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Health care reform dominates the news and public debate, and whatever reform is enacted (if any) will far from solve all of our nation's health care problems. Health care is an enormous, and enormously complex issue, and many people in both parties have said many things, some true, some misleading. This discussion guide is intended to help you understand the issue and the many choices for possible reform.
America's overall health care bill has risen to about $2.4 trillion, 16 percent of our total economy (and twice what we spend on food). Spending has been rising much faster than overall inflation — by about seven percent a year, far outpacing economic growth. By 2017, our collective doctor's bill is projected to be $4.1 trillion, and by 2040, overall health care spending is on track to double as a proportion of gross domestic product, accounting for more than a third of all the goods and services that the United States produces.
Nearly half of the nation's current health care spending is paid for by the government through federal programs which cover more than a third of the U.S. population — particularly those who are most in need — and have transformed health care for retirees, the disabled and low-income Americans (Medicaid receives more than 60 percent of its funding from the federal government, with states paying the rest.)
These programs include:
Additionally, tax breaks to corporations to subsidize employer-sponsored health plans cost the government about $225 billion.
Budget experts from across the political spectrum agree on two points: One is that the biggest long-term problem for our nation's federal finances is the astronomical rise in public and private sector health care spending, which will require huge federal funding increases for Medicare as the baby boom generation retires. The other point of agreement is that controlling federal health expenditures cannot be divorced from reforming our nation's overall health care system, which is prone to inflation and among the world's most expensive.
So far, we've been able to support Medicare through a combination of employee and employer Medicare taxes and additional government revenue from the general tax base. We've also increased federal and state Medicaid spending, in part by cutting other spending. Unfortunately, several powerful trends spell potentially enormous financial problems for Medicare and Medicaid over the next 20 years. Medicare and Medicaid, together with Social Security, now consume about 40 percent of federal spending. But this would rise to 100 percent by 2040 if these programs are not reformed or overall taxes and spending are not dramatically increased. The looming costs of Medicare over the coming decades, if reforms are not enacted, are a staggering $30 trillion to $40 trillion.
Soaring Medicaid costs have also squeezed state finances, making it harder to spend on schools, roads and other local needs. At the same time, in 2009, stimulus funds helped states but increased federal spending. Cost growth has adversely affected U.S. businesses' global competitiveness and has consumed a larger portion of employee compensation, leaving less room for wage growth. Meanwhile individuals' health care expenditures — while only 15 percent of the nation's total outlays for health — have risen sharply and are a prime cause of household debt and bankruptcy.
There are many reasons for America's exploding health care costs. Individuals and health care providers largely don't know or pay the real bill for health care, because most costs are paid for by private insurance or government. Other reasons for rising health care costs include doctors' defensive medicine leading them to order more tests and follow-ups, new medical technologies and drugs, an aging population, curtailing of health care benefits by employers, and malpractice litigation.
Administrative costs are five times higher than the average in Europe and Japan, and the United States lacks the tools, such as a national database of patient records and best practices for treatment that might reduce red tape.
Another aspect of the health care dilemma in the United States is the fact that an estimated 47 million Americans lack health insurance. The quality of care, furthermore, varies greatly. While the United States does have some of the world's best health care, our nation consistently falls behind more than 30 others in the quality of health outcomes for its people, according to the World Health Organization. American life expectancy has expanded from about age 46 in the year 1900 to nearly 80 today, but when it comes to infant mortality and some other health indicators, the U.S. lags behind many countries whose health spending is much less per person.
Any change in our health care system raises fundamental questions that are as much about values as they are about money or public policy. Should we consider "rationing" health care by limiting total annual government health spending and focusing on the most essential care?
Countries like Great Britain and Canada ration care as part of their national health systems, but is that the right choice for the U.S.? Should we expect people to take greater responsibility for their own good health? Should we reward those Americans who engage in healthier behavior?
While there is considerable debate about which approach is the right prescription for health care in America, there's one point of consensus for many citizens of all walks of life and political allegiances: something about America's patchwork system of health care is broken.
This guide suggests three different approaches to the challenge facing the health care system and the nation’s budget:
Each approach, which has its own underlying philosophy and proposals, is intended to be a discussion starter. You should not think that you need to adopt every idea under any one approach. You can mix and match ideas from different approaches and toss other ideas into the mix.
The intention is that while working through the ideas and choices in each approach to health care reform, you will come closer to being able to answer this question: What do you think are the best courses of action to meet the challenges facing America’s health-care system and why?
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