In health care policy, a pro-competition agenda is the answer

In a new collection of essays released by the Manhattan Institute, New York’s Next Health Care Revolution: How Employers Can Empower Patients and Consumers, American Enterprise Institute health economist Joseph Antos uses the New York State health care system to demonstrate how state-level reforms can empower patients, reduce costs, and produce better health outcomes.

New York State is an excellent case study because, despite world-class medical facilities, health care outcomes are mediocre at best, health care spending is out of control, and the state’s Medicaid program is one of the country’s most expensive.

In “Bringing Effective Competition to New York’s Health Care System” Antos points out that:

• The Institute of Medicine estimates that 30 percent of health spending is wasted or misused.
• Both how we finance health care and current regulation of the health sector are discouraging competition.
• Health care cost and quality information is typically unavailable to consumers.

As far as New York state:

• New York has the nation’s third-largest public retiree health plan, with $250 billion in unfunded liabilities at the state and municipal levels.
• Because these expenses are incurred on a pay-as-you-go basis, taxpayers must bear the full cost of past promises made to retirees.
• Annual costs for current employees are ramping up as well, with about $2 billion in expenditures for state employees in 2013.

Antos concludes that over the next decade, the federal government will spend a total of $14.6 trillion for major health programs (including Medicare, Medicaid, subsidies for insurance through the exchanges, and the Children’s Health Insurance Program), making health care the largest single category of spending in the budget. Left unchecked, federal health spending and interest on the debt is expected to consume every dollar of federal revenue by 2089.

Joseph Antos is the Wilson H. Taylor Scholar in Health Care and Retirement Policy at the American Enterprise Institute. He previously held senior positions at the Congressional Budget Office and the U.S. Department for Health and Human Services.

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