by Joe Minarik for Bloomberg Government

By now just about everyone understands that the root cause of the federal government's budget problem is health care, driven mostly by the $555 billion a year Medicare program.

 

While popular opinion fixates on Social Security as the big "entitlement" problem, health care is by far the bigger cost driver. Between now and 2085, Social Security spending is likely to increase from 4.8 percent of the gross domestic product to 6.4 percent, according to the Congressional Budget Office. That's an increase of 1.6 percentage point in 74 years.

 

Net health-care spending, meanwhile, is expected to increase from 5.1 percent of GDP to 17.2 percent in 2085, or more than a three-fold leap. CBO says the program will cost taxpayers $903 billion by 2020.

 

The enormous projected growth in health-care spending has led many elected lawmakers to the obvious conclusion: Forget about everything else, just focus on health care. Such a policy recommendation is airtight, except for one problem: It's wrong.

By William W. Lewis, Director Emeritus, McKinsey Global Institute

After watching the efforts to reform U.S. health care over the past 5 years, I have concluded that health care reform will have to proceed from the bottom up and not from a top down approach like that of the recent bill, the Affordable Care Act. Reform is threatened by a Federal debt crisis that would throw health care into a survival mode with slash and burn cost cutting and no innovation. The quality of care would be at severe risk.

Health care in the U.S. now costs 18% of GDP. Eighteen percent of a $14 trillion economy is $2.5 trillion. That's a lot of dollars. A million seconds is about two weeks; a trillion seconds is about 30,000 years. In economic resources applied, health care in the U.S. is bigger than the entire economies of all but four other countries, Japan, Germany, India, and China. It is bigger than the entire economy of the UK or France. We're not devoting the level of competence and experience required to address the reform of such a large amount of economic activity.

Reform of the U.S. health care system requires solving three main problems:

By Charles Kolb for the Huffington Post

The Obama presidency began with inspirational talk about transformational leadership and solving the country's most challenging problems through a bipartisanship approach that would eliminate Washington bickering. Health care reform, a cap-and-trade energy bill, financial regulation and an economic stimulus bill were among the centerpieces of the domestic agenda.

What happened to health care reform? Read more...

By Joe Minarik

You surely have seen numerous press stories about how the special election for the Massachusetts Senate seat has changed the legislative options for health reform. Different news pieces and editorials have anointed different alternative paths as being the answer for the President and his (now crucially diminished) majority in Congress.

When the President presented his framework for health-care reform to a joint session of Congress in September, he emphatically stated, "My guiding principle is, and always has been, that consumers do better when there is choice and competition." We agree with this two-part focus.

The health reform proposal headed for upcoming Senate debate stops far short of the twin goals of choice and competition. It would restrict each of an estimated 200 million Americans to the specific health insurance package provided by his or her employer, which in the vast majority of cases allows no meaningful consumer choice. Indeed, for the typical American, health insurance "competition" would continue to be limited to multi-year re-bidding of the employer's specific plan. Limiting competition to the employer's one-size-fits-all health plan has perpetuated the fee-for-service system that has pushed costs unsustainably higher.

By Bo Cutter and Joe Minarik

The Sunday, October 18, 2009 New York Times long editorial in support of the public option in health care reform: first, displays a scary level of economic ignorance; second, validates a long and harmful tradition of budget smoke and mirrors; and third and worst of all, completely ignores a real alternative which has far and away the best chance of leading to a functioning health care reform, and which The Times seems almost deliberately to refuse even to mention.

We should say that we consider ourselves passionate centrists, served in senior positions in the White Houses of Democratic presidents, value the public sector a great deal, and have no connections with the insurance industry. We write because The Times has simply refused ever to look at the alternatives, and is simply wrong.

By Joe Minarik

The Senate Finance Committee very early Friday morning refused to consider Senator Ron Wyden's "Free Choice" amendment to the Committee's health reform bill. Therein lies the tale of health reform as it stands before its consideration on the floor of the Senate and the House.

Two watchwords of the case for health reform thus far, uttered in close proximity but never quite together, are "Today's health-care system is a disaster!" and "You can keep what you have." Fewer than a majority of our legislators have put these two sound bites together to consider their joint implications.

By David R. Riemer

Congressional leaders and President Obama must now forge a compromise on national health insurance reform that passes both the House and Senate, and actually reduces costs.

 

So far, Congress's committees have focused on creating a new institution -- either a "public option" or cooperatives -- to achieve consensus and discipline costs.

By Joe Minarik

Those who have followed the current health-care debate certainly have begun to hear the dreaded "R-word:" rationing. At this point, one side has attacked the other side's plan for threatening both to drive health spending through the roof, and to institute rationing to hold costs down. It would be possible to commit both of these transgressions at once, although they might seem under most circumstances to be mutually exclusive.

By Joe Minarik

A significant element in the dispute over health-care reform seems to involve conceptions of the prospects for costs, and cost savings. Some people seem predisposed to believe that the prospects for cost saving (assuming sound, even aggressive public policy) are severely limited, while others are more optimistic. To some extent, the difference between these views may be based on different conceptions of what the practice of medicine really is, or should be.