Health care spending deserves public, congressional attention
There was encouraging news on health care spending reported last week, but it needs to be put in perspective.
The New York Times reported that Medicare spending has actually fallen, a little bit.
That’s newsworthy, given that for decades, per-capita Medicare spending — indeed, all health care spending in the U.S. — rose faster than inflation.
The report notes that per-capita Medicare spending was $12,000 three years ago. This year, the average cost figure fell to $11,200. If the cost reduction were to continue, notes the Times, it would be a rarity in Medicare’s history.
Still, the modest price decline is good news. Supporters of ObamaCare might even use this to tout the program’s success.
But as welcome as this news is, it is important to compare U.S. health care spending to spending in other countries. That story is less encouraging. In fact, the United States spends much more on health care, on a per-capita basis. Health care costs in the U.S. are about twice the average per-capita spending in other advanced countries.
Even with the latest Medicare news, the U.S. still spends about 18 percent of gross national product on health care. The next highest level of health care spending is found in the Netherlands, where health care consumes 12 percent of total spending.
The debate over ObamaCare gave lip service to cost control. President Obama talked about “bending the cost curve.” But the law mostly just expanded access to health insurance — an important change that will help millions of Americans.
But the health care reform debate did not put enough emphasis on cost control, despite the official name of the law “Patient Protection and Affordable Care Act” featuring the words affordable care.
Controlling health care costs is much harder to do than expanding coverage, which is what ObamaCare has done so far. Expanding coverage amounted to subsidized coverage paid for with higher taxes. Reducing costs would mean cutting into profits of drug manufacturers, hospitals, some doctors and health insurance companies — something Washington politicians are reluctant to do.
During the health care debate we repeatedly heard that 50 million Americans lacked health insurance. But no politicians made speeches explaining that the U.S. spends twice as much on health care as other countries.
A story in Friday’s Butler Eagle suggested that Democrats are aware of their political vulnerability on health care costs. The Associated Press story reported that former senior advisers to the Clinton and Obama administrations helped author a plan that would let states use their own strategies to reduce health care spending in Medicare and Medicaid. The proposal calls for states to be rewarded with a share of the savings, which could amount to hundreds of millions or even billions of dollars, depending on the state.
Despite the good news about lower Medicare spending, experts expect health care costs to return to an upward trend. The recent slowdown in health care spending has been linked to the weak economy and shifting of more costs to consumers in the form of copays.
Part of high costs might be related to overutilization or excess capacity of expensive, high-tech equipment. But the larger problem is that excess health care costs are part of the profits of U.S. pharmaceutical companies, health insurance companies, medical device makers, hospitals and doctors, specialists mostly. And trimming those profits will be hard, given the political clout of health care industries in Washington.
Still, it’s good news there is finally some attention being paid to containing, or reducing, health care costs. Despite public weariness with the health care debate, any talk about reducing health care costs is worth paying attention to.
