Monday, December 07, 2009

Health care is swallowing up the budget

Just looking at projections of future budgets from today without adding in the Democrats' health care reforms, it is clear that health care expenses are going to become the major expense unless something is done. We're going to be facing questions about how much health care for the elderly we can afford. Unfortunately, the President, instead of facing up to that reality, is working hard to expand the federal promises for providing health care. Robert Samuelson, as always, is very good on outlining the problem.
One consequence is a slow, steady and largely invisible degradation of other public and private goals. Historian Niall Ferguson, writing recently in Newsweek, argued that the huge federal debt threatens America's global power by an "inexorable reduction in the resources" for the military. Ferguson got it half right. The real threat is not the debt but burgeoning health spending that, even if the budget were balanced, would press on everything else.

"Everything else" includes universities, roads, research, parks, courts, border protection and -- because similar pressures operate on states through Medicaid -- schools, police, trash collection and libraries. Higher health spending similarly weakens families' ability to raise children, because it reduces households' discretionary income either through steeper taxes or lower take-home pay, as higher employer-paid premiums squeeze salaries.

A society that passively accepts constant increases in health spending endorses some explicit, if poorly understood, forms of income redistribution. The young transfer to the elderly, because about half of all health spending goes for those 55 and over. Unless taxes are increased disproportionately for older Americans (and just the opposite is true), they are subsidized by the young. More and more resources also go to a small sliver of the population: In 2006, the sickest 5 percent of Americans accounted for 48 percent of health spending.
The Republicans are highlighting the cuts in Medicare under the Democrats' plans. These are notable and it is interesting that AARP doesn't seem to mind those cuts. We are going to need some cuts made and all this rhetoric about the reform is going to make those inevitable choices even more difficult. But the Democrats are being, not only hypocritical, but totally deceptive.
Obama's health-care proposals may be undesirable (they are), but it's mindless to oppose them -- as many Republicans do -- by screaming that they'll lead to "rationing." Almost everything in society is "rationed," either by price (if you can't afford it, you can't buy it) or explicit political decisions (school boards have budgets). Health care is an exception; it enjoys an open tab. The central political problem of health-care nation is to find effective and acceptable ways to limit medical spending.

Democrats are no better. Obama talks hypocritically about restraining deficits and controlling health costs while his program would increase spending and worsen the budget outlook. Democrats congratulate themselves on caring for the uninsured -- who already receive much care -- while avoiding any major overhaul of the delivery system. The resulting society discriminates against the young and increasingly assigns economic resources and political choice to an unrestrained medical-industrial complex.
This is not sustainable. It is madness to expand our indebtedness for health care without any serious, non-phony way of addressing the problem that we're facing when health care will have swallowed up the entire budget.