Tuesday, September 27, 2011

The 16% Tax on Everything

You don't hear about Republican plans to roll this one back.

This is how much healthcare costs in the US, currently 16% of our GDP and on its way to becoming 20% by 2020. Compare this rate to Canada (perhaps our closest demographic match), which spends 10%, Ireland which spends 8%, and Switzerland, which is probably the Switzerland of health care, 12%.

In some ways, it's not fair to compare the US with other countries because our lifestyle is not as healthy. On the other hand, countries buying or competing with our exports don't care why we spend so much. The only thing that matters is that it makes us less competitive.

When will we start looking at trimming our healthcare costs? I can't believe it isn't time yet. The biggest impediment to reform isn't satisfaction with the current system, it's that healthcare is quite the political football.

The Republican Approach
The Republicans, who are bullish on cutting other taxes, are less sanguine on cutting medical expenditures. They have their private-sector solutions: stripping the corruption out of malpractice rewards (and taking fair higher compensation with it), letting people buy overpriced and/or fraudulent health care insurance over state lines, turning Medicaid into block grants to states, and voucherizing Medicare, so that our seniors can try to buy overpriced and/or fraudulent insurance too. Granny won't be thanking them.

The Democratic Approach
The Democrats have some plans too. One (ostrich) wing thinks Congress could  pass a single-payer system if ... er... Fox News didn't inflame the country with lies. Democratic policies have to be negotiated between near socialists like Bernie Sanders and blue-dogs like Ben Nelson. Not surprising then that the Affordable Care Act (Obamacare) is a mish-mash of what they could get through Congress before the Republicans took over the House. It's jimmied to get a good score from the Congressional Budget Office (CBO), but it'll blow up later when we're subsidizing premiums on overly-mandated health insurance and long-term care.

The Super Committee
I fear that the super committee will be skittish about cutting healthcare spending, particularly Medicare. After all, crying foul on Medicare (or death panels!) has won more elections in the last two years than it's lost. That simply means that healthcare for federal workers and Medicaid will be cut more. Considering our Congress, their staff, judges, and the executive branch use federal employee healthcare, somehow I imagine that Medicaid will suffer the most. No, I don't mean Medicaid will suffer, just those on Medicaid, those annoying free-riding poor.

By the way, we don't pay 16% for healthcare on absolutely everything. Imports from other countries don't carry same healthcare burden. But that's not especially comforting.

Establish a global budget for total federal health care costs and 
limit the growth to GDP [growth] plus 1 percent.
--One of the Simpson-Bowles debt commission's recommendations 
to reduce healthcare expenditure

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