The State (and Costs) of Our Health Care

Day two of "The road to fiscal responsibility goes through health care" week is upon us, and we're beginning to see how a president can use the bully pulpit to drive his message. What a difference a year makes. Over one year ago, Sen. Barack Obama was an attendee at President Bush's State of the Union address where health care was scarcely mentioned outside of tax policy and health savings accounts, and the federal government had little plans to tackle the issue.  Today, President Obama gives his own address in which health care is rumored to loom large.  But that's not all - on the same day the Centers for Medicare and Medicaid and the Institute of Medicine released reports detailing the future cost of inaction in health care.  In 2009, our government is telling us our path is unsustainable - and that's a huge difference.

(Programming note: I'll be liveblogging President Obama's address here at healthcare.change.org beginning at 9 pm ET.  Please stop by and join the discussion!)

First, CMS released its report "Health Spending Projections Through 2018" on Health Affairs today.  The first revelation is one that policy wonks and the Congressional Budget Office have warned about for a long time - that health care costs will be as much as 20% of our GDP by 2018 at the current trajectory.  (Contrast that with countries which covers all their citizens where, paradoxically, you seldom see higher than 10% of GDP).  Aside from the United States turning into GM writ large, the other revelation is that public financing - Medicare, Medicaid, the VA, etc. - are expected to be the largest source of funding in health care by 2016, and responsible for more than 50% of all costs in 2009.  Keep in mind that this is without any government intervention, if we let the free market work its magic.  Upon further reflection, the reasons are obvious.  The effects of the recession are driving people out of coverage - and they're only leaving the private insurance market.  If the effects are as severe as expected, more people will be on Medicaid.  Prescription drug costs in Medicare part D have ballooned the cost of Medicare, in no small part because of provisions that do not allow the government to negotiate for the best prices, push for generics or allow drug reimportation.  And finally, the baby boomers are entering Medicare.

Also keep in mind, the picture is worse for the federal budget than even this report shows (and it's pretty bad!)  CMS anticipates a dip in public costs next year, with health care growth slowing to 0.5%.  That would be amazing - the first time since the 1940s that growth has dropped like that.  But that presumes that a 20% cut of physician payment rates goes into effect next year as it's scheduled to do.  That ain't gonna happen.  Merrill Goozer says, "As anyone who follows that issue closely knows, that never happens. Congress always steps in and restores the cuts."  So everything we said for 2018?  Presume it'll happen a lot earlier.

Oh, and health care costs in this country is going to shoot past $8,000 per person this year, according to HHS.  (By contrast, Japan in 2006 was around $2,500 per person).  So we've got that going for us, which is nice.
One thing that the administration's focus on the economic necessity of reforming health care misses is the human cost.  Into that breach comes the Institute of Medicine, who unveiled their latest report today:  America's Uninsured Crisis: Consequences for Health and Health Care.  Their top line discoveries will surprise no one.  The uninsured are less likely to fully recover from severe trauma than the insured, have a higher mortality rate in hospitals than the insured, are more likely to be diagnosed with cancer at a very advanced or irrecoverable stage than the insured, are more likely to suffer damage during strokes, be unable to control their sugar when diabetic, be aware of their high blood pressure, die of congestive heart failure or heart attack than the insured.  This is no comfort when the economic recession is adding millions to the ranks of the uninsured every few months.

The state of our health care is bleak... but for once, it is the people in a position to do something about it that are telling us.  There's hope in that, at least.

(Photo credit:  a35mmlife on Flickr.)