Monday, January 14, 2013


The Good News


On the evidence, political anger and cultural pessimism are pleasurable. Presumably that’s why rage and gloom appeal to us even when the situation isn’t objectively unpromising at all. The hand wringing about the national debt is a case in point. The large deficits of the last four years were largely a consequence of the Great Recession and are diminishing now even though the economic recovery has been extremely slow. We aren’t going broke, and interest rates remain remarkably low. This simply isn’t Greece or Zimbabwe and isn’t going to become Greece or Zimbabwe. The debt is not a present catastrophe, and the political groups that are making the most noise about it are using it to promote quite different goals than fiscal propriety. None of this slows the manufacture of panic, however, even on the part of people who ought to know better. If they recognize that the Republicans are acting cynically, they insist that there is a real long-term problem on the far side of the largely invented immediate crisis. They figure that if better economic times will improve the deficit situation, the implacable rise of the cost of entitlements, essentially medical entitlements, will nevertheless eventually overwhelm us.  To which I answer. No, they won’t; or, at least, no, they shouldn’t.

In cartoons, the hapless coyote just stands there motionless as the Acme safe hurtles towards him from the cliff above. In real life, you figure, he’d just move to the side a little way as the shadow of the safe got bigger and bigger. Thus it is perfectly true that if you simply extrapolate the increase in the cost of medical care, it appears we’ll be squashed in a couple of decades. Thing is though, although I seem to be the only guy who has noticed this, there is simply no reason why the costs should increase. I can understand a Frenchman or an Englishman or a Japanese succumbing to despair about medical inflation, but we should not. And the reason we should not is because we aren’t Frenchmen, Englishmen, or Japanese, who already have a reasonably efficient health care system. The good news is that we’ve got a dreadfully inefficient medical system that costs almost twice as much per capita as the systems in other countries. We spend $8,000 per person to get results comparable to countries that at worse spend $4,000 per person. Even in our own hemisphere, Canada spends 11.3% of its GPD on health care. We spend 17.9%.  If we reform our health care system to roughly match the performance of everybody else’s system, our medical cost disaster goes away. And if medical costs don’t blow up, neither will the budget.  Let me rephrase this dreadful good news in its own paragraph:

We know we can reduce the amount of wealth we spend on health care drastically because almost every other country shows that we can.  And if we don’t have a health care cost problem, we don’t have a long-term budget problem.

I call this good news dreadful, not only because it will be disappointing to those who get off on despair, but because it doesn’t actually ensure that we won’t have a disaster. It simply means that we won’t have a disaster unless we act with truly epic stupidity. If the safe lands on us, it will be our fault. Unfortunately, it’s perfectly possible that we will not rationalize our health care system. In lieu of doing something sensible like moving to a single payer insurance scheme or some equivalent approach, we may even dismantle the minor efficiency improvements that go along with the ACA. In that case, even if we avoid a fiscal disaster by privatizing everything in sight, we still will have an economic disaster as more and more of everybody’s income is pissed away on health care that costs twice as much as it should and American economic competitiveness is decisively crippled. 

What we should really do is not merely match the efficiency of the health care systems of other nations, but develop a system that is more efficient than theirs and sell it to them at a profit.  Unfortunately, such a program of economic nationalism would violate the free market principles of conservative politicians and injure the material interests of their supporters.  

3 comments:

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Unknown said...

Sorry for being sidetracked by this ... but does the shadow of the safe get larger as the safe descends in Roadrunner cartoons? It is visual cue that we all (?) understand even thought it is incorrect. Objects appear to get larger as they approach, but the cast shadow of a safe descending from above should remain the same size because the sun's rays are essentially parallel (i.e. the ones that contribute to the shadow). It would be a different story if the sun were nearby.

Allan Dobbins

Jim Harrison said...

Mr. Dobbins,

This is cartoon physics. The shadow gets bigger for the same reason you don't start falling until after you notice that you've run off a cliff.