Monday, September 14, 2009

Health Care Reform

We are at a historic moment for the financing of the American health care system. In the 44 years since the establishment of Medicaid and Medicare, we have never been closer to fundamental reform that can have systemic impacts on the financing and quality of American health care. In this discussion, it is important to keep certain facts in mind:

  • Among developed, industrialized countries (Organization for Economic Cooperation and Development) the United States spends vastly more than any other country.
  • 16% of GDP which is almost double the OECD average.
  • Highest per capita with $7290 which is two-and-half times the OECD average. (Adjusted for differences in purchasing power)
  • Despite this large difference in effort, 45 million Americans are not covered by health insurance
  • Health outcomes (life expectancy and infant mortality) are far from the best.
  • There are fewer doctors per capita than in most other developed countries.
  • Most other countries spend substantially less than the U.S. and provide health care with at least equal and in some cases better health outcomes.

As a nation we have been clear that a market mechanism—while obviously superior in terms of the economic production—was not an effective or just method of allocating resources the fields of education, national defense, police and fire protection, and criminal justice. However our free market ideology has led us down a path in which market mechanisms and private ownership have been the determining structures of our health care system. After 40 years, I think we can conclude that this has only added cost without benefit to a health care system. We need to move away from a failed ideology and move toward an approach that every other industrialized country has found both efficient and effective.

However, simply changing the financial and institutional structures of the health care system will not solve the more fundamental problem: the deteriorating health of American citizens. When Medicare was established, 13 percent of adult Americans were obese; today 32 percent are. Fully two-third of all adult Americans are overweight or obese. In 2008 $147 billion in health care costs were spent on health issues related to obesity. This is 9 percent of all expenditures. There is nothing to suggest that these trends will not continue.

It is well established that Americans consume substantially more of the world’s resources than our share of world population. While this over consumption has provided us with a comfortable and easy life style, it is now becoming apparent that this very over consumption—whether of oil or of food—carries costs that we simply cannot afford. Sooner than later we need to reform our health system in ways that effectively incentivize health and wellness rather than treating chronic diseases caused by our life style. If we do not address both issues, it is hard to see how an unhealthy and bankrupt America can provide the political leadership the world desperately needs.

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