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November 25, 2007

The Long Run

Friedrich von Blowhard writes:

Dear Blowhards:

In 1986, just back from a couple years abroad, I opened a copy of the Washington Post and saw a long article on healthcare spending. It made a convincing case (to me, anyway) that healthcare spending that exceeded the growth rate of the economy as a whole was a recipe for disaster in the long run.

Welcome to the long run.

A report that the CBO has just issued, "The Long-Term Outlook for Health Care Spending" points up how little has changed in the last 20 years:

Spending on health care in the United States has been growing faster than the economy for many years, representing a challenge not only for the government's two major health insurance programs -- Medicare and Medicaid -- but also for the private sector...In December 2007, the Congressional Budget Office (CBO) will release new long-term budget projections, and spending on health care will play a central role in the [U.S. Government's] fiscal outlook to be described in that report...The goal of the projections in this study is to examine the implications of a continuation of current federal law, rather than to make a prediction of the future. Under [the no-change scenario], however, federal spending on health care would eventually reach unsustainable levels...[emphasis added]

By the way, 'central role' means that any pretense of fiscal solvency of the U.S. government will turn almost completely on how we handle health care spending.

How can I make such a ridiculous statement? Well, this is the one paragraph summary:

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. Thereafter, health care costs continue to account for a steadily growing share of GDP, reaching 41 percent by 2060 and 49 percent by the end of the 75-year projection period...

As a naïve kid, I would have thought that such a problem would be vigorously addressed by a nation that likes to think of itself as a can-do problem solver. Unfortunately, as a sadder-but-wiser adult, I now see that we’ve been conducting a philosophical experiment over the past twenty years. An immovable object, budgetary constraints and simple prudence, has met an irresistible force: health care special interest lobbying.

Heck, the immovable object has failed to even slow down the irresistible force.

(Granted, this is hardly the only sign of U.S. governmental sclerosis. Two families have run the country for 19 of the last 21 years, and with a little luck they can probably extend that run to a solid 28 years.)

Perhaps immovable object will develop more mass when we start signing over our paychecks directly to our healthcare providers. But I’ve grown tired of speculating. It’s like Robert Heinlein said about life after death: "Why worry about it? Soon enough, you’ll know."



posted by Friedrich at November 25, 2007


As I've said many times, health care reform without some sort of outcome-based rationing is just rearranging the deck chairs on the Titanic. We have reached the point at which a vastly disproportionate share of health care spending is used to prolong the lives of the hopelessly ill a few weeks or months, in cases where the chances of long-term survival and the patients' quality of life are both zero.

Posted by: Peter on November 25, 2007 7:41 PM

We spend more on health care because we can. And there are more cool products in the health care store. There was no such thing as Lasik surgery a generation ago, and not that may people could have afforded it, even if it had existed. Now, of course...
This is no social crisis.

Posted by: Jim O'Sullivan on November 25, 2007 7:47 PM

I guess Jim O'Sullivan lives in a world of upper middle class management types who all get top tier insurance coverage provided by their employers. Not to mention hefty annual bonuses that make it possible for them to consider elective procedures uncovered by those plans like Lasik surgery.

42 million and growing unisured? Continued drop in the U.S. postion internationally for life expectancy? Continued rise of U.S. infant mortality? Rationing of health care based on income rather than medical need? Ate you including these facts when you decide there is no social crisis, Jim?

Posted by: Chris White on November 26, 2007 6:56 AM

Socializing healthcare may have the unintended consequence of driving many doctors out of the healthcare profession (and discouraging others, esp. more competent students, from pursuing it) because of the inevitable bureaucracy they'll have to deal with.

My understanidng (is it a correct one?) is that the high costs of healthcare are for the most part caused by huge liability insurance. Won't serious tort reform go a long way toward lowering the cost of medicine, as well as attracting more bright young people into medicine?

Jim O'Sullivan's point about Lasik may have been that medical procedures based completely on free-market principles are affordable and efficiently administered. (Anyone can come up with the $2K for the procedure if they really need to.)

Posted by: PA on November 26, 2007 11:00 AM

Dear Chris:
You can argue that the government should intervene to redistribute the allocation of health care services to make things more equitable, as I suppose you believe.
But that's beside the point of this particular entry, which is an exploration of the reason that a greater percentage why a GREATER PERCENTAGE of our GDP gets spent on health care. THAT is not a social crisis. OK?

Posted by: Jim O'Sullivan on November 26, 2007 1:47 PM

PA: I don't think the data support that. Health care costs rise at twice or more the rate of inflation consistently, and I don't think malpractice insurance premiums come anywhere close to accounting for that year after year. (Though I think they have a big impact on specific specialties, such as obstetrics.)

Posted by: albatross on November 27, 2007 11:31 AM

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