Health care spending is out of control

WASHINGTON — If we learned anything from the bitter debate over the Affordable Care Act (Obamacare) — which seems doubtful — it is that we cannot discuss health care in a way that is at once compassionate and rational. This is a significant failure, because providing and financing health care has become, over the past half-century, the principal activity of the federal government.

If you go back to 1962, the earliest year with the data, federal health spending totaled $2.3 billion, which was 2.1 percent of the $107 billion budget. In 2016, the comparable figures were $1.2 trillion in health spending, which was 31 percent of the $3.85 trillion budget. To put this in perspective, federal health spending last year was twice defense spending ($593 billion) and exceeded Social Security outlays ($916 billion) by a comfortable margin.

The total will grow, because 76 million baby boomers are retiring, and as everyone knows, older people have much higher medical costs than younger people. In 2014, according to the Kaiser Family Foundation, people 65 and over had average annual health costs of $10,494, about three times the $3,287 of people 35 to 44. Medicare and Medicaid, nonexistent in 1962, will bear the brunt of higher spending.

At a gut level, we know why health care defies logical discussion. We personalize it. We assume that what’s good for us as individuals is also good for society. Unfortunately, this is not always true. What we want as individuals (unlimited care) may not be good for the larger society (overspending on health care).

Our goals are mutually inconsistent. We think that everyone should be covered by insurance for needed care; health care is a “right.” Doctors and patients should make medical choices, not meddlesome insurance companies or government bureaucrats; they might deny coverage as unneeded or unproven. Finally, soaring health spending should not squeeze wages or divert spending from important government programs.

The trouble is that, in practice, we can’t have all these worthy goals. If everyone is covered for everything, spending will skyrocket. Controlling costs inevitably requires someone to say “no.” The inconsistencies are obvious and would exist even if we had a single-payer system.

The ACA debate should have been about reaching a better balance among these competing goals — and explaining the contradictions to the public. It wasn’t.

The ACA’s backers focused on how many Americans would lose coverage under various Republican proposals, more than 20 million, the Congressional Budget Office has estimated. The ACA’s entire gain in coverage would be wiped out, and then some. From 2013 to 2015, the number of insured Americans rose by 13 million, estimates Kaiser. But the ACA’s advocates don’t say much about stopping high insurance costs from eroding wage gains or strangling other government programs.

Meanwhile, congressional Republicans and the Trump White House proposed huge cuts in health spending — $1 trillion over 10 years for the ACA’s repeal alone — while implausibly suggesting that hardly anyone would be hurt or inconvenienced. There was no coherent strategy to reconcile better care with lower costs. Democrats kept arguing that the health cuts were intended to pay for big tax cuts that would go mainly to the rich and upper middle class. Sounds right.

Still, there’s no moral high ground. Some Democrats have wrongly accused Obamacare opponents of murder. This is over-the-top rhetoric that discourages honest debate. It’s also inconsistent with research. Kaiser reviewed 108 studies of the ACA’s impact and found that, though beneficiaries used more health care, the “effects on health outcomes” are unclear.

We are left with a system in which medical costs are highly concentrated with the sickest patients (the top 5 percent account for half of all medical spending). This creates a massive resource transfer, through insurance and taxes, from the young and middle-aged to the elderly (half of all health spending goes to those 55 and over, who represent just over one-quarter of the population).

And yet, we govern this massive health-care sector — representing roughly a third of federal spending and nearly a fifth of the entire economy — only haphazardly, because it responds to a baffling mixture of moral, economic and political imperatives. It will certainly strike future historians as curious that we tied our national fate to spending that is backward-looking, caring for people in their declining years, instead of spending that prepares us for the future.

We need a better allocation of burdens: higher eligibility ages for Social Security and Medicare; lower subsidies for affluent recipients; tougher restrictions on spending. But this future is impossible without a shift in public opinion that legitimizes imposing limits on health spending.

We didn’t get that with the eight-year Obamacare debate. The compassionate impulse overwhelmed the rational instinct. The result is that health care is controlling us more than we are controlling it.

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