The Real Healthcare Reform

by Dave Schuler on July 14, 2014

There’s a sentence early on in Robert Samuelson’s column about Medicaid and the PPACA that he lets pass too quickly:

The further truth is that Medicaid also threatens to crowd out spending for many traditional state and local functions: schools, police, roads, libraries and more.

Since 1990 per capita spending by the government of the state of Illinois has grown at three times the rate of inflation. It has grown faster than incomes in the state by a substantial margin. It has grown faster than the state’s GDP. It has grown faster than the state’s revenues.

The two biggest line items in the state’s budget are Medicaid and public pensions. Both are growing fast, faster than we can afford. The state’s thirst for revenues is driving companies and people from the state at the highest rate of the fifty states.

If you wonder why I keep harping on healthcare costs as the most needed healthcare reform need, look no farther.

Contrary to some opinion, it is not true that healthcare costs have stopped rising. They are merely rising more slowly than they were before. They are rising, coincidentally, at just about three times the non-healthcare rate of inflation.

{ 3 comments… read them below or add one }

steve July 14, 2014 at 7:27 pm

“Health care spending grew at a record slow pace for the fourth straight year in 2012, according to a new government report. But the federal officials who compiled the report disagree with their bosses in the Obama administration about why.

The annual report from the actuaries at the Centers for Medicare and Medicaid Services, published in the journal Health Affairs, found total U.S. health spending totaled $2.8 trillion in 2012, or $8,915 per person.

Health spending consumed 17.2 percent of the nation’s gross domestic product, but that was slightly down from the previous year’s 17.3 percent. And in a rare event, the growth rate of 3.7 percent was actually slower than that of the overall economy, which grew at a rate of 4.6 percent.”

However, as PEW notes, it is growing faster at the state level.

“Total US health care spending grew slowly in 2012, rising about 4 percent, but the story for state and local governments was dramatically different Health care spending by states and localities increased 8 percent, according to the latest data from the Centers for Medicare and Medicaid Services, consuming a larger share of revenue—about $3 of every $10—than has been the case for such expenses since at least 1987, the earliest year for which complete data are available 1As state and local governments continue to navigate the aftermath of the Great Recession, health care spending remains a main source of fiscal pressure”

Steve

Dave Schuler July 14, 2014 at 8:12 pm

rising about 4 percent

Exactly as I said. That’s between twice and three times the non-healthcare rate of inflation. 8% is 4-5 times the non-healthcare rate of inflation. That’s obviously not a sustainable rate.

Andy July 16, 2014 at 12:37 am

Steve,

The economy grew at a rate of 4.6% in 2012? Everything I’ve read says it was 2.2%.

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