Guest View: Obama holds health summit, but will he bust the budget?
When the last Democratic president, Bill Clinton, took office in 1993, he surveyed the economic conditions and decided to shift his attention to deficit reduction.
This was something he had barely mentioned during his campaign. By the end of Clinton’s second term, the government was running surpluses.
When President Obama took office, he made no such adjustments, as was made abundantly clear in the gargantuan budget he released last week. Virtually everything he promised in his campaign — a major health care initiative, greater investments in education, energy and more — is in his spending plan, funded largely by endless deficit spending.
Perhaps this should come as no surprise. On the stump, Obama promised transformational change, and he is delivering it. But the follow-up on his promises to reverse the Bush administration’s fiscal irresponsibility is mostly missing. The combination is breathtaking given the tsunami of red ink unleashed by the distasteful but necessary plans to rescue banks and stimulate the economy.
Nowhere is the lack of adjustment more visible than in health care, the subject of a White House summit on Thursday.
The stark reality is that “the health care problem,” as it is known, is really two conflicting problems: lack of insurance coverage and exploding costs. Addressing the former but not the latter is a prescription for failure.
A Massachusetts plan to expand coverage, adopted in 2006, has reduced the number of uninsured by about two-thirds. But it has no real cost containment measures. Its cost to the state government, now running at about $1.3 billion annually, is much greater than expected, forcing the state to slash funding for public hospitals and clinics.
Obama’s goal of extending coverage to many of the USA’s 46 million uninsured people is one we have long shared. If he does not get serious about controlling health care costs, however, he will not only miss his goal, he will make a bad fiscal outlook even worse.
Health care already accounts for about 25% of the federal budget, and costs are rapidly inflating. As more money has flowed into medical service, providers have found ways to spend it with expensive new drugs and medical technologies. This has created many useful treatments, but it has helped to drive up costs further and pushed more Americans into the ranks of the uninsured. Costs have also risen because the industry has been shielded from the buffeting forces that have forced other industries to become more efficient. When third parties foot most of the bill, consumers care about little beyond their co-payments.
Obama’s plan would throw yet more money at health care. In his budget, he proposed a $634 billion reserve fund intended as a down payment on providing universal coverage and paid for by higher taxes and premiums. He has acknowledged the need for cost controls, but he has yet to identify any beyond the low-hanging fruit of digitizing medical records and focusing more on outcomes and disease prevention.
More is necessary, none of it particularly popular. Options include the type of managed care procedures tried in the 1990s, higher out-of-pocket expenses for consumers, switching to a government-run system, and restraints on the pipeline of costly new medical technologies. Reforming health care is going to require the castor oil of cost control along with the candy of expanded coverage.