Friday, July 17, 2009

Controlling the Cost of Health Care

I haven't had very much to say about the current health reform fight in Congress - it is neither my top priority (that would be climate change) nor an issue about which I am overly informed. Given, however, the issue's current prominence in the national debate and its importance to another pet cause of mine (fiscal sanity), I feel compelled to offer a few thoughts regarding the spiraling cost of health care.

My position is basically this. I don't really care what the actual reform is - single-payer, expansion of the current employer system, health co-ops, etc.* - as long as it accomplishes these four goals: if it gets insurance for at least thirty million of the 47 million uninsured Americans, if it improves insurance for the fifty million or so Americans with bad insurance, if it is paid for, and if it brings skyrocketing costs under control, I will support it.

Unfortunately, we learned yesterday that while each of the plans currently under consideration in Congress would accomplish the first three of these four goals, none would bring skyrocketing health care costs under control. What are these costs? For starters, if you think the current deficit is bad wait until you see what Medicare and Medicaid will cost in just a few short decades. In May, Medicare trustees announced that Medicare will be insolvent by 2018, two years earlier than expected. According to the New York Times, "The trustees predict that average Medicare spending per beneficiary will increase more than 50 percent, to $17,000 in 2018, from $11,000 last year." Per the non-partisan Congressional Budget Office (CBO), overall health care spending as a percentage of the GDP is even worse: "Over the past 30 years, total national spending on health care has more than doubled as a share of GDP. Under the assumptions described above, according to CBO’s projections, that share will double again by 2035, to 31 percent of GDP." In other words, over the next three decades, U.S. health care expenditures will grow from one in every six dollars spent to one in every three.

Unfortunately, Congress, in typical fashion, is focused on the short term rather than the long term. House liberals just unveiled a plan that they would pay for by slightly raising taxes on the rich. The Senate Finance Committee (disclaimer: I used to intern for Chairman Max Baucus) is exploring a number of different ways to pay for their plan, including ending the $200 billion subsidy we call the employer-sponsored insurance tax exemption. All of these proposals would expand health coverage and pay for the expansion, but yesterday, CBO director Doug Elmendorf informed Congress that none would actually lower costs.

Elmendorf is right, expanding health coverage isn't enough. Here are five ideas I’ve heard for changing the actual care, not just the method of insurance. Two frequently-discussed ways of lowering the cost of prescription drugs are making Medicare competitive and allowing purchases in Canada. According to a speech New York Times economics reporter David Leonhardt gave at Dartmouth in February, two other ways to lower costs include digitizing health care records (a frequently discussed option) and accepting less flashy treatment. We must remember, he says, that new and experimental options aren’t always better than tried and true methods; that surgery is not always superior to treatment; and that sound diagnoses do not always require dozens of tests and procedures. Finally, in the upcoming New York Times Magazine, Princeton professor of bioethics Peter Singer argues that while politically untenable, rationing health care may also be a necessary part of bringing costs under control.

White the possible exception of rationing, I cannot for the life of me understand why Congress is not embracing these ideas as part of its discussion on health reform. The status quo might make more money for hospitals, insurance agencies, and pharmaceutical companies, but that does not mean it provides the best care for patients or the most affordable care for a nation in dire fiscal straits. When health comes before profit, then we will finally have an affordable, healthy, and ethical health care system.

*If the jargon surrounding different forms of health care is as Greek to you as it is to me, check out this helpful article from, "Healthcare for dunces".


Jordan said...

Is there a reason beyond exorbitant tax rates we just can't copy the Canadian system?

I find this Health Care issue for me to follow under the fundamental "right to life" as stated in the Declaration of Independence. In seeing that it is the federal government's job to insure this right I find no qualms in nationalizing health care. I understand that there are many issues with this (such as the government deciding what treatment of care you get, etc.), but surely a government run system, albeit possibly nonsensically, is better than no system at all for those 47 million Americans with no insurance.

You state, "Unfortunately, Congress, in typical fashion, is focused on the short term rather than the long term." I see this as tantamount to those protesters you berated at Sotomayor's "inquisition." They don't realize as well as they should that beyond the next election the country will still exist and be dealing with the issues you don't solve today.

Nathan Empsall said...

I don't know enough about Canada to comment, but even if tax rates are the only reason, that right there will get you at least 35 no votes in the Senate, if not a full 45.

My own thought similar to your Declaration comment, which is also philosophical rather than legal, is to look at libertarians and small government folks and wonder, "When you say the government should only take care of defense, why do you only mean defense against other nations and bombs? Why not defense against viruses and bacteria? Life is life and preventing its demise is preventing its demise, right?"

Cany said...

I am working on this issue a lot, Nathan, so let us start here, k?

Can you link this statement to something (I ask because there is LOTS and LOTS of bad information out there).

Here's your initial statement:

Unfortunately, we learned yesterday that while each of the plans currently under consideration in Congress would accomplish the first three of these four goals, none would bring skyrocketing health care costs under control.

I ask because this just isn't true.

So where did that come from?

If we link health care to employment, Nathan, it is neither assured nor sustainable. Unemployment should NOT be a reason for not being able to receive health care.

But it is... even with the incredibly unaffordable COBRA.

Nathan Empsall said...

Cany - what I'm talking about has nothing to do with employment. I completely agree that the unemployed should be able to take care their health care with them. The reason for the statement you quote is twofold, neither linking directly to employment: One, the CBO's Elmendorf's testimony to Congress yesterday about the House, HELP, and Finance plans. Two, the skyrocketing costs of health care are not linked to its lack of universality. Health care isn't unaffordable because people don't have it; rather, they don't have it because it's unaffordable. And the reason it's unaffordable is uncompetitive prescription drug prices and a jerry-rigged system that favors profits over patients, encouraging extra (and expensive) tests and the most expensive rather than efficient treatments. What Congress is doing - focusing on covering the uninsured - is a heckuva great start, but it also needs to focus on bringing down rather than just paying for costs. When we eliminate the need for profit from the system, we'll finally have affordable care. Decoupling it from employment would help expand coverage, but I don't see how it would help pay for said coverage.

Linda said...

Also a very good post. You are a thinker.

Jordan said...

I consider myself a libertarian, and in that philosophy I know it is the government's responsibility to uphold the three basic God-given rights to any human being:

1) The right to life - You have the right, as much as is within your power, to choose when and where you die (or live for that matter).

2) The right to liberty - This is hard to define as it's stated so succinctly. You have the right to live your life as you choose with no interference from anyone unless in doing so you violate any of the rights enumerated herein.

3) The right to the pursuit of happiness - To me, this is just an expanded version of right #2, but still. You have the right to pursue, purchase, own whatever you wish in your life as long as it does not violate any of the other rights herein.

Anything else to me is just and enumeration and clarificaiton of these fundamental three rights.

That is my political philosophy in a nut shell.

Jordan said...

If you find something that doesn't fit let me know so I can revise my system. Most I've come up with are just two different rights clashing. For example:

Who wins in abortion with the mother's right to choose to be a mother or not; or the unborn infant's right to life?

I don't want to get into a debate on that issue, but you see where I'm going. (btw I lean pro-life.)