New AHA Ad Illustrates the Problem with Government Setting Healthcare Payments

The American Hospital Association, Federation of American Hospitals, National Association of Public Hospitals and Health Systems and several other lobbies for inpatient care providers have embarked on an extensive ad campaign to stem further payment cuts to hospitals, reports AHA News Today.

The print ad, entitled “Enough is Enough,” discusses some $155 billion in payment reductions it claims the hospital and related sectors have already had to endure.

The ad warns that continued funding cuts would lead to longer waits for care, shuttered emergency rooms and reductions in hospital staff, among other changes. Those constituents most impacted would include children, seniors and disabled Americans.


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The AHA does have a valid concern, in that Medicare and Medicaid payment reductions make much of the services unprofitable, and they must seek to make up the difference from other patients.  Or they must cut the more unprofitable services.  Or go out of business. 


But this ad campaign illustrates exactly the problem with centralized, government-led healthcare.  It sets up various constituencies that are dependent upon government policy and payment for their very existence, and then that constituency is compelled to lobby officials and seek favors to benefit their businesses.  And the government becomes the controller with all the power over peoples’ lives and livelihoods, able to dispense favors to those who are politically powerful. 


Taxpayers are the most dispersed interest group, and therefore least powerful for seeking their interests of controlling costs.  But when costs run out of control, government has only two ways to lower their costs – lower payments for each service, or reduce the amount of services through rationing.


The only alternative is the free market – where patients decide what services they are willing to pay for, and providers decide at what market price they are willing to provide them.