Post by kaima on Nov 10, 2008 21:54:20 GMT -7
From a respected Alaskan economist who publishes about once a month:
Rationed by price, health care in US becoming a luxury
DAVID REAUME
COMMENT
(11/08/08 23:40:59)
Barring change, Alaska babies born today will find themselves in one of two socio-economic groups when they reach their early 20s: those struggling to make ends meet, and those who work in health care.
An exaggeration? Yes, but it dramatizes the fact that in 25 years, continuation of current trends in health care costs and income will force more than one-half of Alaska households either to do without all but the most basic medical and dental care or else to reduce their standard of living to levels that the average Alaskan would find unimaginable today.
Here are the facts.
According to the Henry J. Kaiser Family Foundation, a well-respected keeper of the records on health care, combined employer and employee annual premiums for health care in Alaska came to $12,198 in 2006 for the average "family" that actually had employer-provided health insurance, or some 21 percent of average household income. Although employers paid more than $9,000 of that amount, the number $12,198 represents a reasonable estimate of the cost of quality health care for the average Alaska household in 2006.
Now let's extrapolate.
Between 1991 and 2004, health care costs grew each year by about 4 percentage points more than did household income.
If that differential continues for 25 years, health care premiums will total more than 50 percent of Alaska median household income for those households and employers who still buy health insurance. Not many employers and even fewer individuals are likely to be able to afford costs that are that high. That tells me that Alaska, and for that matter the rest of the country, is likely to be largely populated by the walking sick and the walking wounded unless we radically alter the way we deliver health care.
Health care is not a free good. It must be rationed in some way. Either we can continue to lean heavily on price rationing and thereby concentrate the reduction in services on lower income Americans, or we can move to a more centralized system and spread the pain more evenly across the spectrum, or, finally, we can try to devise some new sort of hybrid.
Today's system has not been working nearly well enough because a) it is rife with incentives that encourage unlimited treatment and continual cost increases, and b) too many Americans are outside the system.
The much-touted Massachusetts solution tweaks the current system but does little to reduce health care costs. In fact, less than two years into the program, Massachusetts has been forced to ask the federal government for an additional $1.5 billion in health care funding (Boston Globe, March 26).
On the other hand, the much maligned centralized single-payer system has merit, at least in terms of how such systems rank in terms of the quality and cost of services.
The United States is now ranked 37th in the world by the World Health Organization in health care performance but first in cost per capita. Most countries doing better than we are in both respects employ a centralized single-payer system. The top performers in terms of quality of care include France, Italy, San Marino, Andorra and Malta. Canada is 30th and the United Kingdom 18th. From the Organization for Economic Cooperation and Development we learn that the French spent $3,374 per capita in 2005, the Canadians $3,326, the U.K. $2,724 and the U.S. $6,401.
Probably the most common objection to a centralized single-payer system is the queue. People stand in line.
But let me repeat, health care is rationed in Alaska and the United States, in our case via a price-rationing system that, if trends continue into the next generation, will leave over 100 million Americans on the outside looking in.
_ _ _
David M. Reaume is a Washington state-based economist who was based for many years in Juneau. His opinion column appears every fourth Sunday.
Rationed by price, health care in US becoming a luxury
DAVID REAUME
COMMENT
(11/08/08 23:40:59)
Barring change, Alaska babies born today will find themselves in one of two socio-economic groups when they reach their early 20s: those struggling to make ends meet, and those who work in health care.
An exaggeration? Yes, but it dramatizes the fact that in 25 years, continuation of current trends in health care costs and income will force more than one-half of Alaska households either to do without all but the most basic medical and dental care or else to reduce their standard of living to levels that the average Alaskan would find unimaginable today.
Here are the facts.
According to the Henry J. Kaiser Family Foundation, a well-respected keeper of the records on health care, combined employer and employee annual premiums for health care in Alaska came to $12,198 in 2006 for the average "family" that actually had employer-provided health insurance, or some 21 percent of average household income. Although employers paid more than $9,000 of that amount, the number $12,198 represents a reasonable estimate of the cost of quality health care for the average Alaska household in 2006.
Now let's extrapolate.
Between 1991 and 2004, health care costs grew each year by about 4 percentage points more than did household income.
If that differential continues for 25 years, health care premiums will total more than 50 percent of Alaska median household income for those households and employers who still buy health insurance. Not many employers and even fewer individuals are likely to be able to afford costs that are that high. That tells me that Alaska, and for that matter the rest of the country, is likely to be largely populated by the walking sick and the walking wounded unless we radically alter the way we deliver health care.
Health care is not a free good. It must be rationed in some way. Either we can continue to lean heavily on price rationing and thereby concentrate the reduction in services on lower income Americans, or we can move to a more centralized system and spread the pain more evenly across the spectrum, or, finally, we can try to devise some new sort of hybrid.
Today's system has not been working nearly well enough because a) it is rife with incentives that encourage unlimited treatment and continual cost increases, and b) too many Americans are outside the system.
The much-touted Massachusetts solution tweaks the current system but does little to reduce health care costs. In fact, less than two years into the program, Massachusetts has been forced to ask the federal government for an additional $1.5 billion in health care funding (Boston Globe, March 26).
On the other hand, the much maligned centralized single-payer system has merit, at least in terms of how such systems rank in terms of the quality and cost of services.
The United States is now ranked 37th in the world by the World Health Organization in health care performance but first in cost per capita. Most countries doing better than we are in both respects employ a centralized single-payer system. The top performers in terms of quality of care include France, Italy, San Marino, Andorra and Malta. Canada is 30th and the United Kingdom 18th. From the Organization for Economic Cooperation and Development we learn that the French spent $3,374 per capita in 2005, the Canadians $3,326, the U.K. $2,724 and the U.S. $6,401.
Probably the most common objection to a centralized single-payer system is the queue. People stand in line.
But let me repeat, health care is rationed in Alaska and the United States, in our case via a price-rationing system that, if trends continue into the next generation, will leave over 100 million Americans on the outside looking in.
_ _ _
David M. Reaume is a Washington state-based economist who was based for many years in Juneau. His opinion column appears every fourth Sunday.
