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We're Still Dancing As Health Care Drives The U.S. Into Bankruptcy

Posted: 05/14/2012 12:09 pm

No matter how the U.S. Supreme Court rules on the constitutionality of President Obama's health care reform, health care is on track to drive the federal government into bankruptcy. It's not a question of if, but when.

This is the main thrust of our new book, The Battle Over Health Care: What Obama's Reform Means for America's Future (Rowman & Littlefield, $26), a non-partisan, long-term analysis of health care and where the country is headed.

The book reveals how the Patient Protection and Affordable Care Act contains no provision to stop the increase in private health insurance premiums. Not does the law clamp down on the prices that hospitals, doctors, drug companies, and device and equipment makers can charge insurers, patients, employers and employees.

The federal government will pay for subsidies for many Americans to soften the blow. But even the federal government cannot sustain the inevitable increases in the cost of the subsidies in coming years.

The New York Times reported a slowdown in health care spending to about 4 percent in recent years. That's welcome news, but few Americans receive a 4 percent increase in their paychecks every year, and the American economy isn't growing nearly that fast.

So, slowly but surely, health care spending is continuing to eat families and the federal government out of house and home.

With the stroke of a pen, health care reform merely shifts the risk of bankruptcy of individuals and families to the bankruptcy of the federal government.

Two years ago, oil was gushing from the BP oil spill in the Gulf of Mexico. Millions of Americans and people around the globe watched helplessly as an endless gush of oil poured into the waters of the Gulf. After three months, the flow was capped.

There is no similar cap for health care spending. Why not?

The Battle Over Health Care traces how the health care industry (hospitals, insurance companies, drug and device manufacturers) has caught the same Wall Street fever that afflicted the banks. It doesn't want any cap, any limit, on how much money it can make.

This is the unspoken reason that the health care industry is vehemently opposed to the Independent Payment Advisory Board (IPAB), one of the beneficial provisions in the reform law that would keep Medicare spending in check. The IPAB will cut into industry revenues and profit.

The Battle Over Health Care challenges the industry to "pick its poison." If it doesn't like any debt reduction ideas discussed by the Congressional "Supercommittee" last fall, and doesn't want the IPAB, there is only one alternative: eventual federal bankruptcy and a bailout by the International Monetary Fund (IMF).

The book traces what a bailout would look like if the federal government cannot get its fiscal house in order. The U.S. would lose its sovereignty over its fiscal affairs. The IMF is immune to lobbying from special interests.

The IMF is already tracking entitlement spending in the U.S. and the health care reform law's impact on federal spending as part of its due diligence on the economies of its member countries.

There is a way out. Here's one example. Ten cents of every dollar spent on health care in the U.S. is lost to fraud. Ten percent of the $2.5 trillion spent on health care a year translates into $250 billion a year lost to fraud, enough to cover 32 million uninsured at a cost of about $8,000 per person. The reform law gives investigators and prosecutors new tools to fight fraud and corruption but they are a drop in the bucket.

America has a unique way of dealing with thorny problems. It throws money at them. Someday the money is going to run out. So, no matter which side wins when the Supreme Court issues its ruling, the victors will have won the battle but the country is still on track to lose the war.

For now, to quote Citigroup's former CEO Charles O. Prince who said in 2007 before the meltdown, "We're still dancing."

 
 
 
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