Watch out for senior health care costs
The rising cost of gas isn't the only thing to worry about. Commentator Glenn Hubbard says the costs of health care programs for seniors face a big increase and the candidates have different ideas on what to do.
Glenn Hubbard (Marketplace)
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TEXT OF COMMENTARY
Bob Moon: The rising cost of gas continues to headline the presidential campaign. Democratic hopeful Barack Obama has called for tax credits and a second round of stimulus checks to help Americans absorb the expense. Presumptive Republican nominee John McCain touts his support of a gas tax holiday and offshore drilling.
All the focus might be on energy prices right now, but commentator and economist Glenn Hubbard says if we really want to understand each candidate's economic platform, there's a better issue to examine.
Hubbard: Pop Quiz: To determine our country's long-term budget future, voters in November should focus most on (a) the annual cost of the Iraq war, (b) the cost of extending the 2001 and 2003 tax cuts or (c) the price of an MRI.
Answer: (c) The price of an MRI.
Keep that in mind as John McCain and Barack Obama roll out their spending priorities. Listen to what they say -- or don't say -- about health care.
Rising health care costs will radically alter the nation's budget outlook over the next generation. The cost of old-age entitlement programs could rise by 10 percentage points of GDP over that period. The large tax increases or spending reductions required to close this gap should be at the top of any policy agenda.
Most of the health care debate focuses on the level of government's involvement in health care. Sen. Obama's proposals call for a larger role for government. He wants to increase access to Medicaid and give individuals and businesses greater capacity to buy into a government plan. Sen. McCain's plans embrace less government participation. His proposals would grant all Americans refundable tax credits to encourage them to sign up for private insurance. The Obama campaign estimates costs of $60 billion per year. The McCain campaign would use other tax reforms to pay for new spending.
But what will the plans do to health care costs? By encouraging higher deductibles and co-payments, the McCain plan will decrease health care spending. But it doesn't answer how we can reform Medicare to reduce costs. The Obama proposal tries to reduce costs by steering individuals toward government plans. But the proposal does not address the cost of public subsidies to expand government programs or the potential for innovation-unfriendly price controls.
Is a large tax increase in our future? Will we be able to afford a strong national defense, promote education and support basic research?
The answer lies in health care policy.
Moon: Glenn Hubbard is the dean of the business school at Columbia University. He used to run the Council of Economic Advisors for President Bush.
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From Tampa, 06/29/2008
Health care in the US is the single heaviest baggage that we have going forward; this article is excellent at pointing this. Out of all the potential candidates (Republicans and Democrats) Mrs. Hillary Clinton had the most concern about this issue. Did she have the solution? I don't know, but the fact that she didn't get selected as a candidate shows in my mind the blind eye that we have towards this enormous problem.
A few years ago, I believe there was an article about General Motors that showed how health care costs for its employees constituted a larger potion of the total cost of a producing a car even larger than that of the steel in it.
It is also a shame that the US, the most advanced country in the world has about 30% uninsured population and Senior citizens that have to pick each day what treatment to take because they can't afford to treat all of their illnesses.
I have yet to listen or read an article that points the problems:
1. Is it lack of competition in the health care arena; lack of doctors, lack of hospitals?
2. Is the problem Congress protecting those enriching themselves by laws that promote protectionism of the health care industry? Lucrative lobbying for congressmen and poorness and despair for the US?
3. Is it anti-competitive collusion between the players? Namely insurance companies and hospitals (and the corporations who own them)?
4. In any other country in the world, a Medical Doctor is a professional like an engineer or a lawyer, in the US, being a Doctor is a ticket to richness; is this the problem?
5. Is it all of them?
What is the problem, and what would a solution that is sustainable over time look like?
From lancaster, PA, 06/28/2008
The problem with healthcare costs is not the price, but the volume. Those of us who perform and read MRI's have seen no increase in what we get paid per case over the past few years; indeed, when corrected for inflation (general inflation, not healthcare inflation) the price has decreased. Further, for most patients, what we are paid is fixed by the payor. As healthcare costs spiral upward, most physicians are working harder and making less every year. This is not a plea for sympathy; we are very fortunate to be doing what we do, but we are not the primary cause of increasing healthcare costs. Rather than the price of an MRI, the real problem is the number of MRI's performed, which has skyrocketed. The causes are multiple: the growing number of older patients, the demand (by both patients and providers) for everything possible to be done for whatever is bothering them at the moment, defensive medicine, and the sheer power of our technology to provide more and more accurate answers than ever before. Most patients who visit a medical practitioner are disappointed if some sort of advanced diagnostic technique is not utilized. "Take 2 aspirin and call me in a few days" is not what most "consumers" of healthcare expect, or demand, even for self-limited problems. In most countries with single-payor systems, patients do not expect, and do not have, instant access to high tech imaging and the like. Is this bad? Hard to know, but no matter what the data shows, most American patients expect the most and best and do not expect to personally foot the bill for what that costs.
From Seattle, WA, 06/27/2008
I am 61 years old and cannot afford to retire because of the cost of health care. Even then, my plan is what they call "catastrophic" with a local HMO because I could not afford anything else. On top of the premium (over $300 per month) I have to pay for office visits, lab fees and prescriptions.
Additionally, it is INSANE that in a country as rich as ours that anyone should have to pay what we pay for health care. Everyone, whether employed or not, should have low-cost basic health care.
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