Cost
Posted on July 23, 2009
Cost
The dictionary definition of cost is “an outlay or expenditure of money, time, labor, trouble.”
I am fascinated by the varied definitions of cost as it applies to the ongoing health care debate.
The President continues to say that we need to do health care reform to control costs. Republicans say that the President’s bill costs too much. Consumers think their personal costs for health care are too high. Insurance companies agree that health care costs are too high. Small business owners are worried about costs, as are big business CFOs. Labor groups think that costs are too high, doctors think that costs are too high, nurses think that costs are too high. Everybody thinks that hosts are too high.
But what does everybody mean when they say costs?
When Republicans say costs, they mean the cost to the government. They say that we can’t afford to add a new entitlement onto the federal budget that is already badly out of whack. They also say that we should not pay for a new entitlement by sharply raising taxes on job creation, especially in a slowing economy.
When the President talks about cost, he is talking about the general state of health care spending; both government and non-government spending. He thinks that the government can get control of health care spending by either providing a low-cost government alternative that will drive prices down in the private sector, or by simply having the government take over all of health care spending, and then having the government simply pay less to providers.
When consumers talk about costs, they are talking about the rising cost of health care premiums (if they have health insurance) or the high costs of getting health care (without the insurance) if they don’t have insurance. What they don’t realize is that 3rd party insurance tends to rapidly raise costs, but they don’t really care about that. Their concerns are about their money out of their pocket.
Health insurance companies are concerned about the high costs that they have to pay to doctors and hospitals. They care mostly about their bottom line, so they do their best not to pay out to their customers, using teams of lawyers to find loopholes so they can screw them out of their reimbursements.
Small business owners are worried about costs in two ways. They can’t afford health care premiums, so they want more competition in the marketplace and they want to form alliances with other small businesses so they can get a better bargain from the insurance companies. They are also worried about the high cost of government, and they are deeply worried about the higher taxes that come with new government mandates.
Big business owners are worried about how expensive health care premiums are to their profits. They think that they will improve their competitiveness if they move the costs from their balance sheet to the balance sheet of government.
Doctors are worried about the high costs of doing their business, especially the high costs of paying their malpractice insurance, which they need in the likely event they get sued by greedy lawyers.
Costs will continue to increase as long as people perceive that they can somebody else to pay for it. As long as the motive to suppress price inflation is itself suppressed, we will never be able to contain costs.