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Home Publications Blogs Beat the Press Robert Samuelson Is Very Upset That President Obama Didn't Push for Cuts to Social Security and Medicare

Robert Samuelson Is Very Upset That President Obama Didn't Push for Cuts to Social Security and Medicare

Wednesday, 02 January 2013 04:49

Yes, it is so frustrating that President Obama keeps missing the opportunity to whack the elderly. Of course fans of arithmetic know that the story of projected long-term budget deficits is the broken U.S. health care system. If we paid the same amount per person for our care as people in other wealthy countries we would be looking at long-term surpluses, not deficits. And, if we can't fix our health care system because groups like the pharmaceutical industry and the doctors are too powerful, we could always go the route of trade to take advantage of lower costs elsewhere. Unfortunately, public policy is dominated by protectionists like Samuelson, who obstruct such trade. But these political obstacles do not change the truth. The budget problem is health care, health care and health care.

Comments (11)Add Comment
written by foosion, January 02, 2013 4:42
Unfortunately, Obama appears eager to whack the elderly. It's only been GOP refusal to negotiate that has stopped him. For example, he proposed chained CPI as part of a "fiscal cliff" deal.

Let's see what he does during the upcoming sequestration fight and debt ceiling debacle.
On highly privledged Democrats who avoid the main causes of health cost inflation
written by Rachel, January 02, 2013 7:53

It really is sad how effective the single-payer advocates have been in eliminating honest public discussion of why health care costs so much.

True, last year the L.A.Times ran a piece on how a hospital stay in Northern California costs about $7349 per day,* while costing less than $4000 per day in Southern California. The Times also explained why this happens. It is because of the formation of some big hospitals chains in the north (leading to lack of competition, leading to higher prices and higher compensation for the personnel).

This article seems to have had the good effect of persuading the SF Board of Supervisors to take an interest in the hospital chain problem.

But will honest public discussion of the real situation continue? I'm afraid it will not, since it does not seem to interest the most privledged Democrats.

Recently, for example, Rob Reich (N. Ca resident, newspaper columnist, highly privledged) decided to give his spin on why health care costs so much. But he made no mention of hospital chains. He certainly did not mention high salaries. He only talked of lots of paperwork and repeated tests.

No help for anyone who missed the Times story. He reinforced the notion that the innocent doctors were just overwhelmed with expensive paperwork. Period.

True enough, paperwork is a problem. But it is NOT the main problem. Hospital chains and other barriers are the main problem.

But if privledged Democrats who have time to look into these things, prefer not to discuss difficult issues frankly, what are overworked and underprivledged Democrats (the vast majority) supposed to do?

In the meantime, crazy right-wingers are putting all the blame for city deficits on "excess entitlements."

So it seems to me that we have a problm of intellectual failure on both sides.

* $7349 in the six most expensive counties in Northern Ca. Less than $4000 is the six least expensive counties in S.Ca
Republican Drums
written by Ron Alley, January 02, 2013 8:26
Samuelson picks up the din of Republican drumming, and transmits the message faithfully. Yes Dean, the beat goes on. What do you expect? Honest, insightful commentary?

And at the NY Times as well.

written by Kat, January 02, 2013 8:40
Yes, wasn't it comforting to hear of the healing properties of austerity?
If only it was just Samuelson
written by Jennifer, January 02, 2013 8:43
Really it is almost unfair to keep picking on Samuelson, since just about every major media outlet parrots the same line, it's those "entitlements" that have to be controlled. It's rarely explained that what proposals were put forth were either extremely damaging to poor people--proposed CPI changes--or damaging AND would not actually save money--raising the Medicare age.
Hospital Chains & Mergers
written by Bart, January 02, 2013 11:56

Rachel, I don't know about hospital chains but one of the two hospitals in our university town recently was taken over/merged with Sentara, which seems to be some kind of health care holding company.

The hospital magazine claimed that new savings and more efficiencies were sure to result from this action. My first thought was that more management staff and stock holders would have to be paid.
Response to Bart and Rachel
written by Jennifer, January 02, 2013 12:36
There are several posts on the incidental economist, under FAQ (I'm bad with links) that go into this issue in depth. It is complex like most health care issues but the upshot is yes hospital mergers do seem to drive up costs, although probably not 50%.
written by Chris, January 02, 2013 12:47
the only way i'd take SS cuts is if the debt ceiling were to be permanently abolished in return, and UI extensions to be an executive call.

chained CPI is worth that...
written by watermelonpunch, January 02, 2013 8:45
The budget problem is health care, health care and health care.

Many individual Americans' budget problem is health care, health care, & health care.
Which came first the chicken or the egg?
Does one cause the other? And if so, which way, or both?
written by liberal, January 02, 2013 9:11
Rachel wrote,
Hospital chains and other barriers are the main problem.

Huh? The "main problem" is far deeper than anything as specific as hospital chains: it's that market failure is pervasive in medicine. It's difficult, and probably impossible, to create a "market" system (ie, one driven by price signals) in medicine that's reasonably efficient.

The problems?
* Massive principle-agent problems (e.g., doctor acts as both your agent and as someone trying to sell you something)
* Barriers to entry (as you alluded to)
* Extremely difficult to measure "quality" (this is true for most "service sectors," but especially medicine)
* Current industrial organization is that of a medieval guild (WashPost had a piece this weekend which was basically about how one doctor saw his mother essentially killed by the incompetence of another doctor and hospital, because that hospital like so many medical institutions has no systematic regularization of practices and procedures)
* Sufficently esoteric subject matter so as to preclude a large section of the populace from being able to review quality/necessity of services proviced
* Long, long history (probably since the dawn of humanity) of incorrect/unnecessary drugs and procedures being administered (rampant both within medicine, within "alternative" medicine, within "tribal" medicine, etc etc)
* Large emotional investment by the "consumer"
* Inflexible demand (no one wants to die)
and so on.
good summary
written by pjm, January 03, 2013 6:11
@liberal, good summary of the inevitability of market failure in health care. (You probably know, though it doesn't often get said, that all other private insurance in the adv. ind. nations actually isn't private in that by law they are required to be managed as non-profit ventures.)

But market failure, I would guess, isn't the only thing contributing to high costs, the health of the populace and administration of health resources is sub-optimal in the country in many ways, including:

1)the virtual non-existence of a public health infrastructure (compared to most a.i.c.'s).

2) Related to that, we have inadequate/mal-distributed primary care leading to higher costs of treating end-stage chronic disease, i.e., in hospitals (and their ER's) which gets back to rachel's point.

Does anyone have any good comparative statistics on the healthful-ness (or not) of the U.S. population compared to our peer nations.
(My gut tells me that the myriad influences of social inequality would lead to a more stressed and unhealthy population but I don't know the figures. At a minimum, economic and political inequality are going to lead to a sub-optimal distribution of medical resources.)

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Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.