Cap hospital spending? No, free consumers instead
January 27. 2013 4:57PM
If your complete lack of exercise places you in the hospital once a year, you will see that the cost of that visit rises rapidly from one year to the next. Some people say that is cause for government action. No one, though, is calling for government price controls on gym memberships. Why is that?
According to the New Hampshire Center for Policy Studies, total health care spending in the state rose by an average of 6.9 percent from 2000 to 2010, while spending on hospital care rose by 8.8 percent. The remedy it proposed last week to legislators: cap the amount of money hospitals can spend.
That is the worst health care policy idea to come out of this state since Maggiecare, Maggie Hassan's 2010 proposal to create a state commission that would set prices for health care services.
According to the International Health, Racquet & Sportsclub Association, the cost of a health club membership rose by .4 percent from 2008 to 2011. This tiny cost increase occurred during a health club expansion that saw the number of people joining health clubs hit a record high of 59 million.
If hospital expansion is the reason why health care costs are rising so fast, why isn't health club expansion leading to a similar increase in the cost of health club memberships? The answer is obvious. Most people pay directly for their health club memberships, while most people pay a tiny fraction of the cost of their hospital visits, with third parties paying the bulk of the costs.
The solution to reducing health care costs is not to have the state set price controls. It is to give the people more direct control over their health care spending, freeing the power of competition to do what it does best: improve quality while lowering prices.