Healthcare caused Economic Crisis Looming

[NGinpa]

Interesting materials and discussions going on over at the HealthAffairs blog related to healthcare and economics! We discuss around here the uninsured and the tragic life consequences that can happen to the uninsured in this country, but the American Healthcare system may be soon responsible for economic hardships for us all if not already!

A Democrat in Congress wrote the following:

The private sector is making these federal budget problems harder to ignore. Both Standard & Poor’s and Moody’s are projecting that the U.S. Treasury bond could lose its AAA rating within the next five to ten years as a result of financing problems with Medicare and Medicaid. Such a downgrade could make today’s subprime problems look trivial because the T-bond is, as Moody’s says, “the anchor to the world’s financial system.” And losing the AAA rating is just the beginning of trouble unless underlying trends are altered. S&P projects that by 2015 the U.S. could have the same credit rating as Estonia, by 2020 a Mexican credit rating, and, by 2025 junk-bond status.

What is he talking about?


The National Health Expenditure Accounts Projections Team released a report recently saying:

The outlook for national health spending calls for continued steady growth. Spending growth is projected to be 6.7 percent in 2007, similar to its rate in 2006. Average annual growth over the projection period is expected to be 6.7 percent. Slower growth in private spending toward the end of the period is expected to be offset by stronger growth in public spending. The health share of gross domestic product (GDP) is expected to increase to 16.3 percent in 2007 and then rise throughout the projection period, reaching 19.5 percent of GDP by 2017.

Concluding Comments

With the implementation of Medicare Part D behind us, a focal point of the next ten years will be the impending movement of the baby boomers into Medicare. Expected trends later in the projection period, such as accelerating growth in Medicare enrollment, are a first sign of this shift. Although the difference in rates between health spending growth and overall economic growth is projected to be lower over the next decade than the previous thirty years, on average, cost pressures continue to mount. As a result, health is projected to consume an expanding share of the economy, which means that policymakers, insurers, and the public will face increasingly difficult decisions about the way health care is delivered and paid for.

Well it seems the informed anyway in both political parties agree we are heading toward an economic cliff, but of course they disagree how to solve this coming economic squeeze. The main reason likely why the problem festers and nothing gets done (IMHO) is this political ideological disagreement on how to solve the problem. The Democrat Jim Cooper that I linked to above says:

Virtually every policy expert will tell you that our health care spending is our biggest budget problem, yet Washington continues to be strangely silent and passive in its budgets. No major presidential candidate mentions the pending catastrophe for fear of depressing the electorate. Of course, it’s always easier to say that you will think about tough subjects after the next election. And besides, our entitlements have been unsustainable for so long, perhaps they can hold on a little bit longer.

He also says this in finishing, but offers no concrete solutions:

While these projections take us into the future, problems that we are facing are in fact just around the corner. Already cracks can be seen that stretch underneath the most important and most popular federal programs in America: Medicare and Social Security. As the Health Affairs article notes, without congressional intervention, official U.S. policy will be to cut physician Medicare reimbursement by 25 percent over the next ten years. This is news to most physicians who call on my office, none of whom has been briefed by their medical society about the implications of the Balance Budget Act of 1997. The annual Band-aids that Congress has been applying only worsen the long-term problem, which the Treasury has estimated to be $5 trillion in size.

A Republican in the House Paul Ryan confirms the deveoping crisis, but he has more to say about solutions.

The projection that health care spending will reach nearly 20 percent of gross domestic product (GDP) within the next ten years confirms what every leading health care economist is saying: health care spending is out of control, and the time for action is now. But these are not signs that the health care market has failed. In fact – and it is crucial to understand this – they are the predictable results of vast distortions imposed on the market over decades. The government is the single greatest contributor to this problem by the nature of the tax code and the structure of health care entitlement spending; and these can be corrected with fundamental changes in public policy to restore the market’s vitality.

Of course he wants market driven solutions no doubt backing the Consumer Directed Healthcare movement which transfers more diagnostic challenges and payment responsibilities onto the sick patients themselves! YUH, that will work! Make us all Physicians! However, this market Repub line will likely be the default solution if other more socially responsible solution (from both an effectiveness and economic responsibility perception) are not forthcoming! Will that default be any worse than what we see developing now??