Larger than military spending looms the specter of massive, out-of-control entitlement spending, primarily spending on health care.
President Obama’s proposed health reform was sold, initially, in large part as a way to control this spending. That’s the biggest reason why it’s proven at best tepidly popular: because controlling spending means taking something away from current recipients.
A variety of advocates have tried to explain that there’s a lot of low-hanging fruit, but these protests have convinced almost no one. With good reason: dramatic improvements in an industry’s efficiency produced by government mandate are not our usual experience of the world.
As smarter advocates have pointed out, the biggest driver of the high price of American health care is simply that we pay providers more than other countries. American doctors rightly perceive that, relative to their own historical experience, they are doing worse and worse – and relative to other options for people with their cognitive capabilities (Wall Street, say) they are doing wildly worse. The idea that the “problem” with American medicine is that they are still paid too much strikes them as simply mad.
But there’s another way to slice the same data. We spend more than any other country on health care, for broadly comparable results. But we spend hugely more than comparable countries on health care for the elderly, specifically. If you compare spending on routine, preventative care for the young, not so much.
The challenge, then, is not so much to figure out how to pay doctors less but how to change the employment mix of the medical profession as part of an overall reorientation of our medical spending modestly away from the elderly (who will inevitably consume the lion’s share of health-care dollars) and towards the rest of the population.
It’s obvious why this would be wildly unpopular. The elderly vote reliably; kids don’t vote at all. The elderly are also much whiter on average than the young. To be blunt about it, while grandma may well want good health care for her granddaughter, she may not feel as strongly about the daughter of her home-health aid.
But, like I said, this isn’t a post about the politics of the matter; it’s about what we need to do to face our competition. Poor health care for young people and working-age people is a big problem. It makes a material contribution to the poor educational outcomes among the poor, which in turn results in the entrenchment of poverty with wider negative social and economic consequences. The tie between employment and healthcare produces labor market rigidities, inhibits entrepreneurship among the non-rich, has strangled a number of old industrial corporations – it’s a huge problem.
Meanwhile, on the subject of entitlements more generally, the expectation of a comfortable retirement in one’s early 60s is not tenable in a world of longer life expectancies. Most people are going to have to die sooner or work longer. I think people should work longer.
My own inclination is to say that Obama’s health-care proposal is a step in the right direction, the kind of reform that would make it easier for a subsequent Republican administration to reform it in a direction that will be more open to the kinds of price signals that drive medical innovation and, in turn, actually lower costs. Such reforms are essentially impossible until a functional individual insurance market is created, and the Obama health-care plan, if it works, promises to create such a market. That’s a big “if” – but if it doesn’t create a functional individual insurance market, then it will fail, and the citizenry, rather than demanding repeal, will demand that it be changed to make that market work. (Or to eliminate the insurance industry, which I wouldn’t be averse to if you could create a system where price signals reached the consumer in some fashion, something like the DeLong plan.)
And speaking of the DeLong plan: I want to highlight one paragraph from same:
Sin taxes (and, perhaps, someday general revenues) pay for an army of barefoot doctors and nurses and mobile treatment vans roaming the country, knocking on doors, and providing preventive and other long-run lifestyle services for free: Let me examine your prostate. Mind if I check your refrigerator and tell you how to eat healthier? Have you exercised today? I’m a Pilates instructor, and we could do a session now? Are you up on your immunizations? Anybody here have a fever and need antibiotics? Come on out to the van and I’ll clean your teeth.” The idea is to make the preventive care cheaper-than-free, to insure that nothing with a high long-run benefit/cost ratio gets left undone because people would rather get a bigger check the next April to use to buy an HDTV.
That army of barefoot doctors and nurses and so forth? Would they be members of 1199? Or, even more likely, AFSCME? I ask because I like the idea a lot – it’s exactly the kind of paternalistic initiative I tend to go for – but I want to get some idea of what kind of insane long-term costs we’re going to be locking in with this initiative?