The Unsustainable Nature of Medicaid

Jagadeesh Gokhale argues in this Cato Policy Analysis that Medicaid is on an unsustainable growth path.

Current trends and policies imply unsustainable growth in federal Medicaid outlays. In the year 2006, federal Medicaid spending was 11.9 percent of federal general revenues and 1.5 percent of GDP. Making conservative assumptions about future growth in Medicaid enrollment and spending per beneficiary, this paper estimates that the present value of federal Medicaid outlays over the next 100 years will take up 24 percent of the present value of federal general revenues and 3.7 percent of the present value of GDP calculated over the same period.

By the end of the next 100 years, that is, in the year 2106, Medicaid’s share of federal general revenues will be 48 percent — four times larger than its 11.9 percent share in 2006. In the year 2106, federal Medicaid spending as a share of GDP is estimated to be 7.4 percent — a fivefold increase from its current share of 1.5 percent. If the federal government continues to match state Medicaid outlays at the current rate, Medicaid’s share of GDP in the year 2106 will become 13 percent — or one—eighth of GDP in 2106.

If current policies and trends are maintained, federal Medicaid outlays will take up 36 percent of lifetime federal general revenue taxes for males born in 2025 and 69 percent for females born in that year. For females born after 2050, almost all of their lifetime federal nonpayroll taxes will be consumed by their lifetime Medicaid benefits.

Higher tax rates cannot plausibly cover this growing spending commitment. On average, today’s 35—year—old males are projected to have 15 percent of their lifetime federal general revenues returned in the form of Medicaid benefits. Maintaining that ratio for today’s newborn males would require a 78 percent increase in their lifetime nonpayroll taxes. Limiting Medicaid spending growth is, thus, an essential component of putting the federal budget on a sustainable course without imposing crushing tax burdens on younger and future generations, thereby harming the prospects for future economic growth.

Basically, so long as the growth rate of Medicaid is higher than the growth rate of GDP then the system is unsustainable in that at some point in the future expenditures for the system will outstrip all of GDP. The idea that we can move everybody in the U.S. to a plan like Medicaid or Medicare is even less feasible.

FILED UNDER: Economics and Business, Government, Health, US Politics, ,
Steve Verdon
About Steve Verdon
Steve has a B.A. in Economics from the University of California, Los Angeles and attended graduate school at The George Washington University, leaving school shortly before staring work on his dissertation when his first child was born. He works in the energy industry and prior to that worked at the Bureau of Labor Statistics in the Division of Price Index and Number Research. He joined the staff at OTB in November 2004.

Comments

  1. M1EK says:

    Not true at all. IF current Medicare recipients are the most expensive ones in terms of costs (very likely) and IF bringing everybody into the system brought in a corresponding amount of per-capita revenue, then Medicare could actually end up better off from a financial perspective – because they would have imported a bunch of low-cost high-revenue customers.

  2. Bithead says:

    It is an over large assumption on your part, even assuming all else remains static, that any projected savings from total government control over health care is going to overcome the lower GDP.

    Let’s also consider the even lower GDP directly caused by the larger welfare state. That’s a pattern that is well established, yet has been ignored by the proponents of government health care. Ever wonder why?

    Any way you look at it, forcing government in the health care is a disaster.

  3. Dave Schuler says:

    I should hasten to mention that abolition of the Medicare and Medicaid programs is unsustainable, too, both from a political and public health standpoint. Let’s not lose track of the reason that Medicare was enacted in the first place: there were many, many destitute elderly people and the high cost of health care was one of the reasons for it.

    There’s another sense in which the federal government subsidies for health care are unsustainable, too: they divert money from other productive sectors of the economy into healthcare. Non-healthcare investment is reduced. It tends to concentrate more wealth in fewer hands since healthcare employs fewer, more highly compensated people people than other sectors of the economy as a proportion of GDP represented. This is one of the conributing factors in the income stratification and stagnation we’ve seen over the last 30 years.

    And we’re not expanding the number of practitioners. We aren’t building new med schools or nursing schools or expanding the existing programs. More money spent on healthcare doesn’t mean more people at higher wages. It means the same relatively small number of people getting higher wages.

  4. Steve Plunk says:

    Dave Schuler makes a great point. With health care costs outpacing everyones ability to pay why are not trying to increase the number of doctors, nurses and health techs?

  5. Dave Schuler says:

    why are not trying to increase the number of doctors, nurses and health techs?

    This is a complex and multi-part question. We aren’t building more nursing schools because they don’t bring enough revenue into the institutions to which they are connected. It’s more cost effective to build law schools.

    We don’t have more med schools or larger med school programs because the AMA won’t certify the expansions. That’s a strategy that’s more than a century old. I’ve posted on this subject. Significantly more physicians might cut into the incomes of the existing docs.

    The last major expansion took place between 1965 and 1980, roughly doubling new graduates to the present 13,000 some-odd per year. The price of that was the present Medicare subsidization of medical education, presently to the tune of $80,000 per year per medical resident.

  6. Andy says:

    Medicare might be unsustainable in the long run. Private health insurance based case is even LESS sustainable in the long run.

  7. Bithead says:

    Dave Schuler makes a great point. With health care costs outpacing everyones ability to pay why are not trying to increase the number of doctors, nurses and health techs?

    and…

    Medicare might be unsustainable in the long run. Private health insurance based case is even LESS sustainable in the long run.

    The point that both of you seem to be missing, is the concept that these prices have been going up as a direct result of governmental over-involvement.

  8. ken says:

    The point that both of you seem to be missing, is the concept that these prices have been going up as a direct result of governmental over-involvement.

    Basically what your saying is that if government just let old people die right away instead of paying for life saving medical care then prices for medical care would be lower.

    Yeah. So what? How is that relevant?

    The point you seem to be missing is that we are going to have government provided medical care eventually for everyone in our country. That is what the American people want, that is what every other industrialized country already has, that is what we are going to do here as well.

    Better, cheaper, and safer. That is the experience of socialized medicine in other countries. But I think we can beat the high standards already set by others. We are, after all, Americans.

  9. So long as medical care is seen as a right to be given by the government, we will continue down a path towards socialized medicine. I believe this is wrong for many reasons, primarily because abandoning competition and free markets (at least to the extent they do exist) is not going to make the system as a whole better, but also because the need will always outstrip the available resources — no matter how much money we pour into it. And then there will be the decline in the number, or at least the quality, of care givers just when they are most needed as bureaucratic glass ceilings are held over their heads. Take a long look at the declining number of native physicians in the UK and Canada before deciding that we want to follow their most excellent examples.

    Generally speaking, we know the current system can’t last, and at the same time, we wish to avoid the very hard choices that must be made. Of course, these choices will be made for us at some point as health care becomes necessarily rationed and taxes (or deficits) are raised ever higher in an attempt to deliver on promises that just cannot be kept.

    Who will serve the role of President Eisenhower to warn us of the dangers of the medical-industrial complex that will be just as much a threat to the structure of our society as the military-industrial complex was back in 1960s?

  10. Steve Verdon says:

    M1EK,

    The problem is that health care costs in general are growing faster than GDP as well. Bringing them into Medicare and Medicaid isn’t going to solve the probelm, it is very much like re-arranging the chairs on the Titanic.

    Then there is Dave Schuler’s main issue with health care, Gammon’s Law. Putting that many more people into health care coupled with Gammon’s Law will likely mean that health care will become more unsustainable rather than less. The problem is that we need to reduce the size of bureaucracy, not increase it.

    And Bithead’s point is not to be ingored. If Medicare/Medicaid become less sustainable–i.e. the insolvency date is pushed forward, then taxes will have to go up sooner as well. While it might be true that modest changes in taxes wont have a large impact on economic growth, most don’t think that this is true for large changes in tax rates.

    Dave,

    I should hasten to mention that abolition of the Medicare and Medicaid programs is unsustainable, too, both from a political and public health standpoint. Let’s not lose track of the reason that Medicare was enacted in the first place: there were many, many destitute elderly people and the high cost of health care was one of the reasons for it.

    I agree that there is pretty much no way of getting rid of Medicare anymore. As such, what has to be done is limit the impact the program is going to have in the future. Future Medicare/Medicaid enrollees are going to have to be forced to forgoe current consumption to save for their medical in the future. Failure to do so should carry with it extremely severe penalties.

    And we’re not expanding the number of practitioners. We aren’t building new med schools or nursing schools or expanding the existing programs. More money spent on healthcare doesn’t mean more people at higher wages. It means the same relatively small number of people getting higher wages.

    Gammon’s Law. And the solution is more of these things. An economist would say greater competition not less is what is needed. Greater competition would mean more medical schools, more people going into health care professions, etc. The higher wages, profits, etc. would attract more people to the profession.

    And to be sure about this, part of the problem are institutions like the AMA which limits the number of doctors and medical schools. The AMA is backed up, at least implicitly if not explicitly, by the government. Notice the government keeps popping up here, and in a bad way, not a good way.

    Medicare might be unsustainable in the long run. Private health insurance based case is even LESS sustainable in the long run.

    Well, then don’t bring up the French system as your preferred system you want to switch too. It is similar to ours, and amalgam of private and public and some are now claiming they need to have more private and less public aspects to health care to reign in their rapidly growing health care expenditures.

    The problem with health care is that there are bunch of bad policies in place that result in bad outcomes. That is there was little or no thought that went into the incentives surrounding health care.

    For example, by creating Medicare 40 some years ago, it reduced the incentive for the elderly to save for their retirement health care. This meant less savings, which means less investment in productive activities and higher current consumption back then. Could this be linked to the lower rates of growth in GDP? Did anybody stop to think about this possibility? My guess is no.

    ken,

    Basically what your saying is that if government just let old people die right away instead of paying for life saving medical care then prices for medical care would be lower.

    No, I can’t speak for Bithead here, but for me it is a question of incentives. We want people to save for their own retirement which also includes health care.

    The point you seem to be missing is that we are going to have government provided medical care eventually for everyone in our country.

    And everywhere you look it isn’t sustainable, so eventually something is going to give.

    That is what the American people want, that is what every other industrialized country already has, that is what we are going to do here as well.

    Please point to one sustainable example.

    Better, cheaper, and safer. That is the experience of socialized medicine in other countries.

    That is simpply not true at all. Every country is having problems with health care expenditure growing at unacceptable rates. Even in France, the darling of the universal health care crowd, had demonstrations about their health care recently.

  11. Dave Schuler says:

    The point you seem to be missing is that we are going to have government provided medical care eventually for everyone in our country. That is what the American people want, that is what every other industrialized country already has, that is what we are going to do here as well.

    ken, you may need to research the subject a little more closely. Neither Germany nor France, for example, have government provided medical care. What they have is government-subsidized health insurance. France’s system, with many of the French carrying private health insurance which may or may not be subsidized by their employers, is not completely dissimilar to ours.

  12. Dave Schuler says:

    Bithead, we have had a hybrid public/private healthcare system, under the control of a cartel of doctors, for more than a century. Whatever you might want we will continue to have some form of hybrid of public and private healthcare. A completely free market healthcare system (which would eliminate medical licensing and pharmaceutical patents as well as Medicare, Medicaid, the VA, and employer-sponsored healthcare systems) has almost no constitutency.

    And, although I agree that our present mix has contributed mightily to the high cost of healthcare in the country, it isn’t the only factor. Healthcare costs were rising sharply before Medicare and Medicaid were enacted. They were a consequence as well as a cause of rising costs.

    So your point, while somewhat true, is moot. We need to arrive at the correct balance of market and command and we aren’t there yet.

  13. The worst side effect of socialized medicine might well be the rapid decline in reserch for new drugs and new diagnostic techniques. How much of the “problem” we have Medicare/Medicaid is driven by providing treatments that were completely unavailable at any cost thirty years ago?

  14. Andy says:

    The worst side effect of socialized medicine might well be the rapid decline in reserch for new drugs and new diagnostic techniques. How much of the “problem” we have Medicare/Medicaid is driven by providing treatments that were completely unavailable at any cost thirty years ago?

    I might take this argument seriously if the private drug companies spent as much on R&D as they did on advertising.

    Most of the important research in new drugs (as opposed to vanity or functionally similar) and new diagnostic techniques are subsidized by or funded completely by the government.

  15. Andy says:

    That is simpply not true at all. Every country is having problems with health care expenditure growing at unacceptable rates. Even in France, the darling of the universal health care crowd, had demonstrations about their health care recently.

    This is extremely sloppy reasoning.

    It is absolutely true that all of the other first world countries with socialized medical systems deliver better and cheaper care for the vast majority of people.

    If the rates of inflation for medical costs are similar among all countries, wouldn’t you want to start with baseline costs 50% less than what we have in the U.S.?

  16. Steve Verdon says:

    It is absolutely true that all of the other first world countries with socialized medical systems deliver better and cheaper care for the vast majority of people.

    Health care expenditures are not simply a function of how the spending is done (private vs. public). It is a function of the population as well as other factors. How are births treated in other countries? Does a child born with certain conditions get the same treatment in all countries? If not, then you have a confounding factor in looking at infant mortality statistics. What about obesity, smoking, drinking, and so forth. Mortality statistics do not take these factors into account and so comparisons are not straightforward.

    Same for costs. If you make a person with a painful and partially debilitating medical condition wait 2 months that is indeed a cost, but not a dollar cost. It wont show up in the the “balance sheet”.

    If the rates of inflation for medical costs are similar among all countries, wouldn’t you want to start with baseline costs 50% less than what we have in the U.S.?

    Not necessarily. Think of it this way. If the rates of inflation for food are the same across countries would you want to start with a baseline cost that is 50% lower? You mgiht be able to survive on such a diet, but it might be unappealing and you’d be worse off.

  17. Dave Schuler says:

    The worst side effect of socialized medicine might well be the rapid decline in reserch for new drugs and new diagnostic techniques. How much of the “problem” we have Medicare/Medicaid is driven by providing treatments that were completely unavailable at any cost thirty years ago?

    I think it’s actually the other way around. For the last 40 years we’ve been over-investing in healthcare i.e. we’ve been spending more on healthcare than the market would have done on its own. The new drugs and diagnostic techniques are the results of this over-investment.

    It’s sad, but true. The unsustainability that’s the topic of this post means that even beneficial consequences, like new drugs and techniques, of the over-investment are unsustainable, too.

    We might take some solace in the Gammon’s Law that Steve mentioned in his comment, above. I’ve been posting about it for the last three years—since I’ve had a blog. Gammon’s Law means that fewer outputs are produce per input within a system governed by it and that is definitely true of our health care system. Even if government were completely out of health care (not a foreseeable outcome) Gammon’s Law would still be busily going about its work. It’s a characteristic of all large organization not just government-run organizations. Checked how a hospital is administered lately?

  18. Steve Verdon says:

    I’m also calling BS on Andy’s assertion about pharmaceutical R&D and advertising. According to this website, a Stanford Study found that Big Pharma spent $12.7 billion on “advertising” broadly defined (i.e., they included things like free samples which was the largest protion of the advertising). According to this CBO report the Big Pharma Trade Association reports that R&D was around $25 billion when you account for all R&D spending both in the U.S. and that by U.S. companies in other countries (e.g. they give a research grant to a researcher in France or Japan).

    I tend to disagree with the severity of Gammon’s Law for private firms. Private firms that divert more and more resources towards management/administration vs. output will soon find themselves in a pickle when a new firm with a less bloated management/administration starts beating them. I’d also suspect that one reason why hospitals are run the way they are is institutional in that government regulations apply to all firms across the board and can act as a barrier to entry thus allowing Gammon’s Law to have a stronger impact even with privately run entities.

  19. Steve Verdon says:

    Link to the CBO study.

  20. M1EK says:

    The problem is that we need to reduce the size of bureaucracy, not increase it.

    Great. I’ll put insurance company bureaucracies up against the Medicare bureaucracy any day of the week.

  21. TJIT says:

    Ken said,

    Better, cheaper, and safer. That is the experience of socialized medicine in other countries. But I think we can beat the high standards already set by others. We are, after all, Americans.

    He might want to check out a few details before he makes that statement.


    462,000 DEATHS CAUSED BY NHS

    POOR NHS treatment has led to almost half a million Scots dying in the last 30 years, a new study has revealed.

    Doctors at Glasgow University found that between 1974 and 2003, a total of 462,000 people died in Scotland as a result of health service failings

    Doctors admit: NHS treatments must be rationed

    British doctors will take the historic step of admitting for the first time that many health treatments will be rationed in the future because the NHS cannot cope with spiralling demand from patients.

    James Johnson, the BMA chairman, will warn that patients face a bleak future because they will increasingly be denied treatments. He will urge the NHS to be much more explicit about what it can realistically afford to do and ask political leaders to engage in an open, honest debate about rationing.

    .

    I doubt most Americans would be very happy with what Ken calls better, cheaper, safer.

  22. Bithead says:

    Basically what your saying is that if government just let old people die right away instead of paying for life saving medical care then prices for medical care would be lower.

    Interesting you should put it quite that way, when in fact one of the major ways that government run health care will supposedly lower costs, is the rationing of health care.

    in any event, what I was saying, was the fastest way to raise prices, is to guarantee a level of income to the medical world… Which, the government will also be doing… the only kind of money we are never short of, is tax money, after all.

  23. floyd says:

    Jagadeesh Gokhale doesn’t mention medicare in his commentary at all. Medicaid is an entirely separate program and issue IMHO. I find Gokhale’s statistics to be literally incredible vis-a-vis medicaid.

  24. Steve Verdon says:

    ME1K,

    Great. I’ll put insurance company bureaucracies up against the Medicare bureaucracy any day of the week.

    But how much of the Medicare bureaucracy if “outsourced” to “insurance companies”? And how much of the insurance companies’ bureaucracy is due to government mandates, rules, and regulations. You make it sound like it is so simple. This is a complex problem.

    floyd,

    Jagadeesh Gokhale doesn’t mention medicare in his commentary at all. Medicaid is an entirely separate program and issue IMHO. I find Gokhale’s statistics to be literally incredible vis-a-vis medicaid.

    The trend of unsustainable growth rates for health care expenditures is pretty much across the board. Expenditures via employer paid insurance is growing at an unsustainable rate. Expenditures for Medicare are growing at an unsustainable rate. Why should Medicaid be special? Your obstinancy in the face of evidence strikes me as highly foolish, but being foolish is indeed your right.

  25. Andy says:

    I’m also calling BS on Andy’s assertion about pharmaceutical R&D and advertising. According to this website, a Stanford Study found that Big Pharma spent $12.7 billion on “advertising” broadly defined (i.e., they included things like free samples which was the largest protion of the advertising). According to this CBO report the Big Pharma Trade Association reports that R&D was around $25 billion when you account for all R&D spending both in the U.S. and that by U.S. companies in other countries (e.g. they give a research grant to a researcher in France or Japan).

    I call BS on your calling of BS. Your calling of BS isn’t supported by the studies you cite.

    In 1998, pharma spent nearly $13 billion on advertising — in the U.S. alone. Since then, advertising (direct and indirect) has increased substantially.

    In 2003, the pharma trade group claims to have spent $~30 billion on R&D, including the R&D outside of the U.S. The NSF, on the other hand, estimates that, in the U.S., hey spend half that amount. (Gosh, why would pharma exaggerate?)

  26. Gosh, it’s their money. Private funds, not tax dollars. Why does it matter how much of their money they spend to markets their products? Unless, of ocurse, you think it’s not really their money at all. Is that it?

    The idea that pure hearts and good intentions wil perform better than free markets and individual choice is rather ahistorical, to say the least. The perfect remains the enemy of the good. Or, to borrow an old joke do you strive for a system wherein everyone suffers equally?

    I have no illusions that everyone can be taken care of according to their need. There will be rationing of medical care according to something. Should that something be dollars? Political connections? Height? Age? What? Exactly what?

  27. Anderson says:

    Doctors at Glasgow University found that between 1974 and 2003, a total of 462,000 people died in Scotland as a result of health service failings

    15,000 per year? Adjusting per capita, how many *Americans* died during that period as a result of our healthcare system’s failures (including lack of care due to lack of insurance)?

    You can argue till you’re blue in the face (thus becoming another failure of the system), but the bottom line is that tying insurance to employment is stupid, that the uninsured and underinsured are legion, and that the present system will not last.

    Whatever the faults of universal care, and there will be many, they will be the faults of a system that takes care of everyone, instead of the faults of a system that cares only for some.

  28. Anderson, unfortunately, universal health care will not take care of everyone, unless you are willing to define down what “take care of” means. There isn’t enough money in the world to provide everyone with what they “need.” Never has been, never will be.

  29. Steve Verdon says:

    I call BS on your calling of BS. Your calling of BS isn’t supported by the studies you cite.

    Let me see, we have spending on R&D and spending on marketing….hmmm, okay.

    In 1998, pharma spent nearly $13 billion on advertising — in the U.S. alone. Since then, advertising (direct and indirect) has increased substantially.

    And so has R&D. R&D has grown, according to the CBO at about 8% per year. And your data on advertising is….?

    In 2003, the pharma trade group claims to have spent $~30 billion on R&D, including the R&D outside of the U.S. The NSF, on the other hand, estimates that, in the U.S., hey spend half that amount. (Gosh, why would pharma exaggerate?)

    There was no exaggeration in that the two measures were not measuring exactly the same thing. That is the Big Pharma trade association included R&D spending that the NSF did not count. The CBO report explains the difference and doesn’t imply any exaggeration.

    Anderson,

    You can argue till you’re blue in the face (thus becoming another failure of the system), but the bottom line is that tying insurance to employment is stupid, that the uninsured and underinsured are legion, and that the present system will not last.

    I quite agree, but notice that when President Bush actually proposed a policy to eliminat or at least greatly reduce the tax benefit for employer provided health care those opposing Bush poo-pooed the idea, not because it was a bad idea, but because Bush proposed it.

    Whatever the faults of universal care, and there will be many, they will be the faults of a system that takes care of everyone, instead of the faults of a system that cares only for some.

    Charles is right. The rationing of health care will be done via the political process vs. the market process. Think about that, and the idea of a President like Bush. Does that give you warm fuzzy feelings?

    I know, I know, you’ll respond with something like “Well, we shouldn’t have a President like Bush.” Fine, but the probelm is we do, and there is damn little about the electoral process that ensures we wont have another President like him again, and I’m sure the conservatives would find the idea of somebody like Lyndon Johnson equally disturbing. So really, I see this as a pathetic answer.

  30. ken says:

    Steve,

    You can get more accurate information on pharma R&D and marketing cost from a companies annual report than you can from some second or third hand source. Beside the companies are more likely to tell the truth in their 10Ks due to the SEC looking over their shoulder on everything they say.

    I checked the Pfizer report and here is what I found out:

    Pfizer spent around 32% of revenue on marketing in 2006 and around 15% of revenue for R&D. Years 2005, and 2004 had similar ratios.

    If Pfizer has this kind of breakdown between marketing and R&D you can be sure the other pharma companies are the same. Check them if you want. All the information is on line.

  31. ken says:

    There isn’t enough money in the world to provide everyone with what they “need.” Never has been, never will be.

    Sure there is, if you mean money for medical care.

    If you mean we don’t have enough money to meet the greed of certain for profit hospitals, insurance companies and drug companies then you have a point.

    But the whole idea is that once we get the greed motive out of the system we will then be able to actually fund coverage for everyone who needs medical care.

  32. TJIT says:

    The supporters of nationalized healthcare have a wonderful ability to ignore all of the evidence pointing out how many bad results that policy would produce.

    They ignore the evidence of very bad results from other countries nationalized healthcare programs.

    They studiously ignore the failures of public healthcare programs in the US.

    Here is another warning sign they will, no doubt, studiously ignore.

    The Government and health care – 2 stories

    Mammography centers in New York City are closing at an “alarming” rate, causing a 171 percent increase in wait times for the cancer-detecting procedure, according to a study by Rep. Anthony Weiner.

    Since 1999, 67 mammography sites, more than a quarter of the city’s supply, have closed, the Brooklyn Democrat found.

    The problem? Price fixing at a lower level than cost:

    The problem is that Medicare pays only $83 for a procedure that costs $125 to provide, said Weiner, who will introduce legislation to increase payments.

    I guess the above example is another example of the better, cheaper, and safer ken talked about.

    The government can’t manage this simple task. In spite of the stacks of warning signs the various ignorant of the facts people continue to be driven to ecstasy at the thought of putting the government in charge of the entire healthcare system.

    The mind boggles.

  33. ken says:

    The problem is that Medicare pays only $83 for a procedure that costs $125 to provide, said Weiner, who will introduce legislation to increase payments.

    Perfect example of what we are talking about. A private insurance company pays less than cost and the public has no choice but to do without. With Medicare however we, as citizens, can choose to increase payments in order to provide coverage to those in need.

  34. Ken, you would fit in well in France. Around 1789.

  35. Grewgills says:

    Future Medicare/Medicaid enrollees are going to have to be forced to forgoe current consumption to save for their medical in the future. Failure to do so should carry with it extremely severe penalties.

    What consumption do you recommend they forgo?

    No, I can’t speak for Bithead here, but for me it is a question of incentives. We want people to save for their own retirement which also includes health care.

    That has been tried and proved an abysmal failure, thus our current system.

    Please point to one sustainable example.

    The Netherlands.

    Better, cheaper, and safer. That is the experience of socialized medicine in other countries.

    That is simply not true at all. Every country is having problems with health care expenditure growing at unacceptable rates. Even in France, the darling of the universal health care crowd, had demonstrations about their health care recently.

    Many countries are having problems with health care costs, but the US pays more than half again what the next closest country spends and about double what the typical industrialized country with universal health care pays. What do we get for this? We get worse outcomes by virtually every relevant rubric.
    Yes other countries have what amounts to rationing, but so do we. Not only do we have rationing according to ability to access health insurance, but our HMOs ration our health care to limit their costs as well. For every horror story about rationing in Britain or France there is an equivalent story about ‘rationing’ by Kaiser, HMSA, or some other HMO.

    Re: Gammon’s Law
    Calling it a law does not make it so. At this stage of development it would more properly be called Gammon’s hypothesis.
    The definition he provides for bureaucracy and the evils he sees therein corresponds equally well to HMOs as it does to any government body. This is not a distinguishing character between public and private health care.

  36. Bithead says:

    Bithead, we have had a hybrid public/private healthcare system, under the control of a cartel of doctors, for more than a century. Whatever you might want we will continue to have some form of hybrid of public and private healthcare. A completely free market healthcare system (which would eliminate medical licensing and pharmaceutical patents as well as Medicare, Medicaid, the VA, and employer-sponsored healthcare systems) has almost no constitutency.

    And, although I agree that our present mix has contributed mightily to the high cost of healthcare in the country, it isn’t the only factor. Healthcare costs were rising sharply before Medicare and Medicaid were enacted. They were a consequence as well as a cause of rising costs.

    The costs were not going up at nearly the rate, until such time as the Great Society (otherwise known as FDR lite) came along.

    Sure there is, if you mean money for medical care.

    If you mean we don’t have enough money to meet the greed of certain for profit hospitals, insurance companies and drug companies then you have a point.

    I suppose that it hasn’t occurred to you, that profit is the reason that the hospital exists. That the quality of care there in that wouldn’t be nearly as good without the chance for actually making a buck on it. You have immediately labeled the profit motive as evil, without fully accounting for the results of removing it.

  37. Steve Verdon says:

    What consumption do you recommend they forgo?

    Whatever they want. I don’t care so long as they save more. Honestly, are you syaing you want people to save less for their retirement so that future workers can have a heavier tax burden? Really? What about the children? Isn’t that the reason for fighting global warming?

    That has been tried and proved an abysmal failure, thus our current system.

    Actually, there haven’t been the kinds of financial institutions we have today. Things like 401k’s, Roth IRAa, and even the much hated MSAs can help people be prepared for health care insurance during retirement.

    The Netherlands.

    Really? I note no links, no analysis, nothing. But since you are lazy, I’ll go see what I can find.

    Many countries are having problems with health care costs, but the US pays more than half again what the next closest country spends and about double what the typical industrialized country with universal health care pays. What do we get for this? We get worse outcomes by virtually every relevant rubric.
    Yes other countries have what amounts to rationing, but so do we. Not only do we have rationing according to ability to access health insurance, but our HMOs ration our health care to limit their costs as well. For every horror story about rationing in Britain or France there is an equivalent story about ‘rationing’ by Kaiser, HMSA, or some other HMO.

    I’m sorry, but such comparisions are meaningless until you account for differences in the populations. For example, Americans are supposedly some of the most overweight people on the planet. If we account for that does it reduce the difference? And you ignore completely the notion of non-monetary costs. Waiting 6 months for an operation that would repair a painful/debilitating but non-life threatening injury is a cost.

    Calling it a law does not make it so. At this stage of development it would more properly be called Gammon’s hypothesis.
    The definition he provides for bureaucracy and the evils he sees therein corresponds equally well to HMOs as it does to any government body. This is not a distinguishing character between public and private health care.

    But you don’t see it nearly as much with other large corporations, so I’m inclined to think the problem with HMOs is again due to regulations and laws.

  38. Steve Verdon says:

    Grewgills,

    Bad news, the Netherlands has moved to institute more market based reforms in their health care in 2006. Sorry. Looks like the reason for this…rising health care expenditures. Try again.

    Oh and yes, I know the idea behind the Netherlands approach is to make sure health care coverage is universal, my point in asking ken for a single example, was a single example of government provided health care. The Netherlands is moving away from that approach, not towards it.

  39. Grewgills says:

    Actually, there haven’t been the kinds of financial institutions we have today. Things like 401k’s, Roth IRAa, and even the much hated MSAs can help people be prepared for health care insurance during retirement.

    I’m not arguing for people to ignore their retirement, I am saying that if you leave healthcare and retirement funding up to individuals you will have large numbers of people doing without. Do you really doubt this? Or are you just willing to accept it?

    I’m sorry, but such comparisions are meaningless until you account for differences in the populations. For example, Americans are supposedly some of the most overweight people on the planet. If we account for that does it reduce the difference? And you ignore completely the notion of non-monetary costs. Waiting 6 months for an operation that would repair a painful/debilitating but non-life threatening injury is a cost.

    American has a higher infant mortality rate than any western industrialized nation. Do you really think that is a lifestyle issue rather than cheap or free prenatal care being available for all? Obesity is a growing problem in Europe as well, yet the health outcomes remain significantly better. Regarding wait times you have only provided anecdotal evidence. I have been living in Western Europe for a few years now and that is not my experience or the experience of anyone I know. My mother-in-law’s brother recently had a severe stroke. He did have to wait about a week to be placed in long term care residence during which time he had to stay in the hospital. This is the longest wait time I have heard of from anyone I know here and I know a number of people with cancer and other serious health problems.

    But you don’t see it nearly as much with other large corporations, so I’m inclined to think the problem with HMOs is again due to regulations and laws.

    I notice you provide no links. Lazy?

    Bad news, the Netherlands has moved to institute more market based reforms in their health care in 2006.

    There were some market based reforms, but health care remains universal and cheap due to continued government regulation. The health insurance for people in our family went up about 2 euro per month. Average cost for health insurance is about 80 euro per month. My wife and I pay about 120 euro per month for ours. Those who cannot pay are still covered without cost. Despite Gammon’s hypothesis the costs are considerably lower than in the US.

  40. Grewgills says:

    What are the rules for the moderation queue?

    I replied to Steve’s comment with 4 links and waited a few days. When it did not clear I reposted without the links and it still went to the moderation queue.

    Can someone fill me in as to why I am getting hung up?