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The surging tide of health-care costs

The Rocky

Published February 27, 2008 at 12:05 a.m.

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The federal government is out with a scary new report on the projected cost of health care over the next decade. These are big numbers.

Government spending on health care will nearly double to more than $2 trillion in 2017 and total national spending on health care will also nearly double, to $4.3 trillion.

By way of comparison, all federal spending for 2009 is expected to be $3.1 trillion.

Over the next decade, the rate of increase in health-care spending is expected to be three times the rate of inflation and two percentage points more than the rate of all economic growth. In 2015, it will consume one-fifth of our gross domestic product.

The popular Medicare program will also nearly double over the 10 years, from $427 billion in 2007 to $844 billion and the leading edge of the baby boom only starts becoming eligible in 2011. And if private Medicare plans become more popular, that too may increase costs.

The factors that are driving the increases are unlikely to change - an aging population, boomer retirees, advances in drugs and medical technology.

Almost everybody who has looked at these numbers, including the current Health and Human Services secretary, Mike Leavitt, says they are unsustainable. Yet the public shows little enthusiasm for tackling health-care costs and this is reflected in congressional inaction. This year, President Bush proposed reducing the rate of growth in Medicare spending by $178 billion and the proposal fell flat with Congress.

This latest report comes not from alarmists who oppose in principle any government-run health care but from the sober-sides at the U.S. Centers for Medicare and Medicaid Services.

We can't say we haven't been warned.

Comments

  • February 27, 2008

    7:42 a.m.

    Suggest removal

    Mike_In_Hartsel writes:

    "The popular Medicare program"? Popular? It's mandatory! Any program that the government runs that is mandatory or quasi-mandatory is BAD.

    This editorial didn't address the real reasons for high health care costs. Why? They don't really want to discuss them. They like the government health care idea.

  • February 27, 2008

    11:40 a.m.

    Suggest removal

    BrianSchwartz writes:

    We need Freedom and Individual Rights in Medicine: www.WeStandFirm.org.

  • February 27, 2008

    12:31 p.m.

    Suggest removal

    p_myers661 writes:

    All of these projections ignore the effects of the excessive paperwork government programs impose on health care providers and the government and insurance companies. If we were to develop programs where MSA coverage were available to all and restructure the Medicaid and Medicare programs so that their primary form of aid was an MSA, we might actually make some progress. For those on Medicare and others over 55 or 60, I'd offer a choice between the current model of Medicare and the new "choose for yourself" MSA system.

    Can you imagine what would happen if Colorado made those changes and included more people in their programs while lowering costs? Paperwork is very expensive. Ask your own doctor what she/he charges your insurance company for a procedure the next time you go to the doctor. Ask how much they would charge for a cash payment on the spot. IF your "care provider" is open to such questions, ask how many people are on staff for accounting and how many for patient care. You might be very surprised.

    Government paid care is a flat, pre-determined price for each part of care. (I'm trying to find a web site that lists the payouts.) A doctor might charge less for one thing or another but is never paid more. There is no competition and no incentive for any when people, both those with insurance and those on government programs, never know what the price of care is. Include individual choices and knowledge of costs in any program and you will see costs drop. Keep the government "fee schedule" in place alongside insurance agreements with hospitals to charge according to agreements that the patient never sees and you will have skyrocketing costs.

    Oh, one other thing. Most of the costs listed in this article are layered together. You cannot have one cost of health care provided by the government next to the total health care costs and projections without knowing the overlaps. This article seems to forget that such a thing as a cost overlap exists.

  • February 27, 2008

    1:07 p.m.

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    BrooksImp writes:

    What's really amazing is that the people who operate government apparently have no clue about the causal effects of government subsidies, government fee-schedule price fixing, and government protectionism, in artificially inflating the cost of medical care.

  • February 27, 2008

    11:22 p.m.

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    paulhsiehmd writes:

    The reason that health care costs are so high is because of the shameful government interference in the free markets for health care and health insurance.

    Government regulations have have resulted in costs rising twice as fast as inflation. But in the sectors of medicine which are the most free (i.e., subject to the least government regulation), such as LASIK eye surgery and cosmetic surgery we see the typical free market pattern of improved quality and lowered costs over time.

    Colorado attorney Lin Zinser have written an article on this topic in the Winter 2007-2008 edition of the national journal, "The Objective Standard" on precisely this topic, entitled:

    "Moral Health Care vs. 'Universal Health Care'"

    It is available online at:

    http://www.theobjectivestandard.com/i...

    We argue that the current crisis in American health care is the result of decades of government interference and violations of individual rights in health insurance and medicine. Hence the only moral and practical solution to the problem is not more government controls but instead to gradually and systematically transition to a rights-respecting, fully free market in those industries.

    Paul Hsieh, MD
    Sedalia, CO
    Freedom and Individual Rights in Medicine: http://www.WeStandFIRM.org

  • February 28, 2008

    8:33 a.m.

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    sschow writes:

    "Yet the public shows little enthusiasm for tackling health-care costs..."

    I can't take an editorial seriously if the writers assume that "costs" are something a government panel/legislation can (or should) control. The price of a good or service is a complete picture of the consumer's willingness to purchase it and the supplier's willingness to supply it. If you try and control either, you end up with shortages. How can you promote a shortage of health care?

    You are taking the zero-sum fallacy to a new level (i.e. the idea that economic transactions in a free-marketplace benefit one party and harm the other).

  • February 28, 2008

    11:52 a.m.

    Suggest removal

    mytwosense writes:

    I want to hear a real and detailed DESCRIPTION of a "free market" solution to rising healthcare costs, instead of ASSERTIONS.

    I also want to know why eight years of Republican rule has not produced an across-the-board "free market" solution that has measurably resulted in lower, not increased health care premiums, and lower, not increased healthcare spending, and more, not less people with access to good healthcare insurance.

    You people have had almost a decade to come up with the goods.

    Let's hear it.

  • March 1, 2008

    9:36 a.m.

    Suggest removal

    mrfxx writes:

    Why not focus on the health insurance industry, the medical industry and big Pharma which makes more than enough money to do R&D (much of which is taxpayer subsidized), meet caps in other countries & proudly proclaim its humanitarian side by providing cheap/free drugs to the uninsured & underinsured.

    Any publicly or privately held corporation must make a profit, resulting in such decisions such as paying for cheaper medication (one case resulted in the death of 5 children when their mother's effective post-partum medication was deemed too expensive and replaced by a less effective medication) or cutting off folks after they were diagnosed with a catastrophic illness (one company just got nailed to the tune of $9 million after "dropping" a woman after she was diagnosed with breast cancer).

    A recent article pointed out that the health insurance industry picks & chooses when to insure the "unhealthy". When the stock market is rolling along, health insurance rates hold steady or drop - to get more "subscribers" and the money is then invested in the market. When the market tanks - as it currently doing - health care rates skyrocket - and the most vulnerable of the insured are either cut off because the plans are no longer affordable for them or the companies they work for which contribute to their plans - causing more folks to wait until what should have been "wellness care" becomes a visit to the ER. It is a losing game for the US - which pays the highest percent of GDP for healthcare with among the worst results of industrialized countries.

    I am tired of hearing the "horror stories" of Canadian medicine - including long waits for elective surgery "forcing" the folks who can afford it come to the US for treatment. Rarely mentioned is that folks in US northern states regularly go north for "wellness care" at affordable prices - and many more go north to get their prescriptions filled at capped prices. In addition, for all those horror stories, the countries with some form of national health care have lower infant mortality rates & longer life spans, so they must be doing something right.

    Hospital costs are padded to cover the uninsured. The poor sucker who is self-insured is the one who is most likely to be screwed by the current system, as insurance companies most often "cap" what a procedure is "worth" (frequently less than 80% of what is charged) which the hospital accepts that as payment in full, while the self-insured patient pays the full amount.

    This will not be addressed by a Congress which gets a platinum level of healthcare - for life - at taxpayer expense. It's too bad the country doesn't have the same initiative process that Colorado does, as I am willing to bet that an initiative to limit both taxpayer subsidized healthcare & retirement packages for elected & appointed officials not to exceed what the average taxpayer is provided would pass on the first vote - by an overwhelming margin.