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Friday, January 19, 2007
Dionne Column Not Perfect?
EJ Dionne's column today, as usual, is good, but one thing kinda bugged me:
No. 1: Extending President Bush's tax cuts to eternity will make the long-term problem much worse. Hint No. 2: The hardest part will be how -- simultaneously -- to meet the fiscal need to rein in health costs and the social need to get health insurance to everyone. Hint No. 3: Most Democrats don't like to talk about it, but somebody's taxes are going to have to go up.
He sets up the "social need" for universal health insurance in tension to the "fiscal need" to rein in health costs, but I'm not so sure that's the right relationship. As I tried to write yesterday, there's some evidence that a greater role for the government would help bring down health care costs across all sectors in the long term.
Anyway, I profess my ignorance of the mechanisms involved here. But doesn't this seem like the perfect silo-crossing issue? Health care wonks need to help us ignorant budget wonks understand this aspect of universal coverage better.
The best I can do is put Jacob Hacker's summary of the argument for cost-containment after the jump.
EVIDENCE ON THE COST CONTROL ADVANTAGES OF A SIZABLE MEDICARE-LIKE PLAN
Despite Medicare's older and less healthy population, "Medicare's per enrollee spending has grown at a rate that is about 1 percentage point lower than for private insurance over the 1970-2002 period," and these "[d]ifferences have been more pronounced since 1985." (Medicare Payment Advisory Commission, Report to the Congress: Medicare Payment Policy, Washington, D.C.: MedPAC , 2005.)
The United States has not contained costs (public and private) as effectively as nations with broader public coverage. As the OECD Observer notes (March 6, 2004): "U.S. health expenditure grew 2.3 times faster than GDP, rising from 13% in 1997 to 14.6% in 2002. Across other OECD countries, health expenditure outpaced economic growth by 1.7 times." According to OECD Health Data 2006 (Paris: OECD, October 2006), between 1985 and 2004 health spending as a share of the economy increased by more than 51% in the United States—from 10.1% of GDP to 15.3%—compared with an average increase of 34% in the other affluent OECD nations to 9.4% of GDP. The same report also shows that the United States continues to have the highest per capita health care spending among industrialized countries. In 2004, U.S. spending per capita ($6,102, adjusted for purchasing power parity) was more than two times the median for affluent OECD countries ($2,961). (These calculations exclude Korea, Mexico, Hungary, Poland, Turkey, and the Czech and Slovak republics.)
What accounts for these stark differences? According to a study published in the May/June 2006 issue of Health Affairs (Anderson et al., "Health Care Spending and Use of Information Technology in OECD Countries,"as summarized at www.cmwf.org/usr_doc/Anderson_hltcarespendinfotechOECD_itl.pdf), "Higher prices, not higher utilization or resources, appear to be the main driver [of higher U.S. spending]. More spending does not translate into more services. In 2003, the U.S. had fewer physicians, nurses, and hospital beds than the median OECD country. And while the U.S. adopts many clinical technologies earlier than other nations, ultimately it does not make them more widely available, nor does it always provide the most sophisticated procedures compared with other countries."
Indeed, in a recent report ("U.S. Health System Performance: A National Scorecard" (Schoen et al., Health Affairs, web exclusive, 2006)), the United States comes up short on key health indicators, including "deaths before age seventy-five from conditions that are at least partially preventable or modifiable with timely and effective health care. The United States ranked fifteenth out of nineteen countries on this indicator as of 1998….The United States ranked last on infant mortality out of twenty-three industrialized countries as of 2002." In 2002, the Institute of Medicine estimated that lack of health insurance causes roughly 18,000 unnecessary deaths each year among working-age adults in the United States. (Care Without Coverage: Too Little, Too Late, Washington, D.C.: The National Academies Press).
However, according to OECD Health Data 2006, the United States is slightly above the OECD average when it comes to life expectancy at age 65—which may reflect in part the universal, guaranteed coverage provided by Medicare to America's elderly.
Posted by Matt Lewis
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