In the blog post "Hoping for Audacity," Paul Krugman offers up his version of what he wants President Obama to say in his highly-anticipated speech on health care Wednesday night. Krugman wants vision, passion, simplicity, and "real leadership."
It's all good as far as it goes, but aside from one brief side-swipe at the notion that a "public option" will lower costs, Krugman made no reference to an angle on health care reform that seems bound to appeal to Americans of all political persuasions -- the impact of rising health care costs on the government deficit.
By the middle of this century, just two government programs, Medicare and Medicaid, will account for about 20 to 25 percent of U.S. GDP. Along with Social Security, the two health programs are expected to account for 80 to 90 percent of the growth in government spending over the next several decades. And let's remember, Medicare costs are actually growing at a slower rate than private health care costs. So even as government-run health care is doing a relatively good job of keeping costs from going through the roof, compared to the private sector, health care spending still spells budget doom.
Peter Orszag, director of the White House's Office of Management and Budget, has been making this case for months, and the president flicks at it himself every now and then. But they do so only in the most cautious, technocratic fashion, promising that the administration's health care reform proposals will bring down costs by removing inefficiencies from the system, like learning what treatments are most effective in achieve good health-care outcomes at the lowest cost.
All that is great -- if we can figure out why the Mayo Clinic can deliver great health outcomes at a fraction of the cost of hospitals in McAllen, Texas, and duplicate that on a national scale, that would be fantastic. But such unilateral cost-cutting efforts will be unlikely to bring down costs overall to any significant degree -- we still aren't even sure that they will offset the very real costs of expanding health care coverage to the millions of currently uninsured Americans.
If we're going to rule out raising taxes to pay for quality health care for Americans, then there is only one, time-tested, faithful-to-capitalism way to bring down costs. And that's the blistering, take-no-prisoners pressure of true market competition. Which is exactly what the public option provides. Only if there is a legitimate cheap alternative to private sector health care insurance will we see a real reduction in accelerating health care costs. So what if it gets tougher for the health care insurance industry to make a buck? Why not balance that supposed "downside" against a stronger government fiscal position and improved health care access for millions of Americans? Put that way, it seems like a no-brainer. Let's hear it, Obama!
The Republican position appears to be that government competition is unfair and will lead to the collapse of the private health care insurance industry. While some of us may not shed too many tears at such a prospect, this seems like an amazingly pusillanimous admission of defeat coming from the health care industry and their proxies, the GOP and the moderate Democrats. Are these titans of industry really so fragile that they can't stand a little competition?
Maybe the health insurance industry has simply forgotten what competition really looks like, because it certainly doesn't exist at present, as conclusively documented in a report from the Urban Institute earlier this year. In fact, health care industry profits have been rising faster than costs over the last decade, which implies that the insurers are just passing along the cost increases directly to consumers without remorse or fear of retribution. And no wonder, since there is nowhere else for consumers to turn to.
True fiscal conservatives should endorse competition. The public option will deliver that competition. The American health care consumer will benefit from better coverage at lower costs. We'll all benefit from a healthier federal government balance sheet.