Without Reform, Health Care Costs Will Skyrocket

Rising health care costs will overwhelm the American economy and the American consumer, without an overhaul of the system. This is the conclusion of most health policy analysts, as well as a new study by the Commonwealth Fund, as reported in "The Cost of Doing Nothing" in the New York Times last Sunday.

"Health policy analysts and economists of nearly every ideological persuasion" agree that "the unrelenting rise in medical costs is likely to wreak havoc within the system and beyond it, and pretty much everyone will be affected, directly or indirectly," says the Times.

Karen Davis of the Commonwealth Fund, a nonprofit health care research group, contends that things will hardly stay the same if we do nothing: "in fact, what we will have is a substantial deterioration of what we have."

The Fund analyzed the potential cost savings of past proposals on health care reform, and concluded that all of them would have resulted in a much lighter burden on the economy than we now pay. Health care now absorbs about 18% of GDP in the US--far higher than any other country in the world. (The figure is about half that in other industrialized countries). If the Clinton health care reform had been implemented, according the Fund's analysis, health care would absorb only 14% of GDP. If earlier plans by Carter and Nixon had been, the figure would be about 11%. (See the chart at the NYT site, and above).

The Fund study also estimated that the typical price of health insurance for a family is likely to double in the next decade, from about $13,000 a year, to $24,000. Health insurance premiums as a percentage of median family incomes grew from 11% in 1999 to 18% in 2007, and are expected to grow to 24% by 2020.

These kinds of costs will further erode economic growth in the United States; they will impede U.S. global competitiveness; and they will bankrupt American families and the U.S. government.

The perilous state of the American health care system is one of the key components of the decline of the U.S., both domestically and internationally, and urgently needs correction. One only wishes the members of Congress could put aside narrow self-interest and petty politics, and seriously confront the issue.

For more on the U.S. health care system, see my earlier post "U.S. Health Care Compares Badly to Others" or click on the "Health Care" label on the right side of the page.