The costs of more government interference in health care

In his first address to Congress, President Biden spent much of his time pushing lawmakers to enact his jobs and family plans. Given the combined $4 trillion price tag, it is no wonder that these proposals have garnered the bulk of the public’s attention. Yet, two other policy areas mentioned recently by the president could impose steep personal costs on American families. 

Specifically, the president’s call to limit prescription drug costs through government price controls and to expand government-run health care through a new public option or Medicare expansion threaten to both increase costs for many Americans and deny all Americans greater access to life-saving medicines and higher quality care.

Democrats in Congress have proposed a bill, H.R. 3, that would impose broad-reaching government price controls on prescription drugs. The non-partisan Congressional Budget Office (CBO) confirms that the proposal would reduce drug prices under Medicare, but at a cost. For example, as a result of the price controls, drug makers will have less money to invest in new research. The CBO concludes that “under the bill, approximately 8 fewer drugs would be introduced to the U.S. market over the 2020-2029 period, and about 30 fewer drugs over the subsequent decade.” Those 30 drugs represent approximately 10 percent of expected new drugs that would otherwise come to market. We have no way of knowing which diseases we will be unable to cure or treat because price controls imposed today will result in less research tomorrow. Other research indicates that the price controls could result in 700,000 Americans losing their jobs.

It is a similar story when it comes to proposals to lower insurance costs through the creation of a public option or by expanding Medicare coverage. Proponents claim they can offer Americans cheaper insurance options with better coverage. But the truth is that government programs like Medicare and Medicaid control costs by limiting what is paid to doctors and hospitals.  

Here, the CBO found that the government, through Medicare, pays significantly less for the same physician services and hospital admissions than private insurance pays. For example, for a hospital admission that costs on average $21,400 under private insurance, Medicare pays only on average $11,400. Hospitals and doctors make up for the government’s underpayment by charging private insurance more for the same services. If you expand government-run health care to more people, everyone else – including employers and employees who get their insurance from their employer – ends up paying more.

The same holds true for a low-cost “public option” health insurance, which the CBO says would lead to higher premiums for those currently insured and fewer coverage options for millions of families.

Instead of taking millions off the private coverage they value and depend on, we should focus on bolstering the competitive insurance markets that continue to meet the country’s urgent health needs. Since the earliest days of the pandemic, businesses of all sizes have answered the call in response to COVID-19. From developing masks and other personal protective equipment and supporting frontline health care workers to rapidly creating lifesaving vaccines, employers and the private-sector have mobilized in unprecedented ways to guard our public health and speed our recovery from the pandemic.

A cornerstone of this private-sector response has been the continuous support and financial protection from employer-sponsored insurance. For decades, our private employer-sponsored insurance market has been a driving force for medical ingenuity and innovation, providing comprehensive health benefits and financial protections for more than 180 million Americans. Employers were the first to embrace the transition to a value-based approach to care that lowers costs and increases quality. Additionally, by quickly making virtual and tele-health services available, employers ensured that employees could have greater access to care and protection against out-of-pocket costs to make treatments and medicines more affordable and accessible.

Our national response to this pandemic and any other public health crisis is dependent on the strength of our health care system. While COVID-19 has tested all of us, it has also reinforced the resiliency of the private sector and the value it provides to millions of Americans. Restricting or eliminating private sector innovation will leave us far more exposed to emerging threats.

There are common-sense solutions on the table that can achieve the goals that we all believe are essential. Destroying the most highly valued source of coverage and innovative therapeutics is the wrong path for our country.

Neil Bradley is executive vice president and chief policy officer at the U.S. Chamber of Commerce.