Health costs hurt U.S. economy
As is the case with energy and taxes and Iraq, partisan political cacophony dominates the health care debate — and it’s likely to get worse if Democrats win control of part or all of Congress.
With no resolution in sight, the twin crises afflicting health care — inexorable increases in both costs and the number of uninsured — are likely to continue unabated, posing a long-term threat to the economy and the nation’s health.
More than 45 million Americans lack health insurance at some time during a year, and 20 million lack insurance all year long. Health care accounts for 16 percent of the gross domestic product (GDP) and is heading toward an impossible 88 percent by 2050, according to the former head of the Congressional Budget Office.
Rising health costs hurt U.S. companies in competition with foreign firms. They also depress workers’ take-home pay and encourage employers to drop or diminish health coverage. Those lacking insurance get less care than they need and are more likely to suffer from costly chronic illnesses.
The just-issued report of the Social Security and Medicare trustees showed that Medicare’s hospital insurance program for seniors will go bankrupt by 2018 — two years earlier than estimated last year and 11 years earlier than estimated when the Bush administration began.
The Bush administration has proposed an agenda to make health care more consumer-driven, but chances are it may win passage of only one item this year — the small-business pools called association health plans that are due for consideration in the Senate next week.
Other Bush proposals, including expansion of health savings accounts and an overhaul of the medical malpractice system, are militantly opposed by Democrats and seem dead for the year — if not the rest of Bush’s presidency.
Meanwhile, Republicans are encouraged by enrollment in the new Medicare prescription drug benefit, the cost savings it has achieved and polls showing that seniors like it. But the plan remains under constant attack by Democrats.
If Democrats win control of Congress, they would likely pass a measure that requires Medicare — i.e., the government — to directly “negotiate” drug prices with pharmaceutical companies instead of leaving the task to private intermediaries.
Backers of such a plan, such as Rep. Henry Waxman, D-Calif., argue that prices being paid by seniors under Medicare are significantly higher than those paid by the Department of Veterans Affairs and the Defense Department, which have Congressional authority to dictate the prices at which they will buy drugs.
A report Waxman issued last year asserted that a month’s supply of 10 commonly used drugs cost an average of $1,158 under Medicare insurance plans, but only $630 to the VA and $717 in Canada, where the government controls prices.
However, when I asked members of a panel on Medicare at the American Enterprise Institute about VA-style price-setting, its members were flatly negative, declaring that private competition was working to lower prices for Medicare beneficiaries and that price-setting would hurt drug research and disease treatment, raising costs in the long run.
Potentially, the hottest new development in health care is the bipartisan plan passed in Massachusetts whereby all citizens are required to have health insurance, and employers who don’t cover their employees pay into a statewide pool to subsidize premiums for the uninsured.
The plan, worked out by GOP Gov. Mitt Romney and a Democratic Legislature, is attracting wide attention as a potential national model. However, it is also being attacked by conservatives as representing “big government” rather than market-driven consumer choice. There’s also doubt whether it will contain costs or prove too expensive.
At the moment, the process continues inexorably, and ideological differences between Democrats and Republicans are helping it along.
Morton Kondracke is executive editor of Roll Call, the newspaper of Capitol Hill.