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YOUR WORLD IN CHARTS: IT'S ALL HEALTH CARE, BABY.
The fine folks over at CEPR just released a document with some charts that nicely illustrate my earlier post on the "Do-Nothing Caucus." Per capita GDP is a crude measure of how much money we all have. And the first chart uses it to show the effects of unchecked health care spending on national income. It compares per capita GDP and per capita GDP minus health care spending in 2010 and 2060. Watch that red bar shrink!:
Growth in health care costs eats up almost all of the increase in per capita GDP over the next 50 years. That's a staggering projection. In some ways however, the ext graph is even more impressive. Folks like Robert Samuelson worry frequently about the budget deficit. The following chart tracks the budget deficit as it's projected to grow over the next 50 years. The blue line -- that's the one shooting up -- is what we expect our deficit to actually look like. Those other lines, the one's going down (and down means no budget deficit, but instead a surplus), show what would happen if our health spending were equivalent to that of other rich nations like Japan, Germany, and Canada. The difference is stark:
And to just give you an idea of how absurd the Social Security fearmongering is, the above graph assumes no reform of the Social Security system. Social Security is not the problem. Medicare is not the problem. National health spending is. Without system-wide reform, the deficit will explode, to be sure, but the private sector will fare little better: The large real income gains we'd expect from 50 years of economic growth will be chewed up by the health system, leaving us basically stagnant. So I'll say it again: Raising the eligibility age for Medicare and cutting benefits for Social Security is doing nothing about the actual fiscal threat facing the nation. If you're not addressing national health spending, you're not addressing the problem.
COMMENTS (8)
As far as I'm concerned, that second graph makes the case for UHC. You don't need any more than that.
Posted by: James F. Elliott | October 22, 2008 12:20 PM
2 thoughts:
1. The numbers are disheartening, but there is part of me that is in the David Cutler camp of "Increased health spending isn't necessarily bad"-- if the costs drivers are based on value-based medicine being practiced, is it really such a bad thing if most of people's income growth is spent on making them healthier? I'm not suggesting the numbers above are OK, but some increase is probably desirable if value-based medicine is being practiced and the system has been fixed. Doesn't change the overall point, but its a nuance that is frequently lost.
2. Germany, Japan and Canada's systems grow faster than their GDP historically, so how is it possible for those lines to be moving in the downward direction? (I hope the answer isn't that we're taking theirhealth care cost growth rates outside the context of their GDP growth rates, when there are clear correlations between the two...)
Posted by: wisewon | October 22, 2008 12:24 PM
PS To relate to the earlier post-- you don't solve the cost problem by simply moving to UHC and cutting out "waste." Other countries have lower costs primarily because they resrict utilization. The lumbar surgery and arthroscopic surgery examples (questionable clinical benefit) will only get you so far-- at some point, if you're talking about "value-based" medicine-- you're restricting access to interventions that do have clinical benefit, but not enough to justify the cost. That is a cut in benefits. Unquestionably. This is what other countries do.
Posted by: wisewon | October 22, 2008 12:30 PM
Wisewon: Don't forget Ezra's other motto, "Squeeze the providers!"
Posted by: Klug | October 22, 2008 1:26 PM
wiseone wrote, countries have lower costs primarily because they resrict utilization.
A health system most Americans cannot afford also restricts utilization, but in a different way. You could argue that CEOs deserve better health than someone who works on the line, but on that point we would just have to agree to disagree. Unhealthy workers at any level are a drag on the productivity of our economy and that is bad for people in all income brackets.
Posted by: goDems | October 22, 2008 1:54 PM
The problem with this analysis is that if it is true than the favored policy ideas of the Republican Party are all bad ones, and the party itself is a failure as is and must either be destroyed or severely restructured. It would also mean that most of those individuals and institutions supporting the Republican Party, e.g. Fox News, are either morally or intellectually bankrupt or both. But that's way too partisan.
Posted by: Jack | October 22, 2008 2:45 PM
Improving the supply side of health care would help.
I'm open towards walmart style health care. Doctors are over educated and overpaid. Hospitals are over regulated.
Posted by: thehova | October 22, 2008 8:01 PM
Don't we already have single payer universal care for people over 65? And nevertheless don't we spend more on that group than other countries do?
So if we extend universal care to everyone, then we are suddenly going to spend much less on everybody? I don't get it.
Posted by: ed | October 23, 2008 4:18 AM