With Obamacare “repeal and replace” on its last legs, it is time to move to reflection; time to step back from the intensity of ideological extremes; time to let go of the life-or-death desperation of those on both sides of this most recent apocalyptic moment of this heart-stopping year.
The month of July 2017 was not the only possible time to “save” our health care “system.” Indeed, only the most myopic among us could even call the contraption we have created over the past 75 years a system at all.
The rules for executing this effort to change horses in midstream, it seems to me, are: first, don’t shoot the horse we’re currently riding; second, assure all those desperately hanging on that we’re not going to boot them off and encourage them to relax their death grip, which serves merely to frighten and constrain our horse; and, third, look around and see where we want to go.
Seeing where we want to go requires putting health care into the context of the broader economy.
In 2015, the most recent year for which we have a wide range of compatible data from the U.S. Bureau of Economic Analysis, the U.S. gross domestic product was just under $18 trillion. The health care component of GDP amounted to about $1.2 trillion, just under 7 percent of total national economic output.
There were just over 190 million jobs (full- and part-time) in the U.S. The total in health care amounted to about 17 million, or about 9 percent of total employment. In Maine, the relative importance of the health care sector was even greater, amounting to just over 10 percent of total GDP and just over 11 percent of total employment.
In a nutshell, health care is an enormous part of the total economy, both nationally and in Maine. And in terms of consumer spending and employment, the health care sector has been growing much more rapidly than the overall economy.
Between 1998 and 2015, total personal consumption expenditure for the U.S. grew by 108 percent, while consumption of health care grew by 149 percent. Over the same period, total employment nationally grew by 20 percent, while employment in health care grew by 49 percent. The same pattern held true in Maine, where total employment over the 17-year period grew by 10 percent while employment in health care grew by 31 percent.
It’s also important to identify how much of this health care consumption is being financed directly from public sources (Medicare, Medicaid and military health insurance). In 2015, such public transfer payments nationally amounted to nearly $1.1 trillion, or about 58 percent of personal health care consumption. In Maine, the total was about $5.6 billion, or 55 percent of total personal health care consumption here. And since 1998, these publicly financed totals had increased by 212 percent nationally and 171 percent in Maine.
This brief scan of the broad outlines of the relationship of our health care “system” to the broader economy identifies three central questions. What is the total cost of health care in this country? What are the incentives in the current “system” that drive the demand for and the supply of health care? How can we adjust each incentive in the “system” to increase its power to drive consumers to seek improved health care outcomes at lower cost?
On its face, such a statement sounds Pollyannaish. “Yeah, that’s the ticket – better health at lower cost – what a thought!” Yes, it is simplistic. But hardly more than the current alternatives of “slash eligibility” and “single-payer.”
If we start from the position that this is to be “our” system, then changing horses in the midst of this torrent won’t be so drastic or anxiety-producing. The first instruction in making this change is: “Recognize the difference between health care and health insurance, between treatment and risk.” Are we heading toward the shore of universal health care or the shore of universal health insurance?
If we’re talking about the former, then it’s single-payer health care similar to public education – an institution open to all and paid for by all, through administrative and treatment protocols to be decided. If we’re talking about the latter – an actuarially sound system of risk pooling with some risks covered fully by individual insurance policies and others (think pre-existing conditions and low incomes) covered by individual policies supplemented by publicly financed subsidies – then we’re into mandatory insurance and annual budgets built on a national health risk assessment.
To my mind, the better direction, the one more likely to hit the targets of better outcomes, more innovation and lower cost, is the latter shore, the one demanding that no one be excluded, and that everyone have both a clear understanding of the rules and some skin in the game.
Consulting economist Charles Lawton, Ph.D., can be contacted at:
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