How the government reduces healthcare costs

It’s almost universally agreed by liberals and conservatives that the core problem with our healthcare system is its cost, which routinely outstrips inflation by a wide margin. So it’s only natural that the federal government, when faced with such unanimity, takes steps to reduce those costs.

But witnessing how the government does this provides it’s an apt demonstration for how government addresses such problems: by simply ordering the problem to go away, and calling it a “solution,” regardless of the costs imposed on everyone else.

To illustrate the effects of this approach, one need look no further than one’s local hospital. In my case, that’s Gifford Medical Center, an incredibly well-run, efficient facility that boasts great outcomes and high ratings by its stakeholders. In its annual report for 2010, Gifford provides a summary of its financial situation using layman’s language, so it’s easy to interpret, even for a numerically-challenged person like me.

The most significant numbers for present purposes follows:

Because we did not receive full payment for amount billed:

From those unable to pay:          $701,280
From Medicare & Medicaid:       $27,233,694
From other contracted payors: $9,442,835

To put this into perspective, the amount that Medicare and Medicaid short-changed Gifford equals more than 28 percent of the facility’s total revenues.

This is how Medicare and Medicaid bend down the cost-curve of healthcare for taxpayers: they simply don’t pay their full bills. So who pays the balance? The rest of us, of course. So if you have private insurance, not only do you pay federal taxes to cover Medicare and Medicaid, but your premiums continue to rise to cover the healthcare promised by the federal government, but not paid for by the federal government.

They get us coming and going, but because the programs themselves are underpaying, they can show us that they are reducing costs.

This is very much like saying I can reduce my grocery bill by shoplifting; my costs go down, and I can show you that on my balance sheet. But everyone else pays for my clever strategy of cost-containment.

I’m not suggesting that the federal programs should pay full-freight; I’m suggesting that this is the type of obfuscation and double-speak we can expect as Vermont moves to single-payer, and as the federal government’s involvement in healthcare continues to become more pervasive.


About Jamal Kheiry

Public relations consultant with experience in domestic and international journalism and public relations. At it since 1995.
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