Fiscal Suicide Ahead (NY Times)

[Island Boy]

http://www.nytimes.com/2009/05/15/opinion/15brooks.html?_r=1

By DAVID BROOKS

Published: May 14, 2009

Barack Obama came to office with a theory. He believed that the country was in desperate need of new investments in education, energy and many other areas. He also saw that the nation faced a long-term fiscal crisis caused by rising health care and entitlement costs. His theory was that he could spend now and save later. He could fund his agenda with debt now and then solve the long-term fiscal crisis by controlling health care and entitlement costs later on.

In essence, health care became the bank out of which he could fund the bulk of his agenda. By squeezing inefficiencies out of the health care system, he could have his New New Deal and also restore the nation to long-term fiscal balance.

This theory justified the tremendous ramp-up of spending we’ve seen over the last several months. Obama inherited a $1.2 trillion deficit and has quickly pushed it up to $1.8 trillion, a whopping 13 percent of G.D.P. The new debt will continue to mount after the economy recovers. The national debt will nearly double over the next decade. Annual deficits will still hover around 5 percent or 6 percent of G.D.P. in 2019. By that year, interest payments alone on the debt are projected to be $806 billion annually, according to the Congressional Budget Office.

Obama believes these deficit levels are tolerable if he can fix the long-term fiscal situation, but he hasn’t been happy about them. He’s been prowling around the White House prodding his staff to find budget cuts. Some of the ideas they have produced have been significant (Medicare reforms), some have been purely political (asking cabinet secretaries to cut $100 million in waste, fraud and abuse), and many have been gutted on Capitol Hill (cap and trade, proposed changes in charitable deductions, proposed changes to the estate tax).

In any case, these stabs at fiscal discipline haven’t come close to keeping up with the explosion in spending. The government now borrows $1 for every $2 it spends. A Treasury bond auction earlier this month went poorly, suggesting the world’s hunger for U.S. debt is not limitless. President Obama has been thrown back on his original theory. If he is going to sustain his agenda, if he is going to prevent national insolvency, he has to control health care costs. Health care costs are now the crucial issue of his whole presidency.

Obama and his aides seem to understand this. They have gone out of their way to emphasize the importance of restraining costs. The president has held headline-grabbing summits with business and union leaders. Unlike just about every other Democrat on the planet, he emphasizes cost control as much as expanding health coverage.

So what exactly is the president proposing to help him realize hundreds of billions of dollars a year in savings?

Obama aides talk about “game-changers.” These include improving health information technology, expanding wellness programs, expanding preventive medicine, changing reimbursement policies so hospitals are penalized for poor outcomes and instituting comparative effectiveness measures.

Nearly everybody believes these are good ideas. The first problem is that most experts, with a notable exception of David Cutler of Harvard, don’t believe they will produce much in the way of cost savings over the next 10 years. They are expensive to set up and even if they work, it would take a long time for cumulative efficiencies to have much effect. That means that from today until the time President Obama is, say, 60, the U.S. will get no fiscal relief.

The second problem is that nobody is sure that they will ever produce significant savings. The Congressional Budget Office can’t really project savings because there’s no hard evidence they will produce any and no way to measure how much. Some experts believe they will work, but John Sheils of the Lewin Group, a health care policy research company, speaks for many others. He likes the ideas but adds, “There’s nothing that does much to control costs.”

If you read the C.B.O. testimony and talk to enough experts, you come away with a stark conclusion: There are deep structural forces, both in Medicare and the private insurance market, that have driven the explosion in health costs. It is nearly impossible to put together a majority coalition for a bill that challenges those essential structures. Therefore, the leading proposals on Capitol Hill do not directly address the structural problems. They are a collection of worthy but speculative ideas designed to possibly mitigate their effects.

The likely outcome of this year’s health care push is that we will get a medium-size bill that expands coverage to some groups but does relatively little to control costs. In normal conditions, that would be a legislative achievement.

But Obama needs those cuts for his whole strategy to work. Right now, his spending plans are concrete and certain. But his health care savings, which make those spending plans affordable, are distant, amorphous and uncertain. Without serious health cost cuts, this burst of activism will hasten fiscal suicide.

[Prosperity]

all this talk about health care and I still have no idea why we spend so much. I heard that something like 30% (or some large percent) of funds is spent in the last 6 days of people's lives. The old and infirmed are putting a drain on our resources. As a society we have to re-evaluate how we value their lives. Clearly it doesn't make much sense to spend thousands upon thousands of dollars to keep someone alive for a few more days. And clearly, we can't continue spending what we do on social security and medicare.

I just hope we take our government sponsored health care system to be something that can provide free primary care so that people don't develop more expensive conditions later, and some sort of mandatory exercise and dieting program for those that want government help. I don't see any way around this. Universal insurance will just make us spend more money on an already broken system. We need to mandate healthy living for those that want government health, and we need to re-evaluate the old people's roles in our society (raise retirement age anyone?) before we give everyone insurance.

[Art Monk Fan]

all this talk about health care and I still have no idea why we spend so much. I heard that something like 30% (or some large percent) of funds is spent in the last 6 days of people's lives. The old and infirmed are putting a drain on our resources. As a society we have to re-evaluate how we value their lives. Clearly it doesn't make much sense to spend thousands upon thousands of dollars to keep someone alive for a few more days.

The truth is, U.S. health care is so much more expensive, because it is so much better. If we want to control costs, Americans will have to accept government agents deciding who gets care, what kind and how much; essentially who lives or dies. One way or another, every American gets just about every test they need and has just about every procedure tried in order to cure/save them. Affordable universal health care will require Americans to accept the government's decision that they will simply have to die.

[twa]

all this talk about health care and I still have no idea why we spend so much. I heard that something like 30% (or some large percent) of funds is spent in the last 6 days of people's lives. The old and infirmed are putting a drain on our resources. As a society we have to re-evaluate how we value their lives.

:yikes:

:maniac:

:paranoid:

:handicap:

:whew:

:gang:

:shot:

:halo: :violin: :ciao:

but seriously,you do have a good point in that we spend like crazy to hang on our life and the lives of those we love.

There is no easy answer there,but speaking from experience letting them go sucks and our thinking is not always sound at the time.

The increased use of living wills might help reduce costs and uncertainty in that time of life,but I sure would hate to leave it in a congresscritter's hands.....or yours;)

[SnyderShrugged]

all this talk about health care and I still have no idea why we spend so much. I heard that something like 30% (or some large percent) of funds is spent in the last 6 days of people's lives. The old and infirmed are putting a drain on our resources. As a society we have to re-evaluate how we value their lives. Clearly it doesn't make much sense to spend thousands upon thousands of dollars to keep someone alive for a few more days. And clearly, we can't continue spending what we do on social security and medicare.

I just hope we take our government sponsored health care system to be something that can provide free primary care so that people don't develop more expensive conditions later, and some sort of mandatory exercise and dieting program for those that want government help. I don't see any way around this. Universal insurance will just make us spend more money on an already broken system. We need to mandate healthy living for those that want government health, and we need to re-evaluate the old people's roles in our society (raise retirement age anyone?) before we give everyone insurance.

I read somewhere once that there is a direct correlation (not neccessarily causation, mind you) to the HMO mandates by the feds in the 70's and the increase in costs since. I'll try to find it, it was interesting.

[81artmonk]

IMO the problem with healthcare isn't making sure everyone has it, but fixing the system.

Pretty much everywhere universal healthcare has been tried, it isn't a success. But I suppose the prevailing thought is, this is america, it'll work here.

[Prosperity]

There is no easy answer there,but speaking from experience letting them go sucks and our thinking is not always sound at the time.

The increased use of living wills might help reduce costs and uncertainty in that time of life,but I sure would hate to leave it in a congresscritter's hands.....or yours;)

all I'm saying is that if it's a choice between you and say a mini fridge, I know which plug to pull :hysterical:

[Ghost of]

I've seen a CATO economist/analyst state that we could actually cut spending on health care by 40 percent and not reduce the quality of coverage at all by shifting government out of that sphere of the economy (it's no coincidence that housing, health care and education have all skyrocketed as budget items for families and governments well beyond any rate of inflation or rate of increase in tech utilization or coverage areas.) The other part is people embracing or being incentivized to

1) Not smoke

2) Exercise

3) improve diet--not even to perfection, just to an appreciably higher standard

4) create means of price sensitivity rather than our price-dumb health market that is made so by insurance

5) cut the tether between employment and health

There's a lot more but I read it months ago.

But again, I've said for years that government is heavily involved in education, health and housing. And we wonder why it's so damn expensive.

Just wait until it's all free!

If you want Canada or Britain's system--have fun with it. They'll let you go blind in one eye to demonstrate the necessity to save the other one. Give you a white prosthetic when you're black and won't ALLOW a willing person to get a pap smear too early and thus, good luck when you have that cancer that WOULD have been found and cured if not for limits that are purely accounting/cost reduction measures.

A free people doesn't need the permission of some petit tyrant to engage in voluntary and beneficial transactions with health care providers.

[SkinsHokieFan]

But again, I've said for years that government is heavily involved in education, health and housing. And we wonder why it's so damn expensive.

One hell of a great quote

[#98QBKiller]

But again, I've said for years that government is heavily involved in education, health and housing. And we wonder why it's so damn expensive.

Just wait until it's all free!

If you want Canada or Britain's system--have fun with it. They'll let you go blind in one eye to demonstrate the necessity to save the other one. Give you a white prosthetic when you're black and won't ALLOW a willing person to get a pap smear too early and thus, good luck when you have that cancer that WOULD have been found and cured if not for limits that are purely accounting/cost reduction measures.

A free people doesn't need the permission of some petit tyrant to engage in voluntary and beneficial transactions with health care providers.

Isn't Obama's plan to provide the choice of an affordable government-based health care plan?

i.e., not a free program like Canada's or Britain's?

[Art Monk Fan]

Isn't Obama's plan to provide the choice of an affordable government-based health care plan?

i.e., not a free program like Canada's or Britain's?

Except this is clearly a ploy. Employers will use the public option as an excuse to cut costs by reducing or eliminating coverage for their employees, driving increasing numbers into the public plan. It is the "stealth option" for implementing a single payor system.

[Predicto]

The truth is, U.S. health care is so much more expensive, because it is so much better.

This is not even close to accurate.

The truth is, the largest reasons US health care is so much more expensive are 1) because we support a huge industry of highly profitable private insurance companies, 2) the system does not have any competition built into it, 3) there is no incentive for anyone to care about cost because the people making health care decisions are completely removed from the idea of paying for it.

[Predicto]

IMO the problem with healthcare isn't making sure everyone has it, but fixing the system.

Pretty much everywhere universal healthcare has been tried, it isn't a success. But I suppose the prevailing thought is, this is america, it'll work here.

Go to France. It works there.

[Sticksboi05]

Go to France. It works there.

It's not perfect.

[Blackest Eyes]

I don't think universal healthcare is a good option for the US. I do think that having a government run healthcare system for people who cannot afford anything else is a nice thought...but I don't think the government should be handling its peoples healthcare. The government needs to not be so involved in everything. Insurance companies just need to not be douchebags, but that will never happen.

[Ghost of]

This is not even close to accurate.

The truth is, the largest reasons US health care is so much more expensive are 1) because we support a huge industry of highly profitable private insurance companies, 2) the system does not have any competition built into it, 3) there is no incentive for anyone to care about cost because the people making health care decisions are completely removed from the idea of paying for it.

And place bizarre barriers between states when it comes to insurance regulation and pricing. We are basically made price insensitive and noncompetitive at every level of our health care system.

Make no mistake, though, we do not have anything resembling the market system. It's like the worst of all worlds from a long-term sense.

That said, I never had a problem finding a halfway decent insurance plan on the web, be it short-term temp or longer-term. I'm not sure I ever understood (other than low deductibles) this connection between employment and benefits. If they don't offer at work, just buy a policy. Hell, for a single person at my old job it was twice as expensive for a newer employee (less than 3 years) to have the PPO as it was for me to have a quality PPO from ehealth or whatever it is.