Robert Pear’s New York Times article about Hillary Clinton’s and Barack Obama’s health care plans has an alarming statistic. Medicare and Medicaid, our two government-funded health programs, cost our country $627 billion last year – or 23% of all federal spending. Many people like to criticize the Iraq War for its cost – proclaiming that it could bankrupt our nation. Over the past 3 years, defense spending (that includes everything….not just Iraq) has accounted for about 4% of the U.S. Economy…the same percentage enjoyed during the “peace dividend” in the early 90’s after the fall of the Soviet Empire — a historic low.
If anything is going to bankrupt us, it’s the rising costs of health care. According to the Congressional Budget Office, with no change in law or coverage policies, in 10 years costs will double, and Medicare and Medicaid will make up 30% of our annual budget.
Not only is this unsustainable (we’ll be Greece), the notion of covering additional people under these programs…those not currently covered under either program’s mission, presents a fiscal impossibility.
I could only draw one conclusion from these facts. We must rein in the cost of administering health care in this country BEFORE we do anything else. If we could create a market for health care, we could reduce costs through simplified billing and collections, and price transparency. More people would be able to afford preventative care and wouldn’t need Medicaid. www.doctorpricing.com.
Heck, maybe if we pulled 30-40% of current costs out of the process through a well-oiled free market system, everyone in this country could be insured….and we could reduce government spending and taxation. Maybe…
Expanding goverment medical coverage to cover more people without addressing the soaring oresent costs of administration will create a budgetary black hole. Our country will collapse in on itself.
Don’t confuse GDP with federal spending.
Not a critique of laissezfairehealthcare.com, but I find it a little off that military expenditures are regularly measured in terms of GDP rather than govt spending. GDP is great for *comparison* to other nations, since we’re fortunate to have an economy that extends beyond merely protecting ourselves from King George waltzing in and taking our houses. But we play a different role in the world than any other nation. Percentage of government spending would be a more concrete measure for taxpayers – most of whom are smart enough to know that it needs to stay high.
Military spending by its very nature comes only from the government, while healthcare spending is incurred by both the govt (taxpayers) and taxpayers an individuals in the market.
Thanks for the observation. I didn’t confuse the two, just didn’t have stats on both with the same methodology. Perhaps its a misleading comparison. And yes, there’s lots of health care spending where the government doesn’t play intermediary. Although the number from the NY Times was Medicare and Medicaid spending… I’ve seen other numbers out there that speak to individual health care spending — we’re the highest in the world with double digit percentages of our income going towards health care-related expenses. Some of this is a function of being a wealthy nation…the idea that overspending – charging that HMO for the CT scan when the doctor doesn’t think it’s necessary – is associated with better outcomes. Much of it, I think at least, has to do with the fact that stuff is simply too expensive. And obviously, the latter affects the former. In law school, when analyzing what some appellate court did, you deal with decisions that hinge on matters of fact or matters of law. Whether it’s one or the other affects who gets to decide the outcome, burdens of proof, etc. etc. Except for those grey areas where it’s a mixed issue of fact and law. Then one affects the other. Being a quasi-”marketist,” I think better information and more choice equals lower costs.
College tuition is another example of a necessary expense that outpaces inflation so much that no average person can afford it without scholarships or serious debt. Finally something is giving. Harvard took the lead and stopped requiring families of certain income levels to pay sticker price. Now Columbia is replacing loans with grants for families who earn less than $60,000 per year. It will continue to trickle down.
I believe health care will be the same way. Something will come along to bring it back into balance. It has to. Whether that’s a consumer-driven model or Hillarycare 2.0 is anyone’s guess…