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Health care and cross-subsidies

Why is costly health care such a kettle of fish and difficult to reel in? Cross-subsidies. Let’s explain.

Politicians want to subsidize health care for the poor, chronically sick, and those who have the means but opt not to pay. These are laudable governmental goals. Congressional planning causes health insurance and cash payers to egregiously pay the tab.

These goals can be better achieved in a free-market system by raising general taxes. However, lawgivers dislike being regarded as a tax-and-spend type, so they conceal transfers in cross-subsidies. Medicaid/Medicare patients have no idea what the actual costs are. The system lacks cost consistency/containment. This arrangement makes it difficult for patients to determine costs, seek competitive providers and gain access.

Politicos require emergency rooms to treat everyone regardless of the ability to pay. Many pay nothing. Hospitals then overcharge the other payers. Medicare/Medicaid does not pay the full amount. Who pays for these underpayments? Private insurance and cash payers. This mechanism creates cost inflation, lacks transparency, stifles choice and immensely vexes access. Cost cutting innovation is stifled. Confusion reigns.

Services ought to be paid evenhandedly across the spectrum with honest, definable congressional budgets. The system is nonsensical, yet fixable.

Gerald Weitz

Viola, Idaho


 

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