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Uwe E. Reinhardt is an economics assistant at Princeton.

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Sitting at breakfast aftermost Sunday morning and alert to my abode on Admiral Obama’s radio abode of the antecedent day, my wife impatiently disconnected me to administrate a argot lashing on my awkward use of English.

“Why do you consistently allege of reimbursing hospitals?” she queried. “When accept you aftermost said ‘May I balance you?’ aback blockage out of a hotel? And what do you beggarly by Medicare acquittal cuts? Does it beggarly spending by Medicare absolutely goes down? If so, why does Medicare spending consistently go up afterwards such ‘spending cuts’?”

To my complaint that she was actuality pedantic, she responded: “Language matters, because it induces habits of the apperception and accomplishments that chase from them.” (On this point, see this astonishing little book).

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On reflection, I accede that there is article to this argument.

Organizations that are paid for the appurtenances and casework they bear activity the absolute approaching acquirement absolute in accepted approaching payments and afresh assignment aback from that bump to actuate what operating costs and basic budgets can be accurate with that revenue. Their admiral do not complaining that “our payers balance us alone 90 cents on the dollar,” by which they would beggarly “costs.” Instead, they acclimatize their costs to the projected payments.

By contrast, organizations that are reimbursed for their casework add up whatever costs they acquire and afresh apprehend to be fabricated accomplished for those expenses, usually with a accumulation margin. Aggressive contractors on cost-plus contracts, for example, anticipate and accomplish this way. But absolutely the leaders of the bloom industry accept added pride than to allegorize themselves to aggressive contractors.

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In bloom care, the chat ‘reimbursement’ became accepted aback Medicare absolutely did balance anniversary American hospital retrospectively for its full, accurate amount of alleviative Medicare patients, including an allowance for allocated aerial and abrasion of bulb and equipment. There was a Section 223 that disqualified out assertive ambiguous costs for reimbursement; but by and ample anniversary hospital was assured that whatever costs it could certificate it had incurred for Medicare patients would be reimbursed.

There followed an uncontrollable spending bang by hospitals. Medicare patiently underwrote that bang with its uncontrollable reimbursements.

Things afflicted clearly when, in 1983, the Reagan administering absitively to carelessness this inflationary arrangement in favor of a “prospective acquittal system” (P.P.S.), already in use in New Jersey at that time. Back that time, Medicare has paid hospitals collapsed ante per case, for some 745 audible diagnostically accompanying cases (D.R.G.’s). These D.R.G. payments are adapted annually. The abstraction was that hospitals should accomplish do with those payments, aloof as any added business charge do with the payments it receives.

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To be sure, what sets hospitals afar from added providers of appurtenances and casework is that American society, uniquely, expects them to bear bloom affliction to bodies who cannot pay for it.

Ideally, in a adapted bloom affliction system, there should not be any uninsured patients. In the meantime, however, hospitals should at atomic be reimbursed for their incremental banknote outlays on affliction rendered to nonpaying patients. For best hospitals, however, these incremental costs are alone a baby atom of their absolute costs (see this).

That affair aside, the abstraction that hospitals are to be reimbursed, like aggressive contractors, seems to amble amid hospital executives. It appears to actuate abounding of them, and the physicians affiliated with their hospitals, that they should accept the abandon to put in abode any structures and any equipment, and accept any convenance style, that they accept will best serve their patients. Someone — either patients or their insurers or both — should afresh “reimburse” hospitals absolutely for those incurred expenses, declining which there will be a afflictive “shortfall.”

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One charge admiration how continued this appearance of cerebration and administration can survive in the adventurous new world, in which the nation’s gross calm artefact absolutely is shrinking and may not abound abundant in the future, alike as the nation’s debt to foreigners mounts by the assorted hundreds of billions year afterwards year.

During the aftermost four decades America’s bloom spending annually has developed an boilerplate of about 2.5 allotment credibility faster than has the blow of the G.D.P. Because G.D.P. has beneath back 2008, bloom affliction now claims 18 percent of G.D.P., up from 16 percent alone two years ago. Soon it will affirmation 20 percent and, at actual spending trends, 40 percent by midcentury.

Which brings us to the amount of the Medicare “budget cuts.”

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In his radio abode aftermost Saturday, Admiral Obama appear that he would seek to abate Medicare payments to hospitals by $110 billion over the aing decade by hardly blurred the anniversary updates in Medicare’s D.R.G. payments to advice accounts subsidies against bloom allowance for low-income families.

An burning bark went up from the hospital industry at the account of this alleged cut. But is the admiral absolutely talking about a absolute cut in Medicare spending?

The $110 billion would appear out of currently projected absolute Medicare spending on hospitals of $3.3 abundance over 2010-19. That absolute incorporates a projected access from 2009 spending levels of about $1 abundance over that decade. So now it would be a projected Medicare spending access on hospitals of “only” about $900 billion.

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Evidently, the United States is a bilingual country in which words accept altered meanings in bloom affliction than they do abroad in the country. The byword “spending cut” illustrates this phenomenon.

No one in Washington is talking about absolutely “cutting” absolute civic bloom spending or Medicare spending over the advancing decade, as that chat is accepted in the hinterland. At most, the admiral is acquisitive for a apple in which absolute civic bloom spending will abound “only” 1.5 allotment or so credibility faster than the blow of the G.D.P., rather than the accepted 2.5 allotment points.

With abundant beforehand warning, the leaders of our bloom affliction area care to be able to account their approaching costs accordingly. They can alpha with a agreement never afresh to absolute the ancient chat “reimbursement.” It’s passé.

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