The Economist has run an interesting piece on the expansion of government spending around the world. To suggest that the article’s forecasts are sobering would be an understatement. Current fiscal spending is at 40% of GDP in the U.S. While this is sustainable and, relatively speaking, enviable compared to countries like France where it sits at 55%, current spending and taxation trajectories would open a growing gap over the coming decades.
President Obama’s attempt to overhaul health care was, in part, supposed to address this fiscal time-bomb by slowing the growth of health care costs (or “bending the cost curve” as the President is fond of saying). Paradoxically, health care reform’s advocates argue that we will need to spend more in the short term to save more in the long term. In many respects, this argument has significant merit. Yet, as this past week’s Congressional election in Massachusetts has demonstrated, it is a political non-starter. Clearly, reform of the health care system must be tied closer to a broader reform of American fiscal spending policies if either issue is to be addressed successfully.
A New Way Forward
One way to tie fiscal and health reform together more closely would be to separate the health care reform legislation into two packages with two distinct types of goals (according to the White House, health care reform efforts should target not one, but eight distinct goals). The first would be designed exclusively to “bend the cost curve” of health care provision in the U.S. through legislative and regulatory reforms of the health care system — everything from payer/provider relationships to delivery systems to medical tort reform to rules regarding what insurance companies can and cannot consider when making coverage decisions (e.g. pre-existing conditions).
The second package of reforms would be aimed at a distinct, but related goal: expanding health coverage to the uninsured. At the end of the day, this is where most of the controversy lies because this is where one would expect most of the costs to lie. By separating health care reform into two distinct, sequenced packages, reform advocates could demonstrate that they are serious about addressing America’s growing fiscal problem by addressing one of its most important elements: run-away health care spending.
Only after we have an honest debate about what can be done to contain cost-growth can we hope to have a productive debate about how much the American people are willing to expand the provision of health care coverage to the un-insured.
However, one final consideration should give pause. It is an often-overlooked fact that the American health care system is already providing very expensive care to many of the un-insured. That is the status quo. So it is possible that a significant portion of the potential cost-savings realizable through health care reform will only be accrued through an expansion of coverage. If this is in fact the case, then it would be difficult indeed to split the reform package into two component parts that reflect the distinct goals pursued by reformers. Yet, even then, it still might make sense to split the package int two pieces. Most people assume that the majority of the health bill’s costs will arise from programs designed to expand coverage to the un-insured. If the expansion of coverage does result in a net saving then that should be made clear by making the expansion of health care coverage a separate and distinct legislative package.
It should be clear to all, however, that it is time to try something new. The severity of America’s pending fiscal crisis and the political paralysis afflicting efforts to address major societal problems, like our un-sustainable health care system, demand it.
