There is an excellent post over at The American that arrives at a disquieting conclusion: all of the increase in federal government spending between 1966 and 2007 was due to increased government spending on healthcare.
The country is currently engaged in a pitched battle over the size of government and the fierce struggle over the debt ceiling is a skirmish in this much larger war. Health spending is central to this debate. But many Americans may not realize the degree to which healthcare has dominated the growth of government over time. Between 1966 and 2007, the entire increase in the size of government relative to the economy resulted from growth in tax-financed health spending.
That isn’t true only of the federal government. Healthcare spending is driving state, counties, cities, and individuals into bankruptcy. As I’ve posted before healthcare spending is growing faster than any revenue stream available to state and local governments and continuing to fund it at its rate of increase is politically impossible.
I think there is a misstatement in the post. Federal healthcare spending is, unfortunately, not strictly tax-financed. It is financed by a combination of taxes and borrowing. I seem to recall some discussion of a debt ceiling debate in Congress. Whatever became of that?
Even worse, the spending has other consequences:
Of course, all of the figures understate the true impact of tax-financed healthcare on the economy. Every dollar of taxes imposes hidden costs on the economy in the form of lower output (also called “deadweight lossesâ€). That is, we get less of whatever we tax, be it labor, commodities, or even health services.
At the margin, each incremental dollar of federal taxes is likely generating deadweight losses amounting to 44 cents on the dollar. Thus, unless one can make the case that tax-financed healthcare is 44 percent more efficient than the same dollar raised and spent privately, every dollar we shift away from the private sector onto the books of government is a losing proposition.
If you’re wondering why our economy is faltering and job growth is phlegmatic look no further.
My greatest objection to the healthcare reform that was finallly enacted is that it poisoned the well. It didn’t solve the problems that we have, we still need healthcare reform, and nobody has the stomach for continuing wrangling over it.
Richard Minister has an overstated case for the demise of the Democratic Party that does at least focus on the central problem for the party of government — it’s long-term inability to please it’s divergent interests. How can it afford progressive regulations in an era of diminishing economic growth while keeping unions and professionals happy, well-paid and employed?
Government is shrinking, functions are being discarded at the discretion of burecrats. Activities that I think are the proper role of government are not being done, nor do the citizens know it, lest they take advantage of it.
I don’t think it poisoned the well. I think it was the health care equivalent of DADT — dubious on its own terms, but a policy which moved the ball forward. As a political reality we were not going to get single payer with this Republican Party, and with these entrenched interests. The forces arrayed were too great.
What was accomplished was the ending of pre-existing conditions as a bar to coverage, and other incremental changes that taken together solidify people’s inchoate sense that health care is a right.
So long as the GOP could dispute that key point they could block further progress. Five years from now consensus will have formed strongly around the idea that each of us has a right to some form of health insurance. (Poll the question in 5 years and I’ll bet a third of Americans will identify it as being in the Constitution.) And then we’ll get down to implementing that right.
The timing sucks a bit, should have all been done a decade or so ago, but it wasn’t, and this is what we’ve got. We don’t do anything — civil rights, gay rights and so on — until it’s embarrassingly late.
We’ll see, I guess. The history of healthcare reform in the United States for the last couple of generations is that once a major reform is attempted, successfully or not, the experience is so painful for all concerned that, regardless of need, the matter is barely revisited for 15 years or more, cf. “HillaryCare”..
I don’t think another round of healthcare reform will wait for 15 years and I don’t think that the IPAB will manage to institutionalize reform.
I think there’s a key difference between DADT and healthcare reform in that the scope of the problem that the latter poses changes over time while that of the former doesn’t. Today healthcare comprises 17% of the total economy and is zooming towards 20%.
So its all steve’s fault?
steve personally? No. He’s just part of a system that’s in a death spiral. Much as I believe in organic, ground up change, healthcare is one instance in which basic reform will need to be imposed from outside. As I’ve written previously I think that if we had made changes 20, 30, or 40 years ago, we could have headed off the need for drastic changes that faces us now.
I genuinely do not believe that even if we were to magically eliminate all of the inefficient or ineffective procedures it would prevent healthcare from continuing to increase in cost at an unsustainable rate. Just trimming the fat isn’t enough anymore although once upon a time it might have been.
DADT was not simply a compromise, it served a trust-building function in creating the data to support subsequent change.
If you want a single-payer system, you are going to have to establish similar trust-building mechanisms. From what I can tell, people want Medicare for all (government role as simple check dispenser) with no tax increases. Since I think this is impossible, your going to have to either make the government program more efficient or grow confidence that the government won’t screw it up.
And no, you don’t build confidence by having jackbooted thugs pull Coors beer off the shelf because of a silly paperwork dispute. That could be my colon some day!
I suppose we can see how Vermont’s single-payer system works, but Vermont is very old, very white and very small.
As you often point out, Dave, what can’t be sustained won’t be.
If the status quo can’t be sustained then we’ll have no choice but to revisit. But we’ll revisit in an environment where people can no more imagine health care/coverage being denied than they can imagine denying civil rights — it was already very close to being seen as a right, and now it’s moved (I think) substantially closer to status as a God-given (or your choice of rights-grantor) right.
So I think we’ll revisit in much less than 15 years and we’ll do it starting with the core assumption that we are all in the pool. That gives us single-payer, probably Medicare-for-all since that’s an up and running program.
Did you all see this?
The most important chart in health policy
It was linked from Marginal Revolution. It seems to say we have a dedication to spend new GDP on medicine.
Or alternately, bad legislation came out of a poison congress.
As I read the numbers the VA for all is doable (or, more precisely, the VA for everybody who receives subsidized healthcare); Medicare-for-all would be financially ruinous.
I think this relates to that health care and GDP thing:
“What U.S. consumera spend on pay TV alone is more than Europe’s entire media entertainment spending ”
Victims of our wealth.