Comments on: HEALTH SPENDING: Fear The Dragon, Or Slay It?

By: Glenn Gillen

Glenn Gillen — Mon, 21 Jan 2008 16:03:56 +0000

As a foreigner I’m not as well versed on the US health system as I could be, but isn’t there just a slight possibility that the level of inefficiencies are a by product of the level of privatization that has occurred in the sector? A sector that requires ever increasing amounts of spending to continually improve the bottom lines of the insurance and other companies that suck on the sector like leeches?

By: hankkearney

hankkearney — Wed, 16 Jan 2008 15:32:08 +0000

This commentary finishes with the statement…”Most of the talk in the months to come is going to be about coverage expansions, which cost rather than save money. But it’s also clear that affordability is a key to coverage.”

Well, there’s also the argument that expanded cover improves efficiency of the financing system. With too many (defined as greater than 1) out of the financing system, those in the system pay a greater amount for same service (insurance OR medical).

So, with the highly inefficient health care system we have in the US, I would suggest we broaden the discussion from simple costs to include how all that spending is financed.

We don’t get a whole lot for our 16% of GDP.

By: Rob Cunningham

Rob Cunningham — Wed, 16 Jan 2008 15:12:26 +0000

I plead guilty to not having made a thorough canvass of the coverage, but a couple of the first reports I saw commented that whatever was happening in 2006, costs were growing much faster than GDP as a general rule. In any case, I don’t want to pick nits with my fellow scribes. I just wanted to stop and contemplate the slowdown and try to understand it, because I am myself under the general impression that excess cost growth is an intractable problem.

I think it’s quite plausible that the political environment plays a role. But if the current slowdown goes back to 2003, when the MMA was enacted but nothing else that could be described as reform was on the horizon, then that dog doesn’t hunt. I’m not sure the cyclical effects account for the whole pattern either, although a lot of economists seem to respect this interpretation — not that I have scientifically surveyed all of them either. It’s somewhat frustrating that interpretations tend to vary by the discipline of the analyst. There are economists, behavioral economists (not enough of them), political scientists, sociologists, etc. I suspect we could use some anthropology, too. But it would be nice to have more integrative, interdisciplinary thinking that explores the relationships among the different force fields that are in play.

Thanks for your interest and your thoughts.

By: mgoozner

mgoozner — Wed, 16 Jan 2008 00:10:46 +0000

Rob,
It’s not fair to say most commentators missed the angle that nominal spending on health is growing at only a slightly higher rate than nominal GDP. Most newspaper accounts noted it, as did my blog post (see http://www.gooznews.com/archives/000926.html).

On the substance of your post: I don’t think the CBO’s suggestion that this is an effect from the 2001 recession is credible. You suggest economic cyclical effects may play a role, but you leave out the most important cyclical effect: the political cycles of health care reform. The last time there was a slowdown in health care spending that drove it close to GDP growth was in 1993-94 — the last time there was a serious threat of health care reform. I’d argue that the fact that the sector again faces the threat of reform helps explain the current slowdown. Drew Altman of the Kaiser Family Foundation was the first to draw attention to this political cycle effect.