Health Care And The Budget

By Doug Thompson

Control one, control the other

How can we afford health care reform? He’s an idea. Let’s raise taxes over the next five years. Let those taxes be half as much as our health care costs will climb to if we don’t commit some serious reform.
The Center for Economic and Policy Research, a lefty nonprofit, has a neat little graph at www.cepr.net/calculators/iousadeficit/calc_iousa_deficit.html. It shows the ballooning federal deficit. It also shows how that ballooning deficit would go flat if our health care costs were under the same degree of control as they are in Germany, Canada and all those other “socialist” health care systems.
“The government pays for approximately half of the country’s private sector health care through programs like Medicare and Medicaid,” the site says. “Therefore, if the projections of exploding private sector health care costs prove accurate, then the government will face a serious deficit problem. However, if health care costs can be contained, then the budget problems are easily manageable.”
Health care reform is a big budget pill to swallow. A very good case can be made, however, that it’s about the only thing left that might get our budget back under control in the age of bailout.
Allow me to offer, again, the Thompson theory of the difference between a socialist country and a capitalist country. In a socialist country you work, work, work and work to pay your taxes. In a capitalist country you work, work, work and work to pay your taxes and your insurance. Somebody explain the difference here, other that you don’t get to vote for the people who keep hiking up your insurance.
The U.S. health care system is so broken that even the major lobbies have joined in on the reform bandwagon. Why? Because they know an unsustainable spiral in costs when they see them.
Health care groups know they can’t defend the status quo any more.
I started writing this column before finding out that Peter R. Orszag, director of the White House Office of Management and Budget, had this to say about the matter in an opinion piece published by the Wall Street Journal. See the whole article at http://online.wsj.com/article/SB124234365947221489.html.
“This week confirmed two important facts — that health care costs are the key to our fiscal future, and that even doctors and hospitals agree that substantial efficiency improvements are possible in how medicine is practiced.
“The numbers speak for themselves. The Medicare and Social Security trustees’ reports released this week show that health care costs drive our long-term entitlement problem. An example illustrates the point: If costs per enrollee in Medicare and Medicaid grow at the same rate over the next four decades as they have over the past four, those two programs will increase from 5 percent of GDP today to 20 percent by 2050.
“Despite the attention often paid to Social Security, spending on that program rises much more modestly — from 5 percent to 6 percent of GDP — over the same time period. Over the long run, the deficit impact of every other fiscal policy variable is swamped by the impact of health-care costs.”
The state budget is at risk here too. Health care costs are the most volatile part of state spending. It’s very consistent in that it always goes up. The volatile part is, by how much?
If you’re really worried about the future viability of this country, skip the next tea party and go to a health care reform debate.