Thursday, February 22, 2018
Opinion

Prescription for decline

Lost in all the uproar over the U.S. Supreme Court's June 28 "Obamacare" ruling was the crucial link between health care reform and the issue voters care most about: the economy. America's current health care "system" isn't just an ungainly, costly, and unjust mess. It also undercuts the United States' ability to compete and win in world markets.

Amid the debate over "American decline," this connection deserves a lot more attention than it's getting. To revive U.S. international competitiveness, the country clearly needs to rein in runaway health care costs. But it has to be done in the right way - not just by clamping down on spending but also by boosting medical innovation and productivity.

Now that the court has upheld the individual mandate requiring most citizens to obtain health insurance, U.S. policymakers would ideally turn to the challenge of medical cost containment. This is unlikely to happen, however, because Republicans have vowed to make the repeal of the Affordable Care Act a centerpiece of their 2012 campaign message. Republican presidential candidate Mitt Romney dutifully promised Thursday to kill the "bad law," even though it's conceptually identical to the Massachusetts health plan he backed while governor of that state.

Conservative ideologues want to make the mandate and the substantial costs of expanding coverage to 33 million Americans a parable about the dangers of an overreaching and intrusive federal government. The administration ought to counter with a positive narrative about how bending down the health cost curve can help reverse America's competitive slide and spark an economic comeback.

Not only does the United States have the world's most expensive health care system but medical inflation routinely outpaces economic growth. Because most workers get their health insurance coverage from their employers, this saddles firms with rising labor costs even as the United States seeks to slow and reverse the hemorrhaging of manufacturing jobs overseas. Fear of losing coverage inhibits worker mobility and makes the labor market less flexible. Meanwhile, employment in the health care sector keeps growing without producing commensurate improvements in health outcomes - a classic definition of low productivity.

Federal and state government budgets, meanwhile, are groaning under the growing burden of paying for health care. Many states have seen Medicaid spending for the poor displace education as their top spending item. And no one doubts that the mushrooming growth of federal health spending is the country's top fiscal challenge.

The numbers are astonishing: Federal health spending in 2012 will consume 4.9 percent of GDP, or about a fifth of the federal budget ($750 billion). The Congressional Budget Office (CBO) estimates conservatively that spending, driven by a combination of medical inflation and the baby boomers' retirement, will grow to 6.7 percent of GDP ($1.6 trillion) by 2022 and will hit 11 percent by 2050. Reducing that rate of growth is the key to stabilizing the national debt.

Less visible but no less pernicious is what economists call the "crowding out" effect of health-spending growth. Back in the 1970s, according to former CBO chief Alice Rivlin, such "mandatory" spending claimed only about one-tenth of the federal budget; now it adds up to 55 percent. This relentless squeeze on discretionary spending means that Washington has less money to invest in the foundations of future economic growth and competitiveness. That means less money for infrastructure, basic science, the development of breakthrough technologies, and better schools and occupational training - not to mention social support for poor families and children. If the United States can't offer world-class infrastructure and highly skilled and motivated workers, businesses will invest their money elsewhere.

Amid growing concerns about social immobility and inequality, Americans should also take a closer look at the distributional effects of health costs. In short, soaring costs have slowed wage growth and thrown low-wage workers out of work.

As Steven Nyce and Sylvester Schieber documented in a recent Progressive Policy Institute report, medical cost inflation over the last three decades has been a triple whammy for Americans: It has depressed wage growth, increased unemployment among low-wage workers, and aggravated economic inequality. Wages have gone down because employers have shifted compensation toward health-care premiums and rising health costs have priced low-wage workers out of labor markets. "If employers are forced to absorb health cost increases that exceed the added productivity that workers bring to the table, they will stop hiring," write Nyce and Schieber.

For all these reasons, the president should work to beef up the Affordable Care Act's exceedingly modest cost-containment features. U.S. companies and workers shouldn't have to wait a decade for experiments with new payment systems to give them relief from high health costs. And the administration should rethink one key provision of the law: a board that would limit Medicare payments to providers if Medicare costs rose faster than expected. If those payments are simply cut off, many providers will find it easier to forego productivity-enhancing investments than shed workers. Providing higher-value medical care more cost-effectively will take more innovation and more investment in technology, not less.

The countries the United States will compete with in the next century understand the intricate interactions between their health care systems and their ability to perform in global markets. It's time U.S. leaders did too.

Will Marshall is president and founder of the Progressive Policy Institute.

© 2012, Foreign Policy

Comments
Editorial: They value guns, not kids

Editorial: They value guns, not kids

They value guns over kidsSix days after 17 were killed at Marjory Stoneman Douglas High by a teen-ager firing an AR-15 semi-automatic rifle, the Florida House refused to even debate a bill banning the sale of assault weapons. The vote, 71 to 36, wasn...
Published: 02/21/18
Editorial: Listen to Marjory Stoneman Douglas students demanding change

Editorial: Listen to Marjory Stoneman Douglas students demanding change

Students from Marjory Stoneman Douglas High School are traveling to the state capital today and declaring "never again.íí A prominent Florida Republican fundraiser vows he wonít raise another nickel until his party approves new gun controls. Across F...
Published: 02/19/18

Editorial: No more doubt about Russian meddling in election

The latest indictment by the Justice Department special counsel, Robert Mueller, refutes President Donald Trumpís claims that Russian interference in the 2016 election was a Democratic hoax. The indictment details the lengths Russian conspirators too...
Published: 02/19/18

Another voice: Tips should belong to workers, not their bosses

The Trump administration is under fire for proposing a Labor Department regulation that could result in hotel and restaurant employers dipping into the tips customers leave for their employees, depriving the nationís 14 million hard-working restauran...
Published: 02/18/18
Updated: 02/20/18
Editorial: Trumpís rising deficits and misplaced priorities

Editorial: Trumpís rising deficits and misplaced priorities

Itís not popular in Washington or virtually anywhere else these days to express concern about the rising federal deficit. Congressional Republicans who used to be deficit hawks first voted to cut taxes by $1.5 trillion over the next decade, then rais...
Published: 02/17/18
Editorial: Buckhorn should not appeal verdict in firefighterís case

Editorial: Buckhorn should not appeal verdict in firefighterís case

The city of Tampa should have taken Tanja Vidovic seriously from the start when the Tampa firefighter complained about her treatment in the workplace. Now that a jury and judge have spoken, itís time for City Hall to cut its losses, learn from its mi...
Published: 02/15/18
Updated: 02/16/18
Editorial: CareerSource troubles mount as public trust drops

Editorial: CareerSource troubles mount as public trust drops

The dark cloud enveloping Tampa Bayís job placement centers keeps growing. There are accusations of forged documents, evidence of nepotism and concerns about grossly inflated performance numbers that could be tied to receiving more public money and b...
Published: 02/15/18
Updated: 02/16/18
Editorials: Prayers and platitudes after shootings arenít enough

Editorials: Prayers and platitudes after shootings arenít enough

Even before the victims of another mass shooting at another public school were identified, Gov. Rick Scott, Attorney General Pam Bondi, state legislators and members of Congress rushed to South Florida or to social media to offer their thoughts and p...
Published: 02/15/18
Editorial: DCF review should get to the bottom of Hillsborough foster care issues

Editorial: DCF review should get to the bottom of Hillsborough foster care issues

The Florida Department of Children and Families is right to call for a timely and "comprehensive" review of Hillsborough Countyís foster care system. Though the probe is a reaction to a recent case involving a child who was left unattended, the revie...
Published: 02/14/18

A Washington Post editorial: Modernize 911 calling before it becomes an emergency

This Friday marks the 50th anniversary of the first 911 emergency call placed in the United States. Since then, uncounted lives have been saved and people helped. It has been a great accomplishment of government.But even as an estimated 240 million 9...
Published: 02/13/18
Updated: 02/14/18