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Health care reform could really add up
12:00 AM CDT on Tuesday, March 10, 2009
How big is health care reform?
We are talking about revolutionary upheaval for a giant sector of the economy. U.S. spending on health care this year is projected to exceed $2.5 trillion – almost as big as the economy of France. Health care in America employs 20 million people.
President Barack Obama's health care reform effort aims to provide coverage for everyone while finding some way to blunt the cost.
"This time, the call for reform is coming from the bottom up, from all across the spectrum – from doctors, nurses and patients; unions and businesses; hospitals, health care providers and community groups," Obama said.
"It's coming from mayors, governors and legislatures – Democrats and Republicans – who are racing ahead of Washington to pass bold health care initiatives on their own. This time, there is no debate about whether all Americans should have quality, affordable health care – the only question is how."
How indeed. We live longer, better, more productive lives as the result of advances in health care. But the cost is growing so large that we can't afford what we're doing much longer.
Most of what we buy gets more expensive over time. With health care, however, costs have exceeded the overall rate of inflation for a long time, and also the rate of growth in income. On average, each of us spends more than $8,000 a year for health care and health insurance. Unless something blunts the trajectory, health care will account for 20.3 percent of the economy in a decade.
There are economists who say this is not such a bad thing. In a wealthy country, living a healthier, longer life will naturally attract more spending.
But the current trend lines show health care is squeezing what we can pay for everything else. The clearest expression of this is public spending.
Because of the recession and the aging of baby boomers, the government share of health expenditures is likely to account for 51.3 percent of a total bill for $4.4 trillion in 10 years, according to the federal Centers for Medicare and Medicaid Services.
To cover the costs of Medicare over the next 70 years, the Federal Reserve Bank of Dallas estimates, we need to find $85.6 trillion in new taxes or cost savings. That's a personal liability of more than $281,000 for each of us.
When President Bill Clinton proposed his health care overhaul in 1994, we were spending $917 billion a year. Health care took up 13.7 percent of the economy. There were 33 million Americans without health insurance.
This year, health care spending is expected to account for 17.6 percent of the economy. There were 45 million people living in the U.S. without health insurance in 2005, the latest number available from the Census Bureau.
The budget plan released by the White House on Feb. 26 pointed to one possible way to curb health care spending.
From one area of the country to the next, there are big disparities in health care spending for the same ailments. In Dallas, the average health care costs for each senior enrolled in Medicare exceed $10,103 a year. Nationwide, the average is $8,304. In Salt Lake City, it's $6,909.
These numbers are derived from federal data sifted by researchers at the Dartmouth Institute for Health Policy and Clinical Practice in New Hampshire, which estimates the nation could cut its health bill by 30 percent if everyone followed the examples of success followed by lower-cost areas.
The Obama administration has noticed.
More Columnist Jim Landers
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