Health care on first blush may not seem like a topic natural to a Global Markets and Foreign Policy blog. But to the extent that it is an issue of comparative political economy; and to the extent that it is an issue that accounts for approximately 17% of the U.S. GDP and growing rapidly, well, then it seems quite natural, actually. My first admission, however, is this: I am perplexed. No, not on the topic of healthcare reform, in and of itself. On the one hand, Americans resist government efforts to repair a Healthcare system that everyone acknowledges is broken; but on the other hand willingly tolerate the “Free-market” pilferage of consumers by the private sector Health Insurance industry in a system that severely hinders the global competitiveness of our nation. President Obama said as much in a recent radio interview, noting:
‘Passing a big bill like this is always messy. FDR was called a socialist when he passed Social Security. JFK and Lyndon Johnson, they were both accused of a government takeover of health care, when they passed Medicare. This is the process we go through because the American people have a long tradition of being suspicious of government, until the government actually does something that helps them, and then they don’t want anybody messing with [it] afterwards.’ — Pres. Obama
Even more, I’m also perplexed, as Rachel Maddow pointed out recently, that the people most likely to benefit from healthcare reforms have been ginned up into populist rage to oppose it by fear-mongers using vile partisan antics. It’s ironic isn’t it, that the states, largely in the South and the West, that have been most skeptical of President Obama’s agenda for health care reform also have the highest levels of uninsured people in the nation..?? Precisely the population that’s most causing the rest of the nation’s healthcare system to buckle under its cost. Take this one fringe Conservative extremist, Kenneth Gladney for example, who allegedly got himself beat-up trying to hi-jack a Town Hall meeting in St. Louis, MO. It turns out Gladney had just gotten laid-off from his job, and had to end up begging for donations to pay his medical bill from the melee. President Obama’s health reform proposal would protect people in precisely such a situation. When in doubt, lie and obfuscate the issue, then resort to a falsetto’s brand of “patriotism.” Standard GOP play book. Where is the compassion among the “compassionate conservatives”..??
After all, the cost of providing health care to 48 million uninsured Americans is economically and practically, unsustainable. Medical costs are soaring at twice the rate of inflation. Even if you don’t pay the bills directly, you see the medical inflation rate in higher insurance premiums, deductibles and co-pays. And just what are we getting for the money..?? A system that already limits our choice of doctors & hospitals; often doesn’t cover necessary services; forces patients to satisfy a complex labryinth of procedures and paperwork just to get reimbursed; keeps us tethered to a job we might not enjoy for fear of losing health benefits, and strands us without affordable protection if you lose coverage after experiencing health problems – sometimes even minor ones.
Even Fidel Castro raised an interesting point on the Healthcare debate. It is admittedly difficult to take seriously much of anything Castro has to say. But on this one point, it seems he has a prescient point. Castro criticized the U.S. recently for being willing to spend billions on our high-tech military – sometimes even for toys we don’t need – but finding it difficult to approve healthcare reform that would protect the poorest among us. He wrote in a commentary published on a state-run Internet site that huge military budgets are approved easily by the U.S. Congress, but noted that President Obama is struggling to convince federal lawmakers to pass a bill that would “deliver health services to 50 million Americans that don’t have [healthcare protection].”
He is right. We spend over $1 Trillion per year on our military-industrial infrastructure – about one half of the annual Federal budget, excluding debt service on military spending – but only about $200 Bn on government-sponsored healthcare to our populations most in need of it – the poor, working-class and middle-class Americans. Yet many Americans, as recent Town Hall meetings indicate, seem grudging, parochial and petty in their consideration of this most pressing of social issues – especially considering that the majority of uninsured are the nation’s most vulnerable women and children.
Federal Spending: Guns vs. Band-aids
‘Huge military budgets are approved easily by the U.S. Congress, but President Obama is struggling to convince federal lawmakers to pass a bill that would “deliver health services to 50 million Americans that don’t have healthcare protection.”‘ — Fidel Castro
The main stumbling block against providing health insurance for all Americans is the question of how to pay for it. Of the President’s $1 Trillion proposed plan, $800 Bn is already accounted for through the existing group of federal health plans – Medicare, Medicaid, Children and Veterans Healthcare, and the Prescription drug plan – passed by the previous Bush administration, but never funded. To fund the prescription plan, the White House negotiated $80 Bn concession from the Private health insurance industry and approximately $20 Bn concession from the Pharmaceutical industry. The government will need to find a way to plug the remaining $100 Bn revenue hole to subsidize those not getting it through workplace or unable to pay otherwise — about $100 billion. That’s what all the wrangling going on in Congress is about.
Marginal tax rates can and should be raised on high-earners as one source – for example, income earners making over $500,000 a year. But another very viable funding source, albeit never mentioned, can come from a 10% reallocation in military spending, which now is running amok at over $600 billion annually – that figure does not include (1) veterans benefits, (2) the 80% of interest costs on the national debt which comes from bonds issued for military operating and capital expenditures, and (3) the secret budget of our nation’s intelligence agencies. Most knowledgeable intelligence analyst estimate the total U.S. military budget at approximately $1.2 Tn of the federal governments $2.5 Tn annual budget. The Pentagon’s spending rate is now higher than it was at the height of the Cold War, and is about one-half of the entire world’s military spending, and we spend six times more than the next largest military spending nation, China, although they have 20% of the world’s population, while we have only about five percent of the world’s population.
It seems clear the military budget in the U.S. is a sacred cow and, according to Republicans, a matter of “patriotism” while attending to the health and wellness of our citizens is not. We are Sparta, it appears, rather than enlighten Athens.
It has been reasonably well known for some time that the U.S. spend more per capita on health care than any other country – developed, or not. What may be less well known is that the U.S. has the highest medical inflation rate in the world. That is, it has the highest growth rates in per capita health care spending since 1980 among high income countries. In fact, the medical inflation rate in the U.S. is rising faster than the nation’s economic growth, and three times faster than real wages – which in recent years is actually declining. In simplest terms, that means if we do nothing the problem only gets bigger, faster.
So what drives health care spending..?? In the U.S., chronic, but preventable diseases — obesity, diabetes, cardiovascular disease and cancer — accounts for fully 75 percent of health care spending. It has been reasonably well known for some time that the U.S. spend more per capita on health care than any other country – developed, or not. What may be less well known is that the U.S. has the highest medical inflation rate in the world. That is, it has the highest growth rates in per capita health care spending since 1980 among high income countries. In fact, the medical inflation rate in the U.S. is rising faster than the nation’s economic growth, and three times faster than real wages – which in recent years is actually declining. In simplest terms, that means if we do nothing the problem only gets bigger, faster.
The Human side of the Healthcare debate:
In the clearest terms, the National Coalition on Health Care (NCHC) – a rigorously non-partisan, non-profit public interest organization – has a website outlining the gravity of the issue with a compelling set of empirical data that frames the issue, and what it means to us. Among other things, here’s a concise list showing how this extraordinary escalation in health care costs and insurance premiums affects several segments of our economy:
1. Surging health care costs slow the rate of job growth by making it more expensive for companies to add new workers. They also suppress wage increases for current workers by driving up total compensation costs.
2. As health care costs rise, corporate operating margins are cut, which reduces the capacity of firms to grow by investing in research, plant and equipment.
3. High and escalating out-of-pocket costs are forcing families to delay mortgage payments or sell their homes, cut back on normal household expenses such as for food and utilities, and take on onerous medical debt.
4. High medical costs can require retired families to spend hundreds of thousands of dollars out of their savings for out-of-pocket health care expenses.
5. High insurance costs are eroding the ability of firms to fund current levels of pension and health benefits.
6. They put American firms at a steep disadvantage in world markets, where they have to compete against companies with much lower health care costs in the nations where they operate.
7. Rapidly escalating costs are producing severe long-term budgetary problems in the public sector affecting the solvency of federal and state health insurance programs, such as Medicare and Medicaid.
We have reached the point where the public’s main domestic concerns — the economy, jobs, and health care — are really one and the same issue. Unless the health care cost crisis is addressed, we cannot assure robust economic growth, strong job creation, or financial security for American families as we struggle as a nation to recover from the global economic crisis. Healthcare reform is necessary to anyone who studies or understands the topic. The real issue it seems is what will ‘Healthcare reform” look like..??
On that score, the arguments about the comparative political economies of healthcare between developed industrial nations are familiar. Simply stated, it is the comparative measures of empirical outcomes between healthcare delivery systems in similar democratic-capitalist nations – for instance, between those of say the U.S., Britain, Canada, Japan, Australia, Germany and France. The evidence in most objective comparisons show that the U.S., while being the wealthiest nation, is also the only industrialized country in the world that does not have universal health care coverage for its citizens.
single payer system. On one end of the continuum, a few Scandinavian countries have the government own the entire care system and directly employ the care providers. Most others use a mixed model of government care and private care. Some European countries completely exclude the government from the entire process. Those countries use only private caregivers and they provide all coverage to their people exclusively through competing private, completely nongovernment health insurers — with no government coverage at all. The only thing we can conclude from looking at each of the many countries that have achieved universal coverage is that no two countries have chosen the same model. The models vary from one country to another. But what doesn’t vary is that every Industrial competitor, and even some emerging nations have managed to cover all of their citizens—even in destitute Cuba. And we have not. (Excerpts from Healthcare Will Not Reform Itself, by George C. Halverson.)
Web Resources:
National Coalition of Health Care (www.nchc.org/about)
Healthcare Reality Check (http://www.whitehouse.gov/realitycheck/)
NYTs Economix Blog: Healthcare Reform (5 part series)
The White House website (www.whitehouse.gov)
