Health care costs too much. Are we agreed? Great. Perhaps now we can discuss the more interesting question of what policymakers should do about the problem.

There are dozens of different proposals to reform all or significant chunks of the healthcare system. Many are federal in scope, involving major changes in Medicare, Medicaid, and regulated private plans. Others are state-level reforms of insurance, licensure, and the operation of the market for medical services.

North Carolina lawmakers are currently considering both sets of alternatives. As usual, there is a proposal to accept federal Medicaid dollars under the Affordable Care Act to expand subsidies to hundreds of thousands of North Carolinians. Gov. Roy Cooper included Medicaid expansion in his budget. Some Republican lawmakers agree, although probably not enough to prevail.

I think a more productive area for bipartisan cooperation would be on the cost side of the equation. After all, Medicaid expansion is largely about reducing the price of health care, not the cost.

If Medicaid expansion forces taxpayers to pick up the tab for a medical service that was either previously financed some other way or not consumed in the first place, there is no reduction in the cost of care. What really happens is that the price largely or fully disappears. The cost of care gets hidden in the taxes people directly or indirectly pay to cover the Medicaid bill.

Sometimes expansion advocates argue that Medicaid expansion would truly reduce the cost of medical care by diverting people from emergency rooms or encouraging cost-saving preventive care. The first claim is incorrect. Expansion does not consistently reduce ER utilization, and may even boost it. The second claim is wildly exaggerated. Most preventive care does not save money in the long run, although patients may derive other benefits from it.

I think health care costs too much — that is, the full cost exceeds the real benefit in health outcomes — because of poorly aligned incentives, insufficient information, and insufficient competition. Consumers should be spending (tax-free) cash for routine expenses, rather than filing low-dollar insurance claims, and feel empowered to buy that routine care in the form of monthly fees and other alternative arrangements rather than just in payments per service rendered.

For hospitalizations, surgeries, ongoing therapy for chronic diseases, and other high-dollar expenses that represent a disproportionate share of total health spending — the costliest five percent of patients in America account for about half of total annual expenditures — we need a more transparent and coherent system of upfront prices coupled with more robust competition.

The North Carolina General Assembly could make significant headway on the competition front this year. For example, the bipartisan SAVE Act (House Bill 185 and Senate Bill 143) would expand the scope of services that advanced-practice nurses can perform in our state without direct supervision by physicians, which can be unnecessary and adds tremendously to the cost of delivering care.

Lawmakers could also pare back the regulatory thicket of North Carolina’s certificate-of-need law, which forces providers to get permission from the state to open new facilities or offer new services in competition with existing hospitals or physician practices.

Finally, lawmakers should not attempt to obstruct State Treasurer Dale Folwell’s push for more transparent and affordable pricing of the services that teachers and other public employees purchase from North Carolina hospitals through the state health plan.

About half of all medical bills are already “paid for” by government programs rather than by households or private insurers. Of course, patients and taxpayers are really paying those bills, but not in a way that effectively pairs the perceived value of the service with the cost.

Even as we may disagree about how expansive these government financing systems should be, surely we can agree that finding ways to deliver high-quality services at a lower cost is in everyone’s interest. Shifting the cost from one pocket to another doesn’t make it go away. We need more innovation, more competition, and more information. Smart state policies can help.

John Hood is chairman of the John Locke Foundation and appears on “NC SPIN,”which airs Fridays at 7:30 p.m. and Sundays at 12:30 p.m. on UNC-TV.

(2) comments

John H Hamblen

The only way Health Care cost will ever be brought under control is a Single Payer Health Care system. The insurance company only add cost to the system no saving what so ever. We are the only industrialized country paying 30 to 35 % of our medical cost in Admistrative fees. We also pay 50% to 100% for prescriptions than other countrys.

Kent Misegades

John is a smart guy, but looking to the government for help is like asking the Devil for a light. Before Obamacare my monthly medical insurance premium was $270 per month. Afterwards it was $960. I found a solution exempt from Obamacare and pay far less now. We were promised by the Obama regime a reduction of $2500 annually, remember? Reagan said it right - the government is not a solution to a problem, the government is the problem. Leave the government out of the medical industry and free markets will provide a multitude of lower-cost options.

Welcome to the discussion.

Keep it Clean. Please avoid obscene, vulgar, lewd, racist or sexually-oriented language.
Don't Threaten. Threats of harming another person will not be tolerated.
Be Truthful. Don't knowingly lie about anyone or anything.
Be Nice. No racism, sexism or any sort of -ism that is degrading to another person.
Be Proactive. Use the 'Report' link on each comment to let us know of abusive posts.
Comments that violate any of the rules above are subject to removal by staff.

Thank you for Reading!

Please purchase a subscription to continue reading. Subscribe today and support local community journalism.

Digital Only Subscriptions

Thank you for visiting and supporting award-winning community journalism. Not everyone wants to have a newspaper delivered to their home, but they want to keep up with the latest news in Moore County. Click here to gain digital-only access and support local journalism.

Starting at
$1.07 for 1 day

Connect Print Subscription to Digital Access

Thank you for visiting Your Pilot subscription entitles you to unlimited digital access. Simply log in. From the home page, click on Subscription Services. Then click on "Pilot All Access Print Subscribers." It should show your phone number . If so, click "Sign Up." After a few seconds, it will take you back to the home page. Log out, then log back in. You're set! For any problems, call our customer service number at 910-693-2487 or 693-2488.

Free access for current print subscribers