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.