Map of life expectancy at birth from Global Education Project.

Tuesday, July 27, 2010

Darkness at the end of the tunnel

We have a several long-term problems, which of course our dysfunctional political system and utterly corrupt and nearly useless corporate media are largely failing even to contemplate, let alone do anything about. If you are reading this, you can probably come up with a list that's pretty similar to my own -- anthropogenic climate change, petroleum depletion, long-term structural unemployment, infrastructure decay, massive unfunded pension liabilities, the permanent war economy, not to mention the dysfunctional political system and corrupt and useless corporate media. Oh, I did mention those.

But long blog posts don't get read very much so I'll concentrate on one problem today. We've discussed this before but we have a strong, specific analysis to rely on today, from Joseph P. Newhouse in Health Affairs. It really frosts my pumpkin that this is subscription only, but I'll do my best to get the gist across. This is really two articles. The first is what the title says -- how various groups of Americans will experience the effects of the Patient Protection and Affordable Care Act in coming years, depending on their current status within the health care non-system the PPACA set out to reform. The basic lesson here is that the legislative factory has built a Rube Goldberg contraption with far too many moving parts that don't really fit together. All sorts of strange outcomes and unnecessary administrative burdens may result, which it may or may not be politically possible to fix. All of these problems would disappear like the flame of a blown out candle if we just had universal, comprehensive, single payer national health care but that can't happen because Aetna (on whose board Newhouse sits and in which he owns stock) would also blow away and well, then, some rich people would no longer be able to suck our blood.

In spite of his blatant conflict of interest, however, Newhouse appears to be a fair analyst. The second half of the article, or the second article really, concerns the future of health care spending with a focus on Medicare. Here's the problem in a pistachio shell: health care costs have been growing at about 2.5% annually above the rate of GDP growth. If that continues, four percent of GDP will shift to Medicare in the next 15 years. Big deal, you say? Yes it is, because Americans are unwilling to pay more in taxes than about 18% of GDP.

Right now, by the way, although nobody will believe it who listens to our dysfunctional politicians and useless corporate media, we're paying the lowest percentage of GDP in federal taxes since 1950, about 15%, so we could conceivably pay more but it seems unlikely to happen. In any event, we'd have to exceed 18% to cover 4% of GDP shifting to Medicare. And of course it just gets worse after that. Newhouse, relying on ME Chernew and no doubt correctly, observes that if this continues, by about 2050 we will actually have less of GDP to spend on everything else, i.e. Medicare will start eating our lunch and burning down our houses.

Of course this won't happen because we won't pass the necessary tax increases. So what will happen? There are a few possibilities but the smash up of universal health care, and of Medicare, seems the only likely alternative. Unless, of course, we can stuff a sock in the idiots who are screaming about death panels and find a way to start making rational choices about medical spending.

I'm not betting on it.


Anonymous said...

So pessimistic.. yet our situation is dire indeed.

Cervantes said...

I suspect commercial sponsorship of the above comment but the site appears harmless so I'll let it stand. However, I do feel the site should explain how it is funded.

kathy a. said...

we absolutely need to do some restructuring of taxes -- at the top end, because poor people [especially -- sales taxes are very regressive] and those a bit better off are already carrying their load, and the richest people and companies are not.

kathy a. said...

we can do better on more sensible cost containment, too. which i think in the medical arena, means making sensible choices in light of the data and the individual -- but ultimately, making health care about health care, not about the middleman insurance companies making profits. that is the real roadblock, i think -- the need for insurance companies to accumulate wealth.

kathy a. said...

i don't think any normal person thinks of their personal taxes as a % of GDP. the less-endowed ~90% of us worry about paying our damned bills, and what will happen when we get older. we aren't the ones paying an incredibly low 15% toward taxes.

Cervantes said...

Well, you have to think in terms of % of GDP because GDP is the base from which taxes are raised. It is true that more progressive tax system would make raising taxes overall less painful for most people, but politically, it's going to be awfully hard to increase federal taxes by 5% of GDP no matter how you slice it.