America is on 'unsustainable path'
Patrick Barkey has crunched the numbers for the future of health care in America, and it's not a pretty sight.
By the year 2032, federal health-care entitlement programs - Social Security, Medicare and Medicaid - will consume every dollar of federal revenue if spending continues at its current pace. And neither Barack Obama's nor John McCain's health-care proposals will fix things in the long run, he predicted.
"Both [presidential candidates] have plans to increase entitlements," he said. "We need to be unwinding these broad-based entitlements and the sooner the better."
Barkey, an economist with the University of Montana Bureau of Business and Economic Research, was one of several speakers at the first Success in the New West conference held Friday in Kalispell.
The educational event, organized by Montana West Economic Development and Flathead Area Young Professionals, was aimed at giving participants information about current and future business trends and the local economy.
BARKEY SPOKE candidly about America's health-care dilemma. The data he has analyzed make him nervous.
"I'm a person who's really worried about health care," he said.
In 1965, health care accounted for 6 percent of consumer spending. By 2004 it had risen to 16 percent and by 2016, health-care spending is expected to dominate one-fifth of the U.S. economy.
Barkey pointed to three unsustainable trends: Medical-care prices growing at 1.7 times the rate of inflation; private insurance premium increases; and the commitments of federal entitlement programs. Add to that an aging population and a revolution in health-care advances that offers costly procedures such as knee replacements as standard care, and you've got a "perfect storm," he said.
When Medicare reimbursements were trimmed back in the 1990s to cut federal health-care costs, hospitals struggled at first but found a way to push costs onto those covered by private insurance.
"It's like squeezing a balloon," Barkey explained. "You squeeze it down in one area and it bulges out in another direction."
He believes the U.S. has two options to fix the health-care mess: Either raise taxes to levels similar to countries with socialized medicine, such as Canada or European countries, or reduce benefits. Neither option is popular.
"Not too many are talking about the unsustainable path we're on," he said.
The cost of health-care insurance premiums peaked in 2003, when premiums increased 13.9 percent. Last year there was "only" a 6 percent increase in premiums.
"What's happening is rational," Barkey said. "You're cutting back on health-care insurance."
Some employers have cut back on insurance benefits, capping coverage and upping co-payments.
"Health-care financial reform is already happening and it's being carried out by the private sector. And it's not very pretty," he said.
While Americans pay far and above what other countries pay for health care, "health-care outcomes here are worse than in peer countries," he added.
Countries in the Organization for Economic Cooperation and Development, which includes most European countries, pay much less for health care and have considerably higher life expectancies - 84 years in France compared to 80.2 years in the U.S.
"We may not be getting all that we pay for," Barkey stated.
THE TWO presidential candidates take very different approaches to health-care reform, with little overlap in their proposals, he said.
McCain's plan emphasizes tax incentives. He proposes a refundable tax credit for purchasing health insurance, but there's a "gotcha" factor, Barkey said, because it comes with the caveat of taxing health-insurance premiums. McCain also proposes a guaranteed access plan for the uninsurable.
Obama's plan focuses on increasing the number of citizens covered by private insurance, including universal coverage for children. While it's a more compassionate idea, Barkey said, there's also a "play or pay" mandate. All employers would be expected to offer health-care benefits or pay a tax.
"Both plans will cost more money," he said. "They're good in the short run, but will add to problems in the long run. What I'd like is a combination of the two plans."
Barkey said he believes incentive reforms should expose consumers to the consequences of their decisions.
Since World War II, there has been a built-in bias to have employers pay for health-care benefits. It squeezes too much into health-care plans, Barkey said.
"It's like car insurance covering oil changes," he said.
"We only take interest in our own health when someone pays us to do it," he said. "If it's not covered, we won't get the test."
Putting more pressure on the private sector actually could increase efficiency of health-care providers, Barkey speculated. Many goods and services - such as microwaves and computers - have gotten cheaper over time, but health care is just the opposite.
"Why is health care different from anything else?" he asked.
One segment of health care that has come down in price is plastic surgery, because it's not covered by insurance. Cosmetic surgeons have found ways of becoming more efficient because their livelihoods depend on it, Barkey said.
Features editor Lynnette Hintze may be reached at 758-4421 or by e-mail at lhintze@dailyinterlake.com
cowboyznut
sorry about the spelling
cowboyznut
Sorry about the spelling I need a better proof reader!
cowboyznut
Did anyone else notice the I-155 article/blog won't come up anymore, Rory and I were have a healthy debate! No pun intended!
mtdon
It's funny but in every other developed country in the world they have full coverage for every citizen. And none of those countries spend more than 12% of their GDP on health care - for 100% coverage. And they are ahead of the USA in every health care statistic. Here in the US it's at least 15% of national GDP and up to 25% of Americans don't have coverage. The Constitution says "Life Liberty and the Pursuit of Happiness". How can you have these when if you get sick you go bankrupt and lose everything. 75% of bankruptcies are caused by people getting sick and not having adequate coverage. Add in the fact that every insurance policy you have (auto, home, etc) has emergency health care coverage as a part of the cost. Also consider if we had national heath care how much more affordable it would be for companies to hire employees. And unless you advocate getting rid of the "Socialist police dept, fire dept, schools etc I don't want to hear "You're a Socialist". Our health care system is of, by and for the rich and is just a plain bad business model.
Dave
That's the thing realist, I could support a single payer system if the fat people, the smokers, the drinkers and similar were forced to pay more or if there were some financial incentives to stay in shape. So many of our health problems (diabetes, heart problems, high cholesterol) come from nothing more than poor lifestyle choices. As a 29 year old the entitlement program costs we've promised are really concerning to me. It's my generation that's going to have to pay for all the excess.
Rob123
Mtdon: I agree with you.....And Dave, don't discount the environmental affects of living. As a college competitive DownHill skier who, while in Vietnam had my mom send me my face mask, snorkel and fins and on days off swam around (unknowingly) in a beautiful looking sea of Dioxin (Agent Orange) and now have Diabetes; be careful about your quickdraw judgements. Livers clean up garbage, but unlike filters, are hard to change.
mtdon
Republicans always want to tell others what to do - but my point is purely fiscal- although I'm sure if people had coverage that allowed them to take preventative care then they would. Medicare can deliver health care for a 3% overhead. Private insurance can deliver it for 2.5% but then add in Executive salaries and shareholder dividends and the costs rise to 20%. So it just makes fiscal sense to provide it as a single payer system. If our system worked so well why don't the statistics bear it out. I'll keep banging away at Rightwing nonsense like national health care is socialism. Break out a dictionary - socialism is state control of production. I'm not saying the state needs to own the hospitals. And I believe it's defeatist to say we can't deliver care for 10-12% of GDP AND give it to 100% of the people. Why can other countries do it and we can't? I myself believe in America. It's just plain better for business. For example, Toyota was going to build a car factory here in the USA but instead built it in Canada because they have health care so Toyota doesn't have to pay the
mtdon
so Toyota doesn't have to pay the cost for that. Nat Health care would be good for the private enterprise system. There are so many republican myths that are just plain NOT TRUE that I feel we need to just present the truth to the uninformed - starting w/ republican blowhards who are frankly mean spirited. It seems their mantra is if someone can't afford health care let them die. Pretty Christian.
alcohol
Did you know Bill Johnson? I was his stripper when he married Gina. Were you at his afterparty, Rob.
Rob123
Posted by:Bull 2008/10/18 07:48:44 AM ? In all honesty, I don't have a clue what you are talking about. And probably don't want to know. But, go ahead, explain yourSelf.