Editing 76-08-B3 (section)

=== Transcript ===
Last October, the Social Security Administration made an announcement that the new year would see a 19% increase in the hospital fees for Medicare patients. In November, Leonard Woodcock of the United Auto Workers wrote in the N.E.A. REPORTER, the publication of the National Education Association, that America needs a national health insurance plan. He said such a program would stop the "insane inflation of health care costs."

Strangely enough, the U.S. Public Health Service had already released a report in which it said: "It may well be that the federal government itself has contributed to cost increases by increasing demand but failing to provide adequate anti-inflation safeguards in its programs."

There has been increase in health care costs greater than the general rate of inflation. Since 1965, the cost of the average hospital stay has tripled as have total health care costs. On the average, we spend $547.00 per person for health care compared to about $200.00 in 1965. But during that same period, Medicare and Medicaid funding multiplied almost six times. Government sources account for 40% of personal health care spending. In 1965, it was only 20%.

Let me give you an example which might explain why the increase in public spending so far outstrips private costs. A few years ago, a young staff member of mine in Sacramento rushed his wife to the hospital for the birth of their first child. It was 15 minutes to midnight when they arrived. The lady at the admittance desk asked if they were on Medicaid. When told no, they were paying their own way, she asked the young wife if she thought she could wait there in the anteroom for 15 minutes. If so, they'd save $50.00 because midnight would be the beginning of a new day. To take the hospital room for those 15 minutes before midnight would be the equivalent of occupying the room an additional day.

They waited. But, had they been on Medicaid, the woman would have sent them right up because the government was paying. When someone else is paying, there's no incentive on the part of the patient to be thrifty. The average length of stay in the hospital for similar ailments is longer for Medicaid patients than for others by several days.

In one county in an Eastern state, the total Medicaid costs last year pro-rated out to $1700.00 for each person in the county -- not who received care -- but who was eligible for government-paid care.

It makes no sense at all to suggest that putting all of us in a compulsory government financed health care program would somehow lower costs. True, the bill wouldn't be as visible. It would be hidden in our taxes but, make no mistake about it, those taxes would go up by a considerable amount.

In health care as in everything else, the rule of supply and demand works. Government increased the demand, and the price went up.

This is Ronald Reagan.

Thanks for listening.
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