Bad Government Raises Health Care Costs

j0427736President Obama and his allies have been criticizing insurance companies, hospitals, doctors, and others for raising health care costs by being greedy.

If doctors, hospitals, and insurance companies were as greedy as some politicians, nobody would be able to afford health care.

If you don’t know how the system works, then any criticism might sound smart. When you know how the system works, Obama and his allies show themselves to be disinformation propagandists.

The main cause of rising health care costs is bad and stupid government. By “government”, I mean the politicians, the bureaucrats, the laws, regulations, policy rulings, and court rulings that influence health care systems, resources, and costs.

Imagine a balloon filled with air. If you squeeze part of the balloon, don’t the other parts expand? If you squeeze the balloon too much, doesn’t it break? Of course, it does. But, the place where it expands and breaks is not the place where the pressure was applied.

The same principle happens when government applies pressure to one area of the health care system. Other parts of the system are reshaped.

The biggest influence in the nation’s health care system is government and the laws, regulations, policy rulings, and court decisions that government makes. The other parts of the health care system adjust and change to avoid problems with the government.

Here is how the balloon principle works in the health care system.

Medicaid is a joint federal and state run health care system for the poor. Each state pays a different reduced rate to doctors for seeing poor patients who use Medicaid. The doctors who do treat Medicaid patients are forced to increase charges to other patients who have insurance or other means to pay. That raises health care costs for many.

In some states, the Medicaid system does not even pay the doctor enough to cover the cost of treating the patient. When that happens, fewer and fewer doctors are willing to contract to treat Medicaid patients. This is especially true of specialists. When the Medicaid patients can’t find primary care with doctors, they go to hospital emergency rooms.

Hospital emergency rooms will treat the Medicaid patients. But, the cost of treatment for primary care matters at a hospital emergency room is much higher than the cost of primary care at a doctor or clinic’s office. Medicaid won’t pay the hospital the fair market value for the emergency room treatment. So, hospitals must increase charges to patients who have insurance or other means to pay. That increases health care costs for many.

When doctors and hospitals increase charges to patients who have insurance, insurance companies must pay more. Do you see how the balloon effect increases charges to insured patients and insurance companies?

Government officials believe that they are doing a great job of getting doctors and hospitals to work for less than fair market value. But, the bad and stupid government policy is raising health care costs for millions of Americans and putting hospital emergency room personnel under constant stress. How healthy is that?

So, the Medicaid system harms many poor people, all taxpayers, and many patients and insurance companies. That’s bad and stupid government at work!

Medicare pays medical service providers at a lower than fair market value which is not as steep as the Medicaid system. So, the balloon effect exists in the Medicare system, too. But, it is less pronounced.

The federal government taxes doctors, accountants, and lawyers at the highest rate tax brackets. How stupid is it for a politician to complain about high health care costs but vote to tax to infinity the people who deliver health care? It is very stupid and very hypocritical! Doctors use accountants to help them keep their records straight and pay their taxes in a timely manner. Lawyers help doctors to understand and follow the law and avoid lawsuits or defend against lawsuits. So, taxing doctors, accountants, and lawyers at the highest rates possible will increase health care costs for everyone. The doctors, accountants, and lawyers will raise their rates to cover the higher taxes. The health care customers will have to pay higher bills because of this bad and stupid government tax policy.

These are just a few examples of how bad and stupid government causes health care costs to increase. Politicians and bureaucrats want to blame private enterprise. But, it is government enterprise that causes the rise in health care costs.

In my first year of college, I attended a debate in which my science professor argued against the establishment of Medicare. He said that it would lead to senior citizens losing their privacy because of all the records passing through hands that could not always be trusted. He said that the federal bureaucracy of Medicare would force doctors, hospitals, and labs to hire more personnel just to communicate with the Medicare bureaucracy and that would increase costs and charges to patients.

I believe that the professor was right.

Woodrow Wilcox is the senior medical bill problem solver at Senior Care Insurance Services in Merrillville, Indiana. That is the largest senior citizen oriented insurance agency in the Midwest. For over six years, Woodrow Wilcox has helped senior citizens with medical bill problems with Medicare and VA clinics. He has saved senior citizens over $600,000 in wrongful charges. For more health care articles by Wilcox, visit or

© 2009 Woodrow Wilcox.  Re-published here with the permission of the author.

Comments are closed.