Eating up America: Who can fix it?
Yesterday, Businessweek published an insightful piece by Chris Farley. He points out that while the respective tax plans of the two presidential candidates have dominated policy debates, it's actually rapidly rising medical costs that are increasingly dominating the economy.
Farley writes: "When it comes to fiscal policy, taxes are a subsidiary issue. The crucial long-term fiscal problem facing the U.S. and its aging population is health-care spending; what happens to taxes will largely be shaped by changes in the health insurance market." He reports that total health-care spending in the U.S. by both public and private sources is expected to expand from 16% of GDP to a staggering 40% of GDP in 2040.
Which of the two presidential candidates is most likely to implement a plan that effectively reigns in these costs and ensures high-quality coverage for all Americans?
I'm sorry... you're asking us? I mean... what is the point of this post? Bring us a thesis. Tell us that Obama's plan is the answer and why. Or, more provacatively, tell us that it isn't and why.
Don't reference a BusinessWeek article by a dead comedian and then ask us to choose between McCain and Obama.
Heck, don't even ask me to believe that healthscare spending is going to account for 40% of GDP. I mean... seriously, is GDP never going to grow again or something?
August 20, 2008 10:12 AM | Reply | Permalink
I've mostly read about the candidates' thoughts on coverage, not costs. Do you have insights into their thoughts on costs?
August 20, 2008 11:13 AM | Reply | Permalink
I know I seem like I'm being a jerk, Shonu. But the question is... do you have any insights into how the candidates will deal with costs? It's your job to provoke discussion.
Tell me why we should even be discussing costs at this point. Seems like coverage is the relevant issue. If you disagree, by all means, say why.
August 20, 2008 2:55 PM | Reply | Permalink
The author of the article is Chris Farrell, not Chris Farley.
August 20, 2008 11:44 AM | Reply | Permalink
Are you Molly Shannon?
August 20, 2008 2:56 PM | Reply | Permalink
Providing coverage to more Americans, and providing higher quality coverage are both ways to increase costs.
Look at the Canadian system. They keep cost down by restricting capacity below demand and shipping patients to the US. The Jepp kids are but one example.
August 20, 2008 3:28 PM | Reply | Permalink
Americans, it seems, will (make-it-up) pay $700/month for health insurance and gripe about it but if offered a deal that raised their income tax by $200/month, and did away with having to pay out the $700 for health insurance, they'd opt for paying the $700.
The very mention of higher taxes, probable if we had a single-payer system, evokes such attacks of apoplexy in the electorate that I suspect we'll just devolve into 40 percent of the GDP and never blink an eye.
One encouraging note, hospitals in my southern Calif. area are advertising like crazy for customers - which is really rather ghoulish if you think about it - but it might indicate hospitals will be forced to reduce fees due to lack of business?
August 20, 2008 3:48 PM | Reply | Permalink
The scary-sounding "40% of GDP for healthcare" line needs to be examined a bit more critically than I see anybody doing.
First, GDP is the sum total of Americans' incomes, as well as the sum total of Americans' spending. It's just a matter of which side of the ledger you add up. The final number is the same either way. So, what's wrong with 40% of Americans' incomes deriving from providing health care? What would be better? Coal mining? Writing software? Or what?
Second, suppose that a few years hence the average American is indeed spending 40% of his income on "healthcare". So 60% of his income goes to buying everything else: housing, food, education, entertainment, electronic geegaws, the works. Is it guaranteed that he will be able to afford fewer of those things, then, than he does today?
Healthcare is not the same as health, of course, but to the extent that Americans have a choice between buying "health" and buying anything else, why would it be such a disaster if they choose to forego, say, more flying cars in favor of more hip replacements a few decades from now?
-- TP
August 20, 2008 4:42 PM | Reply | Permalink
Healthcare is not the same as health . . . .
And even were it.
Assuming that expenditures produce happiness (why else spend?), it seems unlikely that such a high rate of growth in healthcare costs -- given that there would be a much lower growth rate in almost all other expenditures -- could be justified as generating a corresponding growth in happiness.
August 20, 2008 8:17 PM | Reply | Permalink
Oh, I don't know about that. Of the postulated 40% of GDP spent on healthcare, some fraction would be disbursed by Medicare. Of that fraction you could fairly say that the people paying the taxes would be unhappy about their forced choice of spending. But:
1) The government is, in the long run, us. Twenty or thirty years from now, working and taxpaying Americans will either be paying their aged parents' healthcare costs directly, if they choose to not tax themselves enough to fund Medicare. So we get back to:
2) The alleged problem is not the Medicare budget but healthcare spending overall.
Now, either we believe that people act so as to maximize their own utility, or we don't. If we do, then the projections say that Americans will be choosing to spend 40% of their incomes on "healthcare" at some point in the future.
Sure, they would presumably prefer to spend a smaller percentage on healthcare. But, name any good or service, and people would prefer that it cost less. Americans will be spending 40% of their incomes on something twenty or thirty years from now. Would America be better off if Americans were devoting 40% of their incomes on household robots rather than healthcare at that time?
-- TP
August 20, 2008 10:41 PM | Reply | Permalink
Clearly, Americans could so chose, but there's no evidence that they would so chose.
Indeed, we have no idea of whether or not there exists some proportion of GDP which, if devoted to healthcare costs, would generate a level of interclass and/or intergenerational conflict sufficient to alter the current agreement(s) concerning who receives what quality of healthcare (with its associated costs).
August 21, 2008 1:00 AM | Reply | Permalink
This is an excellent point. We focus entirely on the uninsured -- implying that all we have to do is get them insured -- problem solved. No, problem not solved. Uninsured are only one part of the problem and rising costs are a huge part of what needs to be reformed. McCain has made a few cursory stabs at this but has no plan. Obama hasn't even mentioned it as far as I know. Leadership on healthcare is pathetic from both parties at the moment, and i mean pathetic.
September 2, 2008 10:22 PM | Reply | Permalink