By far the biggest issue in the United States is health care. Whatever your cause, you need to help fix health care first.
Two charts make this case hard to refute.
We always hear about wage stagnation, but wages are actually rising – the gains are just getting eaten up in health care benefits, which do not show up as wages. Worker and employer costs are rising rapidly for health benefits. And even when workers end up earning more in spending power, much of it goes to health care in the form of deductibles and other costs.
An entry-level employee in my business ends up having more than a 20 percent cost factor versus salary on health benefits. So if health costs rise 10 percent (not unusual in the last two decades), a 2 percent rise in salary is 100 percent eaten up by health benefits. And, with health care results not increasing, getting ahead in this way really means staying in place.
And our government? Well, they too are swamped covering health care. It is overtaking every other expense with no end in sight. We are headed to upwards of 30 percent of our budget being eaten by health care, and these numbers only include direct health care programs, not the costs eaten up inside other big programs whether the military, research, or education.
So, people who are working hard and succeeding feel no better off. And the government, which has big problems to solve – education, transportation, R&D, climate – has to give all incremental dollars to health care. If you care about any other program, from social justice to military intervention, you need health care costs to be solved first. There is just not going to be money for your program if we keep on the current track.
Despite facing this reckoning, we are not getting solutions. The left is obsessed with universal coverage. This is a noble end, but like any other new program, we need lower costs to make it viable. The right, well, they are not in the game. Ever since Sarah Palin’s abhorrent (but effective) lie of “death panels” the right has used fear of health care reform as a political weapon.
Costs have to be our obsession. We spend too much – almost 50 percent more than any other country on a per capita basis.
The only real proposal on the table to lower costs is Medicare for All. Ever since we removed “pre-existing” coverage as a factor in insurance coverage, the real value of insurance companies – assessing risk – has been minimized. Furthermore, Medicare costs are lower on average than private insurance.
But, politically, Medicare for All is not happening. It’s a wholesale overthrow of the current system. It is just not feasible. Our skepticism of government in the U.S. is too strong. Doctors are too powerful. And a unified force of special interests will blunt it. As Uwe Reinhardt pointed out, “Every dollar of waste in the health care system is a dollar of income for some provider.” They won’t give up easily. Not to mention, universal coverage remains the primary benefit of Medicare for All. Solving the cost issues require deeper thinking.
We need a hardcore push to incrementally get the cost curve bending back. The Affordable Care Act actually contemplated some real cost cutting programs – pay for impact, evidence-based payment boards, even the health care mandate – but failed the final bill or have been weakened since passage. The program fell back on dealing with coverage. Costs were for another day. That day must be now.
To get this done, we need fewer grand plans and more small, wonky ideas that chip away at the problem. With small gains, we will end up in a place where bigger decisions can be made. The left and right have many of these ideas that, in isolation, could pass into law. With a laser focus on lowering costs, each could get things done.
Patent reform on drugs, more pay for service, fewer large hospital and drug mergers, tort reform, testing effectiveness standards, provider licensing reform, behavior-based pricing, cross border insurance plans, patient data standards and portability, giving Medicare negotiating powers, doctor-drug incentive reform, advertisement reform, telemedicine regulations, and many more ideas exist – each of which could make a difference. These are unsexy, technical changes. No one can win office on any one of these tactics, but they can on a total commitment to lower costs and tangible plans to get there.
Americans are going to demand progress on health care costs. They are fed up with their income being eaten up and their government held hostage. Each side could deal to get some of their wish list done. But, we need leadership ready to make lower health care costs a priority. If it gets done, our options expand. We can then fight over the money we get back and what to do with it – pay debt, fund schools, expand coverage, massive infrastructure investments. Those are the fun debates. But the health care overhang will haunt us until we turn the cost tide. Let’s see who steps into this debate with real, doable solutions.