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Why we'll have to get serious about health-care costs in one graph

In Washington, some talk about the health-care problem as if it's simply a Medicare problem. That's not true. It's just that the CBO estimates Medicare's impact on the deficit, and so we get frequent reminders of the threat from Medicare. But imagine if we fix Medicare but don't get private spending under control. Here's what'll happen to our incomes:

incomeandhealthspending.png

Not good. And consider that the yellow line looks at a 2 percentage point difference in growth. In 2006, GDP per-capita growth was 1.6 percent. Health-care growth was 6.7 percent. So the current reality is much, much worse than even the grim scenario that the yellow line is looking at.

(Via Austin Frakt.)

By Ezra Klein  |  August 4, 2010; 12:12 PM ET
Categories:  Health Economics , Health Reform  
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Comments

boy it sure would have been nice to address costs like this when we actually had something to bargain with. You know like 30 million new people for doctors, hospitals, insurers, pharmaceutical users.

Posted by: visionbrkr | August 4, 2010 12:40 PM | Report abuse

Will the money spent help a service based economy?

Posted by: bigless55 | August 4, 2010 12:55 PM | Report abuse

It would be so easy to make the y-axis of this graph start at $0. When things are changing from 100 to 110 I can understand zooming in. But here you're just obscuring (amplifying) the true effect.

Posted by: fakedude1 | August 4, 2010 12:55 PM | Report abuse

Another way to put it: if we do nothing (as in abolish the reform), health care will grow o 25% of the economy by 2025. If it's difficult to get it under control now, how much more difficult will it be then? Any ideas from the Republicans/Conservatives/Tea Partiers?

Posted by: AMviennaVA | August 4, 2010 1:20 PM | Report abuse

I really enjoy the projections of costs in 2084. I thought to myself, "What would my graddad think?" When he was fighting in World War II, did he look at the federal charts and say "Gee, Medicaid will be a financial nightmare by 2010!" Then I thought to myself... nope, since Johnson's Medicaid burden hadn't yet been foisted upon taxpayers, my granddad couldn't have thought about that way back when.

Besides, global warming will destroy us all within 5 years, thereby saving the federal government a huge amount of money. Just think of the Medicaid cost savings which will result from the annihilation of the entire American population!

Posted by: rmgregory | August 4, 2010 1:26 PM | Report abuse

Yeah, it really is a shame the GOP decided to demagoge all cost control as 'rationing/death panels'.

Posted by: yoyoy | August 4, 2010 1:49 PM | Report abuse

yoyoy,

i'm guessing your memory is failing.

It was Rep Eshoo that made sure biologics had a 12 year shelf life. (She's a DEM by the way). That'll cost hundreds of billions of dollars btw.

It was the Dems that made a side deal with Billy Tauzin and Pharma that all they had to do was pay about $150 million in advertising and then the administration would send them 30 million new SUBSIDIZED patients. I've gotta think that is going to be well into 11 figures.

And then it was the DEMS that made sure hospitals didn't have to adhere to cost controls until 2019.

And it was the DEMS that bowed to union pressure to weaken the excise tax.

it was the DEMS that bowed to doctors to make sure the AMA didn't come out against reform with promises of the doc-fix and weak cost controls on doctors.

But you enjoy your dream-world.

Do the Republicans deserve blame, absolutely. If they had to cajones to actually stand with dems to get this done then they could have put the screws to doctors, pharma, insurers etc. but to throw out the death panel talk and not mention any of the above shows partisan rancor at its worst.

Posted by: visionbrkr | August 4, 2010 2:37 PM | Report abuse

And here I thought the main purpose of health care reform was to get serious about costs.

Silly me.

On a slightly related topic, Ezra needs to have a talk with the voters of Missouri. Seems that they don't like Obamacare like they're supposed to.

Posted by: bgmma50 | August 4, 2010 4:48 PM | Report abuse

visionbrkr, where were the votes to do more than this? If you engaged the hospital and pharma lobbies in opposition to reform in 2009-2010, the bill would have crashed and burned.

The gamble the Dems made was to create institutional opportunities for cost reforms and delayed cost reforms to mute opposition. It doesn't result in the quick dramatic impact I would have preferred to see, but over 10 years the impact is very likely to be dramatic for exactly the reason Ezra's chart brings out. Healthcare is making us all poorer, and the legislation gives a few new tools to do something about it when the political will is finally sufficient to overcome the big health care lobbies.

Posted by: jdhalv | August 4, 2010 10:26 PM | Report abuse

jdhalv,

that's where i blame Republicans. As mentioned above if they actually stood where they stood in 1993-94 then we could have had Dems and Republicans standing together against the lobbies and had real cost control.

But again that doesn't absolve Dems from the shady deals that they made on behalf of "reform".

Posted by: visionbrkr | August 5, 2010 10:50 AM | Report abuse

There's been almost no serious discussion about the changing cost of medical treatment when prevention is an aggressive, supported policy. For one glaring - but thus far buried - example, HIV in communities with high rates of medical care, early access to treatment, low risk of insurance cancellation with a positive diagnosis, and fairly aggressive testing - like New York, Massachusetts, and Northern California - the rate of new HIV cases is dropping at 20% per year! That reflects better health, less infectiousness due to early access to medicine, etc., as well as better prevention.

It also represents a net savings to the system of $400,000 per case. In New York, that's nearly $1.5billion. The irony is that such a saving is annual (less than expected and budgeted) yet extends for 20 years. Ending HIV (which is easy in these states given their healthcare systems) could finance ending diabetes and a host of other life threatening, and expensive, diseases.

But nobody's looking at those savings.

Posted by: joebeckmann | August 5, 2010 11:17 AM | Report abuse

joebeckmann,

you can't "end" diabetes until you simultaneously end the crap in our food that causes us to eat how/what we do and also have the general public understand that obesity needs to be treated as smoking was 20 years ago.

Ezra used to tackle the statistics of obesity and there was a recent study that showed (I believe the number are right as i heard them on the radio) a CDC report that showed almost 20% of the states have rates of obesity over 30%. That's horrible.

Posted by: visionbrkr | August 5, 2010 12:01 PM | Report abuse

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