Where Does All The Money Go?

Wednesday, August 13th 2008

AHRQ staffers have published a new piece in Health Affairs looking at who gets government health care dollars. The actual study is subscription only but the Health Affairs blog breaks down what Selden and Sing found. You should go read it. Mostly because it re-enforces the fact that the government is holding most of the cards, if they could act cohesively, when it comes to provider reimbursement.

Using the most recent data available in sufficient detail, economists Thomas Selden and Merrile Sing of the Agency for Healthcare Research and Quality (AHRQ) report that public outlays and tax expenditures constituted 56.1 percent of all health care spending in 2002.

Granted that figure includes tax subsidies. But 56% is still stunning. And that is 2002. The pace with which the government is increasing its piece of the health care expenditure pie is a really ignored story. That pace is alarming. No doubt today, in 2008, the percentage of health care spending made by the government is something more than 56% by the accounting used by Selden and Sing.

The large part of that government spending is Medicare. As MedPAC recently pointed out Medicare reimbursement made up nearly 1/4th of all personal health care spending in 2006. More today.

And, as long as Medicare reimbursement covers at least something nominally above cost, doctors are going to abandon Medicare en masse? Anecdotes and forward looking self reported physician surveys aside the real question is, abandon those Medicare patients and replace them with what? This is nearly a fourth of reimbursement controlled by a single payer. That is insane.

God bless the efforts of organized medicine in selling our politicians medicine’s side, because it is clear that on everything from P4P to the SGR the physicians aren’t the ones actually holding the strings on reimbursement issues.

In anycase, go read the Health Affairs piece, it has some other interesting comments about to whom government health care spending goes.