The War on Social Security and the War on Excessive Health Care Costs

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Wednesday, 27 March 2013 04:12

Ezra Klein put up a blog post last night on the corruption of national politics and the media. It showed graphs from the International Federation of Health Care Plans that compared the cost of various medical procedures and products in the United States with the cost elsewhere in the world.

The graphs showed that the United States is a huge outlier, paying two or three times as much as other countries (sometimes more) for nearly every item on the list. The bottom line is that we spend 8.1 percentage points ($1.3 trillion a year) more of our GDP on health care than the average for other wealthy countries. We have nothing to show for this in terms of better health care outcomes. (The gap is actually larger, since average income in these countries is around 25 percent less than in the United States. We would expect to have better outcomes even if we spent the same share of our income on health care, just as we would expect better housing if we spent the same share of our larger income.)

The reason why Klein's charts reveal the corruption of politics and the media is that this information is news to anyone. The media and politicians harp endlessly on the cost of Social Security routinely yelling about how outrageously expensive it is. In fact, National Public Radio just did a major piece on the Social Security disability program and proclaimed to listeners that it was unaffordable. 

While the cost of the disability program has increased due to the economic collapse, once the economy recovers it is projected to cost less than 0.9 percent of GDP, a bit more than one tenth of the excess cost of our health care system. In fact the entire cost of the combined Social Security retirement and disability program are projected to peak at under 6.4 percent of GDP in the mid 2030s, less than 80 percent of the excess cost of the U.S. health care system. NPR has no problem pronouncing the cost of the disability program as unaffordable, implying to its listeners that it must be changed, but it doesn't make the same pronouncements about the U.S. health system.

The failure of the media and politicians to focus anywhere near as much attention on the excess cost of the health care system as they do on the cost of programs that benefit low and middle income people is especially striking since one of the obvious ways to reduce costs is to simply take advantage of the lower costs in other systems. (Yes, it would make more sense to fix our health care system, but trade is a hell of a lot simpler.)

Yet, the media and politicians, including those who talk about "free trade" as a god equivalent, never mention health care as an item that should be subject to trade. As Klein's charts show, there are enormous potential savings from allowing people to have major medical procedures in other countries, from allowing seniors to use Medicare to buy into other countries' health care systems and of course in bringing in much lower paid doctors from other countries.

But the media and politicians don't have these items on their agenda. Instead they produce lengthy pieces telling us that we can't afford to provide insurance to people with disabilities that keep them from working. Did I mention that rich and powerful interest groups make huge amounts of money from this waste?