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Dear Dr. Kildare,
I've read more than once that government (federal, state, and local) accounts for a little less than half of all health care spending in the United States ( 46 percent) while private spending accounts for a little more than half (54 percent). I was therefore somewhat surprised to see Sen. Tom Coburn, R.-Okla., a leading opponent of health reform, claimthat the government now controls fully 60 percent of all health care spending in the U.S.
"Defenders of the Reid bill say we need 'reform' to keep insurance companies honest," Coburn says. "A better question would be: 'Who's going to keep the government honest?' … Government is already the majority-shareholder in our health care system."
How did government's share of health spending jump from 46 percent to 60 percent in the blink of an eye?
Dear Green-Eyeshade Guy,
Didn't you hear? Bernie Sanders staged a coup d'état at Kaiser Permanente!
Coburn's source is a Congressional Research Service memo that, at Coburn's request, shifted the cost of various tax subsidies from the "private expenditures" column to the "public expenditures" column. The most significant of these subsidies is the tax exclusion for private health insurance premiums. This, CRS calculates, effectively causes the federal government to pay 15 percent of the bill. When you factor in all tax expenditures, then private spending drops from $1.2 trillion to $895 billion, while public spending rises from $1 trillion to $1.3 trillion. According to this reasoning, government (federal, state, and local) does indeed account for 60 percent of all health care spending.
I don't have any problem with this calculation, because I'm a liberal; big government doesn't scare me. But Coburn (like me, a medical doctor) is a small-government conservative, and for such people the very concept of a "tax subsidy" or "tax expenditure" is supposed to be anathema. Here is how the late Murray Rothbard, libertarian disciple of Ludwig von Mises, once explained it:
[I]s it really a "subsidy" to be allowed to keep more of your own money? Only if we agree with the curious implicit assumption … that the government, not us, really owns our earnings and our property, and that therefore being allowed keep some of them is an arbitrary indulgence on its part.
I submit, to the contrary, that there is a big and crucial difference between the government's taxing Peter to pay Paul, which is a "subsidy" to Paul, and the government's allowing Paul to keep more of his own funds. That can only be called a "subsidy" on the grotesque assumption that the government really owns all of our property to begin with.
I have never bought into this line of reasoning, because I've always thought there's a very big difference between saying everyone ought to pay his fair share and saying everybody's money belongs to the government by default. But then I don't go around complaining, as Coburn does, that the health reform bill will cost $1.2 billion per page and $6.8 million per word (a calculation that, incidentally, overstates health reform's cost by more than 100 percent). If the weeping wife of a brain injury victim asked me, at a town hall meeting on health reform, what she was supposed to do after a nursing home kicked her husband out while he still had a feeding tube down his throat, I wouldn't say, as Coburn did, "The idea that the government is a solution to our problems is an inaccurate, a very inaccurate statement." An antitax wingnut like Coburn is supposed to believe that every time Uncle Sam removes his hand from his pocket it's a triumph for personal freedom—not an instance of government "spending."
Bottom line: I can go around saying the government accounts for 60 percent of all health spending if I want to. But for Coburn to say so betrays much of what he purports to stand for.
James Kildare, M.D.