Of course Paul Krugman isn’t worried about the cost of healthcare reform:
I’m not that worried about the issue of costs. Yes, the Congressional Budget Office’s preliminary cost estimates for Senate plans were higher than expected, and caused considerable consternation last week. But the fundamental fact is that we can afford universal health insurance — even those high estimates were less than the $1.8 trillion cost of the Bush tax cuts. Furthermore, Democratic leaders know that they have to pass a health care bill for the sake of their own survival. One way or another, the numbers will be brought in line.
In the near term without fiat pricing, which anyone can tell you will reduce the supply, I think the best we can expect to achieve in terms of cost with universal coverage is that we’ll increase the amount of money we’re spending on healthcare by 15%. Cover 15% more people, increase the costs by 15%. Simple as that.
It’s the best we can do because over time the supply of healthcare has proved to be quite inelastic. That means that, unless you believe that doctors, hospitals, and other healthcare providers are willing to work on average 15% harder without getting paid more or that on average less treatment will mean better outcomes, one of two things will happen. Either costs will increase more than 15% or that outcomes will decline.
We’re currently spending about 17% of GDP on healthcare treating less than 85% of the people so treating 100% of the people means increasing spending by 15%. In other words in the best case we’ll be spending roughly 20% of GDP on healthcare. Salaries are higher than average in the healthcare sector. That in turn means that if we spend more on healthcare even if more people are employed in healthcare the net change in the number of people employed as a consequence of spending more on healthcare will be that fewer people are employed. There will also be less to invest in non-healthcare technology, on energy research, and everything that money might have been spent on. That in turn means that future economic growth will be slower.
So in pursuit of the will o’ the wisp of universal coverage we’re going to increase unemployment and reduce growth.
All part of the acceptable risk, I guess.
I’m skeptical of health care reform myself, but I’m not so sure about this. Other countries seem to manage universal coverage while spending less compared to GDP.
They started from a significantly lower base cost than we have now, Alex. Even folks in the UK have commented on the intractability of our healthcare system considering the high base cost.
I’ve traced this issue back to the start of Medicare/Medicaid and the decade that followed. During that period the public healthcare system had little oversight and, as you might expect, costs grew with few bounds. For the first few years there was “increased utilization” i.e. doctors were doing more so they charged more, then there were price increases once per capita utilization had been potentialized.
Since then inflation alone has been sufficient to keep healthcare costs growing further into unaffordability.
Note that we have the lowest number of primary care physicians per 100K of any OECD country and the number is actually falling. That’s a built-in cost increment.
Insurance is not the end goal, health care is. First get everyone covered, which will provide access..then tackle the cost, and all other issues on health care..step by step…clean it up, and make it work and make it affordable.
Have debates on the limits of health care..American’s might be living longer, but for many living linger means far less quality of life. We need a national dialog on aging, and what this means as a nation, and what it means culturally. It’s time to take back and define our what our society is and means to be human, to be an American, and do so by having a real discussion on these issues, and eliminate the consumer brainwashing mentality that big business has forced our thinking into…
Keep the private sector out of the business of health care coverage, there are plenty of other areas in the health care system for the private sector to make a buck.
Health care for all first, everyone gets access, then step by step, fix the problems…
On the issue of medical doctor shortage…create a medical service much like the military…enlist qualified people to train and become medical personnel. Enlist for the education, get paid, serve your time..and take your training to the private sector…
Fix the system and the cost will go down..spend now to save later…we all do this all the time anyway..How many of you pay cash for a auto, for your home, for your education???
Welcome to your future:
http://goliath.ecnext.com/coms2/gi_0199-7134228/Show-me-the-money-the.html
http://www.ama.com.au/node/2944