require congressional action.  It would have the effect of lowering drug prices for all Americans. Nebraska Representative Fortenberry supports doing this.
  • Require Medicare recipients to pay more than 60% of the cost of their healthcare benefits. This can be done on a means-adjusted basis so that the affluent, at least, pay the full cost of their own healthcare with even middle class Medicare recipients paying more than at present.
  • Put Medicaid on a block-grant financial basis so that the federal government pays only a fixed amount to each state (increasing with inflation) rather than a fixed percentage of the expenses for each state. This will not only limit the federal cost but also give the states a much greater incentive to control their own Medicaid expenses.

The blunderbuss approach if nothing else gets the job done:

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  • Medicare prices for all. Note I did not say “Medicare for All” as is popular amongst the Democratic presidential candidates.  Medicare has a reasonable price control system which could be used for all of American healthcare.  All of the world’s other advanced economies have both universal healthcare coverage and price controls of some sort for all medical expenses.

Summary.  Healthcare costs in the U.S. are out of control and drastic action is needed to rein them in.  If moderate initial steps are not effective in getting the job done, then overall price controls, along the lines of what Medicare does already, will be necessary.  Americans, take heed of this urgent problem!

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2 thoughts on “Controlling Healthcare Costs. What Are the Options?

  1. Price controls would only further aggravate the Paradigm Paralysis of our nation’s healthcare industry. Furthermore, the Paradigm Paralysis exists in large part by the co-dependent connection between the payers and providers of Complex Healthcare (more often as multiples of the Medicare reimbursement system). Attempts to start regulatory price control by Congress have already begun to initiate vigorous lobbying efforts, as reported by the news media. It sould be interesting to witness the up-coming President/Congressional campaigns as they debate the theme of healthcare reform. Meaningful healthcare reforms with price controls would likely end our nation’s rural healthcare capability. To carve out that problem would likely including draconian, reform compromises and everybody loses in the process.

    • I understand that the healthcare industry will vigorously fight cost controls. But the cost of healthcare for both individuals and government is rising too fast and will bankrupt the nation if not strongly controlled.
      Columbus Nebraska is an example of a small town which is not devastated by the cost controls of Medicare and Medicaid.

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