President Obama holds Medicare up as an example for the private sector. Why? Because between 1997 and 2006, Medicare's health spending per enrollee grew 4.6% annually while that of private plans grew 7.3%. But Medicare hasn't controlled costs by discovering some wonder drug to deliver new efficiencies that the private sector doesn't have. Rather, Medicare has cut costs by slashing payments to providers. The only reason providers haven't been bled out of existence is because they have offset these cuts by raising prices charged to private insurance plans.