The key to health-care cost reform is to remember that runaway medical costs are not primarily a federal budget problem; they are an overall economic problem. Regardless of whether payments come from the federal government, state governments or individual consumers, the nation as a whole will suffer if health costs spiral ever-upward in the next decades.
That’s the backdrop to Robert Pear’s NYT story today about Democrats perhaps moving towards Medicare reform. On the one hand, it’s important to remember that shifting costs from the government to individuals (as Rep. Paul Ryan’s plan would do) doesn’t really help much at all. But those who support a strong health-care system, especially for older and disabled Americans, should not simply wish away cost projections behind a defensive crouch of supporting Medicare.
Of course, the latter isn’t what Democrats have actually been up to. Yes, some liberals have taken that rhetoric posture, but others have proposed reforms to health care in general and Medicare in particular. In other words, for all the talk you hear from deficit hawks who are determined to find both sides equally guilty, liberal Democratic politicians have been willing to change Medicare. Yet there is an enormous difference between changes designed to create a better overall system and changes designed to shift costs.
One caveat — Matt Yglesias has noted in the past that, as rich nations become richer, it’s not an inherently bad thing if a larger percentage of their GDP winds up devoted to health care. My version of that is that I sort of expect, 50 years from now, somewhere north of 90 percent of all Americans will be some sort of physical therapists, all of us busy rehabbing each other. But regardless, the United States now spends way more on health care than do comparable nations without getting better results, so there’s room for improvement. Whenever you hear people talking about it, just keep in mind that this is not primarily a federal budget issue.