Citizen's Rent 2005: The Real Crisis

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The Real Crisis

In an ideological fervor, Bush and his acolytes have been fanning the flames trying to convince the American public that there's a social security crisis. With claims of future bankruptcy and the implication that without significant reform today's young people are tomorrow's destitute elderly, the Bush team is waging a full-bore campaign to eliminate them most successful social program we have and to replace it with a high-debt, high-risk alternative straight out of the GOP handbook.

This campaign is well underway though it's not yet a resounding success. Millions and millions of government and corporate funds are being expended to win this battle All the while, the real crisis goes unnoticed, unmentioned, and largely ignored.

The real crisis, both social and economic, is detailed in a Knight Ridder story by Tony Pugh. It's health care, stupid.

The federal Centers for Medicare and Medicaid Services have released new projections on health care costs and coverage and the picture they paint is dire. The report findings include:

From 2006 to 2014, private health care spending will grow at an average annual rate of 6.7% - well above inflation and wage increases.
By 2014, public funding of health care is expected to exceed 49% of total health care spending, of which a significant component is the small-government-Republican's drug prescription plan.
By 2014, health care spending will represent 18.7% of GDP.

Thirty-four states are already restricting Medicaid benefits. In Bush's first term, the number of uninsured increased from 40 to 45 million. It's only going to get worse. The Knight Ridder story puts the numbers into the equation, making it easier to figure out when you won't be able to pay your premiums any longer.

The annual Medicare-Medicaid report found that public and private spending for health care will total $3.6 trillion by 2014 - about $11,045 per person - and eat up a record 19 percent of gross domestic product. That's up from a projected $1.9 trillion in 2005 that will likely account for 15.4 percent of annual GDP and average $6,423 per person. The government will fund 49 percent of all health spending in the United States by 2014 - a record share - due largely to the new Medicare prescription drug benefit.

I wonder how much that number would decrease if the government had the right to negotiate volume discounts from the pharmaceutical companies. Quite a bit I suspect. But that might provide a small amount of relief for the government and therefore for us as taxpayers, it does nothing to address the growing costs for citizens covered by private insurance. Nor does it help the businesses that fund much of that coverage.

So what is Bush doing about this real crisis that affects individuals and businesses? If he is a proponent of the 'culture of life' then surely he's doing something to ensure that we have access to the medical care we need to tend to our physical health, to extend our lives.

Bush's plan is simple. He's going to provide a $1000 tax credit to the poor for use in paying health insurance premiums. Let's do the math.

$11,045 annual premium in 2014
1,000 tax credit
$10,045 remaining premium costs for a poor person

Even if wages skyrocket, this will easily represent a fifth to half of that person's income. They simply can't afford insurance and Bush's tax credit provides no solution. Sure, it will be nice for those with enough income to buy insurance but will they qualify for the tax credit? They're unlikely to make the cut for the "who is poor" list.

Okay, so that's no help. What else is Bush doing? Surely, he has an innovative plan, bold and daring. That's his second term shtick after all. And there is another ingredient in his health care plan. Health savings accounts. You get to put pre-tax dollars into an account and use them to pay medical costs. How generous is that? Very, if you've got enough income to save some in one of these accounts. But let's think about those uninsured poor. They're hardly paying any taxes already so their benefit is minimal. And they're POOR! They don't have money to put in an account. They're hoping they can pay their rent! Health savings accounts are nice for the 401k users among us. But to the poor they're one more ingredient in a giant government shell game (pick the right shell and, voila, you're insured).

There must be something else. And there is. Bush wants to expand Medicaid coverage to more people. Now that sounds promising. But there's a problem you see since without any expansion we're already predicting serious budget hits in 2014 because the government will be carrying almost half the country's health care costs. Can we really afford to take on more? Sure. It won't even cost us any money. You see, at the same time that we expand coverage, we'll reduce benefits. So more people will receive care but the care they get will be less generous.

Maybe health care rationing exists in our future, but have we really done everything we can to address this problem in a way that doesn't cut off care because of costs? Have we created federal commissions, held town hall meetings, directed federal agencies to work the issue, enlisted Congress in the fight, and raised millions of dollars to solve the problem and sell the solution? I didn't think so.

We are facing a crisis. Not in 2042 or 2018 or even 2014. In this advanced, big hearted, wealthy nation of ours, 45 million people don't have access to preventative care let alone emergency care. It's estimated that 50% of bankruptcies are connected to unpaid medical bills. Seniors, the disabled, the poor are choosing between shelter and medical attention. It's happening in every state. It's happening to people you know. And it's going to get worse.

THIS is the crisis. And Bush doesn't care.

Posted by Kathy at 06:16 AM in Politics, Social Security and Tax Reform | Permalink

Comments

You can't solve a problem without first recognizing and defining it. Focus has been diverted for so long by the media and the left (sorry for the redundancy) against the "evil insurance companies," and their "exorbitant profits," that the public simply fails to recognize the source of spiraling medical costs - the medical vendors. Surgeons should be well compensated, but do their really need to charge $20,000 a day, as many do charge? Look at the bloated, wasteful bureaucracy of the PC-run, quasi-for-profit hospitals that bill $5 for a single aspirin, and can't make ends meet. If you want to solve the healthcare crisis, begin with the healthcare. But do it without blinders. Check your preconceived PC notions at the door.

Posted by: Douglas Hill | February 25, 2005 at 01:09 PM

You're assuming too much here. My post doesn't rail against the "evil insurance companies" and their "exorbitant profits". You're seeing blinders where they don't exist based on your own conservative notions.

My point is that there is a crisis. I think that's clearly true. My opinion is that the crisis is fed by both spiraling medical costs AND profit-driven insurance companies. There's no national dialog on this and I'm open to any non-ideological driven analysis of the causes and possible solutions. I'm not open to a debate that puts anything off limits, whether it's spiraling costs, abuse of government provided services, or corporate greed/insensitivity. The reality is that we've got a big problem and we need to look at clearly, to really work in a bipartisan way to solve it. There's no room here for ideology-driven solutions.

But we're getting ahead of ourselves. There's no point in arguing about the ideology of one side or another when the problem isn't being discussed at all. This is the area where the country would benefit from a PR campaign to convince the public that we have a crisis and need bipartisan action to solve it. The crisis is health care, not social security.

Posted by: Kathy | February 25, 2005 at 02:08 PM

Healthcare and Pensions. They're both going to squash us. And please, Kathy, check your preconceived PC assumptions at the door. (to your own blog)

Posted by: eRobin | February 25, 2005 at 09:39 PM

Health care is already rationed. If you have money, you get health care. If you don't have money, you don't get health care. If you have a little bit of money, you get a little bit of health care.

Posted by: Mazurka | February 27, 2005 at 05:30 PM

Those "$5 aspirin" and such aren't even real. Insurance companies negotiate with vendors to pay substantially less than the quoted price on all those items, from mammograms to aspirin to surgeons' fees. But when Joe Uninsured goes to the hospital, guess which rate he pays?

Posted by: Kathy | February 28, 2005 at 02:31 AM

Sorry, forgot this was Kathy's blog...I'm another Kathy, and the previous post was mine.

Posted by: KathyF | February 28, 2005 at 02:33 AM

KathyF,

Insurance companies do negotiate with hospitals; the amount of the discount is usually driven by the volume of business the insurance company directs to the hospital. As in all forms of business, volume counts.

Just think how high your premiums would be if the insurance companies were not able to use business methods to reign in some of the exorbitant costs.

Posted by: Douglas Hill | February 28, 2005 at 07:39 AM

Hmmm...isn't that what I said? It sounded like you were blaming the hospitals for charging exorbitant prices, when the prices aren't actually so exorbitant. Except for the poor uninsured schmuck.

(And, of course, when Joe Uninsured can't pay, the hospital charges (the negotiated) $2 for aspirin to the insurance companies, who raise their premiums, which our employers can't pay, then we become uninsured. Vicious cycle, anyone?)

Posted by: KathyF | March 01, 2005 at 12:54 PM