By Paul Krugman, Op-Ed Columnist
Those of us who accuse the administration of inventing
a Social Security crisis are often accused, in return, of do-nothingism,
of refusing to face up to the nation's problems. I plead not guilty:
America does face a real crisis - but it's in health care, not Social
Security.
Well-informed business executives agree. A recent survey of chief
financial officers at major corporations found that 65 percent regard
immediate action on health care costs as "very important." Only
31 percent said the same about Social Security reform.
But serious health care reform isn't on the table, and in the current
political climate it probably can't be. You see, the health care crisis
is ideologically inconvenient.
Let's start with some basic facts about health care.
Notice that I said "health care reform," not "Medicare
reform." The rising cost of Medicare may loom large in political
discussion, because it's a government program (and because it's often,
wrongly, lumped together with Social Security by the crisis-mongers),
but this isn't a story of runaway government spending. The costs of
Medicare and of private health plans are both rising much faster than
G.D.P. per capita, and at about the same rate per enrollee.
So what we're really facing is rapidly rising spending on health care
generally, not just the part of health care currently paid for by taxpayers.
Rising health care spending isn't primarily the result of medical
price inflation. It's primarily a response to innovation: the range
of things that medicine can do keeps increasing. For example, Medicare
recently started paying for implanted cardiac devices in many patients
with heart trouble, now that research has shown them to be highly effective.
This is good news, not bad.
So what's the problem? Why not welcome medical progress, and consider
its costs money well spent? There are three answers.
First, America's traditional private health insurance system, in which
workers get coverage through their employers, is unraveling. The Kaiser
Family Foundation estimates that in 2004 there were at least five million
fewer jobs providing health insurance than in 2001. And health care
costs have become a major burden on those businesses that continue
to provide insurance coverage: General Motors now spends about $1,500
on health care for every car it produces.
Second, rising Medicare spending may be a sign of progress, but it
still must be paid for - and right now few politicians are willing
to talk about the tax increases that will be needed if the program
is to make medical advances available to all older Americans.
Finally, the U.S. health care system is wildly inefficient. Americans
tend to believe that we have the best health care system in the world.
(I've encountered members of the journalistic elite who flatly refuse
to believe that France ranks much better on most measures of health
care quality than the United States.) But it isn't true. We spend far
more per person on health care than any other country - 75 percent
more than Canada or France - yet rank near the bottom among industrial
countries in indicators from life expectancy to infant mortality.
This last point is, in a way, good news. In the long run, medical
progress may force us to make a harsh choice: if we don't want to become
a society in which the rich get life-saving medical treatment and the
rest of us don't, we'll have to pay much higher taxes. The vast waste
in our current system means, however, that effective reform could both
improve quality and cut costs, postponing the day of reckoning.
To get effective reform, however, we'll need to shed some preconceptions
- in particular, the ideologically driven belief that government is
always the problem and market competition is always the solution.
The fact is that in health care, the private sector is often bloated
and bureaucratic, while some government agencies - notably the Veterans
Administration system - are lean and efficient. In health care, competition
and personal choice can and do lead to higher costs and lower quality.
The United States has the most privatized, competitive health system
in the advanced world; it also has by far the highest costs, and close
to the worst results.
Over the next few weeks I'll back up these assertions, and talk about
what a workable health care reform might look like, if we can get ideology
out of the way.
