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Health-care nation
Medical spending threatens everything else

By Robert J. Samuelson
Monday, December 7, 2009

President Obama's critics sometimes say that he is engineering a government takeover of health care or even introducing "socialized medicine" into America. These allegations are wildly overblown. Government already dominates health care, one-sixth of the economy. It pays directly or indirectly for roughly half of all health costs. Medicine is pervasively regulated, from drug approvals to nursing-home rules. There is no "free market" in health care.

What's happening is the reverse, which is more interesting and alarming: Health care is taking over government. Consider: In 1980, the federal government spent $65 billion on health care; that was 11 percent of all its spending. By 2008, health outlays had grown to $752 billion -- 25 percent of the total, one dollar in four.

Even without new legislation, the health share would grow, as an aging population uses more Medicare (insurance for the elderly) and Medicaid (the joint federal-state insurance for the poor, including the very poor elderly). Obama would magnify the trend by expanding Medicaid and providing new subsidies for private insurance. Thirty million or more Americans would receive coverage.

All this is transforming politics and society. The most obvious characteristic of health spending is that government can't control it. The reason is public opinion. We all want the best health care for ourselves and loved ones; that's natural and seems morally compelling. Unfortunately, what we all want as individuals may harm us as a nation. Our concern sanctions open-ended and ineffective health spending, because everyone believes that cost controls are heartless and illegitimate. The recent furor over proposals to reduce mammogram screenings captures the popular feeling.

One consequence is a slow, steady and largely invisible degradation of other public and private goals. Historian Niall Ferguson, writing recently in Newsweek, argued that the huge federal debt threatens America's global power by an "inexorable reduction in the resources" for the military. Ferguson got it half right. The real threat is not the debt but burgeoning health spending that, even if the budget were balanced, would press on everything else.

"Everything else" includes universities, roads, research, parks, courts, border protection and -- because similar pressures operate on states through Medicaid -- schools, police, trash collection and libraries. Higher health spending similarly weakens families' ability to raise children, because it reduces households' discretionary income either through steeper taxes or lower take-home pay, as higher employer-paid premiums squeeze salaries.

A society that passively accepts constant increases in health spending endorses some explicit, if poorly understood, forms of income redistribution. The young transfer to the elderly, because about half of all health spending goes for those 55 and over. Unless taxes are increased disproportionately for older Americans (and just the opposite is true), they are subsidized by the young. More and more resources also go to a small sliver of the population: In 2006, the sickest 5 percent of Americans accounted for 48 percent of health spending.

Political power in this system shifts. It flows to groups that promote and defend more health spending -- AARP, the lobby for Americans 50 and over, and also provider organizations such as the American Medical Association (AMA), which represents doctors. Predictably, AARP has been active in the present debate. It claims to have participated in 649 town-hall and other meetings and to have reached more than 50 million people through ads this year. Not surprisingly, AARP and the AMA recently conducted a joint TV ad campaign.

The rise of health-care nation has confounded America's political and intellectual leaders, of both left and right. No one wants to appear unfeeling by denying anyone treatment that seems needed; no one wants to endorse openly meddling with doctors' independence. It's easier to perpetuate and enlarge the status quo than to undertake the difficult job of restructuring the health-care system to provide better and less costly care.

Obama's health-care proposals may be undesirable (they are), but it's mindless to oppose them -- as many Republicans do -- by screaming that they'll lead to "rationing." Almost everything in society is "rationed," either by price (if you can't afford it, you can't buy it) or explicit political decisions (school boards have budgets). Health care is an exception; it enjoys an open tab. The central political problem of health-care nation is to find effective and acceptable ways to limit medical spending.

Democrats are no better. Obama talks hypocritically about restraining deficits and controlling health costs while his program would increase spending and worsen the budget outlook. Democrats congratulate themselves on caring for the uninsured -- who already receive much care -- while avoiding any major overhaul of the delivery system. The resulting society discriminates against the young and increasingly assigns economic resources and political choice to an unrestrained medical-industrial complex.

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