Cutting the Deficit

I’m never going to be a policy wonk, but I find that if I squint and tilt my head a little to the side, I blur a lot of distracting appendages and can make out the main shape of the budget problem. The distractions are things like NPR and Planned Parenthood. The main shape is the bloated form of health care—Medicare and Medicaid—that promises to keep growing forever. If you can’t get health care costs under control, you have no hope of balancing the budget.

If you have ever had the slightest involvement with health care, you know there is money to be saved. For example, a resident working in a major county hospital tells me that because the authorization process for certain tests takes so long that the patient would be dead before they got the okay, residents sometimes admit patients to the hospital who don’t need to be there. It’s horribly expensive (and comes out of your pocket) but it’s the only way to get the tests. Anybody working in the guts of the health care system can tell similar stories. There’s tons of waste and abuse. But the system has a lot of built-in resistance to change. And it’s easy to demagogue proposals for change. (Death panels, anyone? Rationing health care?)

Obamacare took a shot at some cost control measures—not many, but some. In the Obamacare approach, the diet is in the details—a million and one policy-wonk changes to the system.

Paul Ryan’s approach is just the opposite. Don’t bother with the details. Just say: here is how much money we have—figure it out. People (and states) will be given vouchers to pay for health care. The rest is up to them and the health care system (including insurance companies).

It’s a Gordian-knot solution. You don’t untangle the knot. You cut it. There’s a lot of appeal in its simplicity. But the devil will still be in the details.

If the Obama approach puts a lot of faith in policy wonk prescriptions, Ryan places a lot of faith in the “free market” health care system.  If you give it a certain set amount of money, it will figure out how to spend it wisely.  I’m not optimistic. As far as I can see, the system isn’t a system, just a collection of interest groups whose workings are greased with a lot of money.

Suppose we adopt Ryan’s approach. What happens when a middle-class somebody with inadequate insurance gets very, very sick, requiring a million dollars worth of treatment that his insurance won’t pay for? Does that somebody just die? If ten thousand middle-class somebodies die, how long does Ryan’s approach last?

What do you think? Can the policy wonks figure out how to make the system work efficiently? Or will putting the system on a strict allowance make it stop overeating?  When I consider these two options, I’m pushed toward the much-reviled Canadian option, which combines elements of both: a strict allowance, with policy wonks in charge of figuring out how to spend it. And yes, we ration health care. Just like we do now.

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3 Responses to “Cutting the Deficit”

  1. peakers82 Says:

    Paul Ryan’s approach won’t work. I’m not sure he expects it to. He knows that it will never get through Congress. In the coming budget debate, however, I think Republicans wanted to start as far to the right as possible. They know people would revolt if they proposed getting rid of Medicare, so they did the next thing, they change so that it is fundamentally not the same program. They will give some ground on those proposals, but by starting as far to the right as possible, I think they hope to end up as far to the right as they can.

  2. snstafford Says:

    good summary of my thoughts. It is infuriating to me that nobody (excepting Paul Ryan) talks about Medicare in the budget conversation. I think most Americans are unaware of how inefficient our healthcare system. A cheaper healthcare system is not always a worse one.

  3. David Graham Says:

    There are no easy answers or quick fixes to health care in America. Well over 100,000 people leave the U.S. each year to get interventional procedures done elsewhere.

    Part of the problem is that technology has outgrown our capacity to pay for it. For example, if a bone marrow transplant costs over $100,000, how do we pay for that (how do insurance companies pay for that)? Maybe we end up like other socialist systems and put limits on everything; e.g., if you’re over 60 and need dialysis, you either buy private insurance to pay for it, pay for it out of pocket (i.e., be independently wealthy), or else die.

    So if “a middle-class somebody with inadequate insurance gets very, very sick, requiring a million dollars worth of treatment that his insurance won’t pay for? Does that somebody just die?” The answer in a rationed system would be “yes.”

    The follow up question is equally valid, “If ten thousand middle-class somebodies die, how long does Ryan’s approach last?” Being the U.S., rationed health care is always going to provoke protest.

    Of course, tort reform is another important component of health care cost cutting – some states (e.g., Texas and California) have had success with this. (Obamacare completely rejected this aspect of expenditure cuts.)

    People are always the most expensive component of any business, so with everyone who works in the health system wanting good salaries, benefits (including health insurance), and the like, costs in the U.S. are not surprisingly much higher than they are in India, Turkey, or Singapore (some of the places Americans go for their health care).

    Finally, these comments: as I pointed out in the first paragraph, technology and medical therapeutics have outgrown our capacity to pay for it. Before the 20th century, as Lewis Thomas pointed out in his writings, medicine really dealt mostly with diagnosis: the number of therapeutic options doctors had was really limited. The advent of 19th century anesthesia made all the 20th (and 21st) century surgical developments possible (e.g., whole fields of surgery came into being: cardiac surgery, pediatric surgery, oncological surgery, etc.) Radiotherapy is a 20th century invention. Chemotherapy didn’t come along until the 1940s. Ditto for antibiotics. Advanced cardiac and advanced trauma care systems are also historical johnny-come-latelies…

    Historically speaking, we are living in a unique age…two hundred, five hundred, or five thousand years ago this level of financing-health care debate didn’t exist.

    Between this advanced technology and high costs of insurance, the U.S. has a health system that frequently works but with great inefficiency, exhorbitant costs, and limited availability…

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