washingtonpost.com  > Opinion > Columnists > Robert J. Samuelson
Robert Samuelson

Prognosis: Stalemate

By Robert J. Samuelson
Wednesday, September 22, 2004; Page A31

Our health care system is a frustrating mix of routine miracles and scandalous failures. The miracles abound; Bill Clinton's recent open-heart surgery was cutting-edge a few decades ago. Failures also abound. In 2003, 45 million Americans lacked health insurance, and medical spending spiraled furiously upward. Since 2000 private insurance premiums have increased 59 percent, reports the Kaiser Family Foundation. Both George Bush and John Kerry say they'll "fix" the health care system, but their campaign proposals suggest that neither is serious.

To be serious would require admitting that the basic problem does not lie with insurance companies, trial lawyers, hospitals or any of the usual suspects. It lies with public opinion. We Americans want the impossible. We want our health care system to provide everyone with good care covered by comprehensive insurance, prevent insurance companies or government bureaucrats from dictating our choice of doctors, hospitals or treatments, and hold down costs. Well, we can have any two of these goals -- but not all three. If everyone has coverage and choice, costs will skyrocket. No one is empowered to control them. But controlling costs involves limits on insurance or choice.

_____What's Your Opinion?_____
Message Boards Share Your Views About Editorials and Opinion Pieces on Our Message Boards
About Message Boards
_____More Samuelson_____
'Job Quality' -- Campaign Myth (The Washington Post, Sep 15, 2004)
Same Old Evasion (The Washington Post, Sep 8, 2004)
Bush's Jobs Albatross (The Washington Post, Sep 1, 2004)
About Robert J. Samuelson

Consider managed care as a case study. It expanded in the 1990s and, by limiting choice, restrained costs. From 1994 to 1998, per capita health care spending rose only 3 percent annually. "There were a lot of controls. You needed permission for admission to hospitals or to get an MRI," says Paul Ginsburg of the Center for Studying Health System Change. Doctors and patients revolted against restrictions that seemed wrong. Managed care relaxed. Per capita spending surged; increases were 10 percent in 2001, 9.5 percent in 2002 and 7.4 percent in 2003.

Not wanting to offend voters, both Bush and Kerry ignore conflicting goals.

Kerry's approach is to throw money. If you spend enough, you can insure many uninsured. He would expand Medicaid and the State Children's Health Insurance Program. Children of families with incomes less than three times the poverty line, or about $56,000 for a family of four, would become eligible. Kerry would provide tax credits for small businesses that offered insurance. The federal government would also subsidize the insurance of big employers; his plan would pay 75 percent of catastrophic health spending for individuals over some limit, beginning at $30,000 and rising annually.

If enacted, Kerry's plan would extend insurance to 27 million people, according to separate estimates by Kenneth Thorpe of Emory University and a team headed by Joseph Antos of the American Enterprise Institute. The cost is unclear. Thorpe puts it at $653 billion from 2005 to 2014; the Antos group estimates $1.5 trillion from 2006 to 2015. Either way, Kerry's plan is expensive. The fact that he would finance it by repealing Bush's tax cuts for those with incomes over $200,000 doesn't change that.

Bush's plan costs less -- and does less. The White House says its plan would insure "more than 11 million and as many as 17.5 million" Americans. Antos's team figures 6.7 million and estimates the cost at $129 billion from 2006 to 2015. The president proposes tax breaks for health savings accounts (HSAs). Tax-deductible contributions to these accounts can be used for ordinary health expenses. People with HSAs are also required to have catastrophic insurance coverage for medical emergencies. The idea is to promote cost-consciousness for routine spending, while making insurance -- covering only big bills -- more affordable. Despite rhetorical boasts, neither plan would control health spending.

Kerry claims to make health insurance more affordable. Technically, this is true. But he merely shifts health costs from private companies and workers to the federal budget and taxpayers. Because health care spending is hard to control, this would make future budgets less manageable. In 2003 health costs accounted for 23 percent of federal spending, up from 7 percent in 1970. With current policy, that reaches 29 percent in 2014, projects the Congressional Budget Office. Under Kerry, it would go higher.

Bush says his plan "will help reduce the rising cost of health care." Just how is unclear. Even if HSAs unexpectedly exploded, the resulting cost-consciousness would affect only a small part of spending. About 10 percent of patients -- the very sickest -- account for 70 percent of spending, says health economist Len Nichols. HSAs don't touch these costs. Limiting malpractice suits (a Bush goal) wouldn't help much; savings might total two-tenths of one percent of spending, estimates the Lewin Group.

What unites Bush and Kerry is an unwillingness to challenge public opinion. People blame high health costs on "waste" or excessive profits. These convenient explanations are exaggerated. In 2003 the profits of health maintenance organizations totaled $10.2 billion, reports Weiss Ratings Inc. They represent a small percentage of the $1.6 trillion spent for health care. The real causes of higher spending are stubborn: We're an aging society; science creates new drugs, diagnostics and treatments; people want the latest and best -- at someone else's expense.

Our medical advances save lives and improve the quality of life. But some spending -- perhaps a lot -- is unneeded. The practical problem, says Drew Altman of the Kaiser Family Foundation, is to find ways of imposing limits on individual patients. This is hard at best, but it requires a political will that's missing. Bush and Kerry won't tell voters what they don't want to hear, even if unchecked health spending puts pressure on wages, other government programs or taxes. Regardless of who wins, the prognosis is for more of the same.

© 2004 The Washington Post Company