The federal government is making healthcare worse

Posted 11/18/21

Following a COVID vaccine mandate issued by the Biden administration, the Centers for Medicare & Medicaid Services (CMS) warned providers that they would lose their federal funding unless their …

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The federal government is making healthcare worse


Following a COVID vaccine mandate issued by the Biden administration, the Centers for Medicare & Medicaid Services (CMS) warned providers that they would lose their federal funding unless their employees were fully vaccinated by Jan. 4, 2022.

Federal funding through Medicare and Medicaid accounts for about 70% of both Powell Valley Healthcare’s and Cody Regional Health’s budgets.

This left them with little choice but to warn their employees their jobs may be at risk if they don’t receive the vaccine.

Dozens of people, most of them healthcare workers, organized a protest last week outside Cody Regional Health. Most weren’t against the vaccine, and none were protesting the hospitals’ decisions. Their objections were directed at the federal government.

The issue highlights the consequence of such a large and all-encompassing federal government. The more we depend on it for our needs, the more control it has over our lives.

Providers are now helping unvaccinated employees request religious and medical exemptions. Some healthcare workers do sincerely need such exemptions, but the federal government is, at least in some cases, forcing hospitals to help employees lie.

A strong argument — unconvincing to those who don’t trust the vaccine — can be made that a vaccinated healthcare workforce is keeping patients safe. That was the intention of the mandate. However, with rural hospitals already suffering staffing shortages, the mandate may exacerbate that problem. Despite any good intentions, the vaccine mandate may harm people’s health, especially in rural areas with small labor pools.

The intentions of government funding are always, at least on the surface, noble. The goal of Medicare and Medicaid programs is to ensure those who can’t afford healthcare can still receive it. Yet, as with all good intentions, actual results are another matter entirely.

Since the feds created the Medicare and Medicaid programs in the 1960s, healthcare has increasingly become less affordable for everyone. During the first five years after Medicare was created, reimbursements to providers grew by 72%, while enrollment grew by just 6%.

Today, the nation spends well over $3 trillion on healthcare, and it accounts for 40% of all federal mandatory funding. If total national healthcare spending would have grown at pre-Medicare rates, today we’d only be spending $220 billion.

The regulatory environment that accompanies that federal largesse adds to the ballooning cost of healthcare. Estimates of how much of total spending goes towards administrative costs vary, but in 2018 testimony before the U.S. Senate, Havard University professor of economics David Cutler put the figure at 15% to 30% of all healthcare spending.

In 2003, a study put the figure at about 24% of all 1999 healthcare spending. While it’s an older paper, it was one of the most extensive analyses of the question because it looked at a lot of administrative costs that aren’t factored into most studies. The authors of the paper published another study in 2017, which estimated that Americans spend a little over $1 trillion on these costs.

What would happen if hospitals didn’t receive large portions of their funding from the federal government? What if providers were spending a lot less time with all the paperwork involved with federal reimbursements?

There are entire fields of healthcare for which the federal government provides no funding. Since it’s elective, patients who seek cosmetic surgery usually have to pay for it out of their own pocket.

Economist Mark J. Perry of the American Enterprise Institute analyzed the costs of cosmetic medical procedures against those of hospital care. Between 1998 and 2018, inflation in the U.S. amounted to 54%.

During that same period, the nominal cost of 19 cosmetic procedures increased by a weighted average of 32%. In other words, the inflation-adjusted cost of these procedures fell over that time period. Hospital care costs, by comparison, rose by 202% — four times the rate of inflation.

Besides saving money on administrative costs, providers of cosmetic procedures must compete with each other to attract customers, which keeps costs down and quality up. Patients are paying directly for the services, so the pricing is highly transparent. They know how much they’re going to pay and if another doctor can perform the procedure for less.

This is not to say that PVHC or CRH aren’t providing the best care they can for the community. Considering the challenges they are forced to contend with, we are all quite fortunate to have the services we do. Many rural communities have severe gaps.

However, the more expensive healthcare becomes, the more the federal government is expected to pay for it. The more the federal government pays for anything, the more we pay for less — and the less control we have over decisions that impact our lives.

Unintended consequences are an inextricable part of government solutions. For every problem government solves, it creates two or three more. It’s best to leave it out of the picture as much as possible.