The real Medicare villain
The Washington Post, August 24, 2012
Republicans cry that President Obama is raiding Medicare to fund a socialist health-care nightmare. Democrats blast the GOP for sticking grandma with vouchers to wreck a program they've secretly loathed for decades. Far be it from me to put the kibosh on all this drama, but when it comes to the policy stakes, such breathless charges are beside the point.
The real Medicare villain is not Barack Obama, and it's not even "evil" Paul Ryan. The real villain is America's medical-industrial complex—and once you grasp this, everything changes.
The beginning of wisdom on Medicare's future starts with two things both parties say but which can't simultaneously be true.
The first is that we spend much more on health care than any other advanced nation yet get no better results. The second claim—implicit in the attacks on Obama's $716 billion in "cuts" or on Romney/Ryan's heartless vouchers—is that, if we do much to slow the growth of health-care spending, we'd hurt seniors' access and quality of care.
As I've argued before, no matter how often and how loudly interest groups and politicians scream this second claim, it can't be true if the first claim is a fact. And U.S. health care's inefficiency is indisputable.
The United States spends twice per person on health care what most other advanced nations spend without better outcomes to show for it. As a share of the economy, this now translates to an eye-popping 18 percent of GDP; the next closest nations spend 12 or 13 percent, while the OECD average is in the 8s. Mighty Singapore, with comparable results, spends just 4 percent! And these nations perform better under every model—from single-payer (Canada, England) to mandated private insurance (Switzerland, Holland) to creative public/private hybrids (Singapore).
These aren't just dry numbers. They represent a progressive catastrophe. If we could run our health-care system as cost-effectively as other rich nations—which also manage to insure everyone, while we shamefully still leave 50 million people without basic coverage—we'd free up hundreds of billions of dollars each year to pay for infrastructure, R&D, universal preschool, great teachers for poor kids, a mega-earned income tax credit for the working poor, and higher wages (that's my starter list, at least).
After Republican intransigence, in other words—and even after we eventually raise taxes to help fund the boomers' retirement—it's not an exaggeration to say that health-sector inefficiency is the biggest obstacle to progressive goals in America.
How does this tie to today's campaign? Take the notorious $716 billion in "cuts," which both Obama and Ryan have in their 10-year plans (Romney says he'll repeal them, but then Romney will say anything). Yes, that's a big, scary-sounding number. But Medicare will still spend $8.4 trillion over the same period—meaning it will increase from $575 billion this year to nearly $1.1 trillion a decade from now as it gets "gutted." (Part of this is because enrollment is slated to rise from 50 million to 66 million, but even with the "cuts," per capita costs are expected to soar by another third).
The point? If we're spending twice per person on health care what other rich countries spend today, we'll still be spending nearly twice as much a decade from now. And that excess would dip only slightly if Ryan's nefarious vouchers took effect in the years after.
How can this continued massive excess versus what other wealthy nations spend amount to "gutting" anything?
We're fighting our Medicare wars in a hermetically sealed bubble, impervious to global benchmarks that suggest our efficiency ambitions are far too timid. Official bean-counters only reinforce our blind spots. When the Congressional Budget Office talked about Ryan's earlier voucher plan eventually shifting to seniors per-person costs of $6,400, it assumed that the system would coast along more or less as is. When Medicare actuary Richard Foster says, "The best available evidence indicates that most health care providers cannot improve their productivity" much because of "the labor-intensive nature of these services," you have to wonder what evidence Foster is looking at. Clearly the man needs to get out more.
All this shows why the entire Medicare (and broader health) debate needs to be recast. Rightly understood, health-care entitlement reform is not, as conservatives suggest, a matter of lessening the dependency of big chunks of the population on government largesse. It's about weaning the members of our medical-industrial complex from their entitlement to far higher payments, despite shabby results, than their counterparts abroad get. This license for inefficiency, issued by both parties to doctors, hospitals, health plans, drugmakers and device firms, is diverting precious resources in an aging America from urgent non-health care, non-elderly needs.
This is what's really going on. It's also what's slated to continue, regardless of what you'll hear in the campaign about big "cuts" a-coming.
The politics of reform are awful, because every dollar of health care "waste" is somebody's dollar of income. And no one has a sure fix, though I'll look at promising ideas in a future column (or five). As with any alcoholic, however, the path to renewal begins with admitting that you have a problem. When "cuts" that leave U.S. health care wildly inefficient compared to our peers are damned by both sides as "savage," our political process dooms us to denial.
Maybe it's too much to expect a conventional campaign (or conventional media coverage) to address this. But if we don't get serious about it during one of our brief intervals of governance, progressive ambitions are toast.