THE BLOG

Newsflash: Health Care Is Too Expensive

04/18/2010 05:12 am ET | Updated May 25, 2011
  • D. Brad Wright Assistant Professor in the Department of Health Management and Policy at the University of Iowa

A lot of people seem to think that it is more important for us to fix the economy than it is for us to fix the health care system. Those people clearly fail to understand how inextricably intertwined those two things happen to be in our country. In fact, I would argue, anything that is done to fix the economy will see its gains unraveled in the near future if we don't also fix health care. Now, I'm not suggesting that fixing health care alone will fix the economy. It won't. But failing to fix it will guarantee that we wind up right back here before long. We need to address both the economy and health care, and we need to do it sooner rather than later, because the costs associated with delay are compounded like the interest we all used to earn on our savings accounts.

The reason why health care reform is vital to economic reform should be obvious, but for too many people it is anything but, so let me be clear: the problem is that health care is too expensive. As Chris Fleming writes on the Health Affairs blog, U.S. health care spending came in at $2.5 Trillion in 2009. Turn off the TV, stop worrying about all the things you have to do today, give me 5 minutes of your time, close your eyes, and just marinate in that. Two-and-a-half TRILLION dollars in a single year. If you say it a few times, "trillion" starts to sound silly -- almost like it's not actually a number at all. As a matter of fact, I think that's exactly how we respond to the fact that our spending is out of control.

Typically, after the statement quantifying U.S. health care spending, comes the almost-cliched statement: "Yet the U.S. ranks 37th in the world in health outcomes." Or something like that, trying to make the point that we aren't getting what we're paying for. I want to go in a slightly different direction, which is simply this: We can't pay what we're paying. I don't care if we got our money's worth. We're still hemorrhaging cash and it won't be long before we bleed to death.

Don't believe me? Well, then, read Ian Morrison's post over on The Health Care Blog. He illustrates that the average American household income remains around $50,000 -- maybe less over time given inflation -- while the average household's health care costs are roughly $15,000 and climbing. Of course, he doesn't go into details about the fact that a big chunk of that $15,000 is being paid for by employers -- meaning it doesn't come out of the $50,000 in income, but rather never goes into it in the first place. Still, the point he makes is that these are averages. With a complete redistribution of income leading to across the board equality of incomes, we as a nation would be pinched. It's an interesting perspective, and one that leads me to the conclusion that raising taxes on the wealthy might be a short term fix to get us to universal coverage -- itself a prerequisite to many cost-saving strategies -- but it isn't the panacea many would claim it to be.

Right now, America is a nation of haves and have nots. If we equalized things, we would find that we are all on the brink of having not. What we need to find is a way to bring costs down across the board. Unfortunately, that's much easier said than done. We can start by fixing the regressive tax-benefit for employer-based health insurance so that we stop subsidizing the rich. Heck, even Rep. Paul Ryan, the ranking Republican on the House Budget Committee, thinks that's a good idea.

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