Controlling the Very High Cost of American Healthcare

Our country’s biggest problem is the rapidly growing national debt.  Furthermore our debt problem is primarily driven by the increasing cost of entitlements and more specifically by healthcare spending.

In a recent post I examined some of the reasons why our healthcare spending is so out of control.  Question: what are we going to do about it?

I have reluctantly come to the conclusion that only strong measures will enable us to control healthcare costs and thereby rescue our country from our currently out-of-control debt problem.  In my opinion there are two major steps which will enable us to accomplish this:

  • Medicare prices for all. Note I did not say “Medicare for all”.  We do not need an overall single payer system.  I am proposing that a cap be placed on the price of all medical services, including for hospitals, providers (e.g. doctors) and drugs, along the  lines of what Medicare pays for these services.  In particular Medicare should be authorized by Congress to negotiate drug prices with pharmaceutical companies.  This does not eliminate the free market, but it does constrain it.  All medical service providers will be forced to operate much more efficiently than they do now.  Huge innovation will occur and the most creative providers will thrive.  A system such as this will drive down the price of healthcare considerably and thereby make private healthcare insurance much more affordable to individuals and families.
  • A more complete financing system for Medicare. In 2017, the net cost of Medicare to the federal government was $591 billion.  This huge dollar amount is growing rapidly and is the main driver of our increasing national debt.  Medicare recipients (I am one myself) pay (through their payroll taxes, monthly premiums, deductibles and copays) about 60% of the total cost of Medicare expenses.  The rest is paid for by the federal government.  We have two options to correct this imbalance.  One way is through a means-adjusted premium support system whereby Medicare recipients pay a greater share of Medicare expenses.  The other way is through a substantial federal tax hike which will necessarily hit the middle class as well as the rich.

Summary.  American healthcare is way too expensive, both for individuals and families and for the federal government which subsidizes it.  It would be far better to solve this problem in a rational, sensible and deliberate manner than to postpone any significant action until a huge fiscal debt crisis occurs and forces an emergency response.

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6 thoughts on “Controlling the Very High Cost of American Healthcare

  1. Uwe Rhinehardt, an economist who died nearly 2 years ago, always seemed to proclaim that its high prices were to blame for our nation’s costly healthcare. His arguments were well-founded. Irrespective of the basis of his assessment, the high prices are currently necessary to underwrite medical education and Medicare’s inadequate levels of financial reimbursement. How that occurred is another matter. So far, our nation’s efforts to achieve healthcare reform have produced negligible benefits. Last year, the excess level of health spending by our nation’s federal government for Medicare and Medicaid was equal to our nation’s fiscal deficit.

    As evidenced by our nation’s evolving incidence of mass shootings, we have serious problems from the underlying disintegration of Caring Relationships within Families, their Extended Families, and their supportive Social Networks. To solve the cost and quality problems of our nation’s healthcare, we will need a community-based collaboration that is nationally facilitated to achieve Primary Healthcare that is equitably available to and ecologically accessible by every citizen within each community. The community collaboration should include a means to resolve local ecological and cultural traditions that maintain entrenched adversities for certain citizens. The concepts of Social Dilemmas, Social Capital, and Social Cohesion apply.

    • The fact remains that we need to take much stronger measures to control the cost of healthcare in the U.S. This is why I have proposed putting a ceiling on healthcare prices comparable to the Medicare reimbursement schedule.

    • I agree but the problem of healthcare costs and its relation to national debt is so severe that drastic action is needed. Either we do it in a carefully planned sensible manner or else we will be forced into emergency measures by a new debt caused fiscal crisis.

      • I am reminded that our nation, on average, experiences a recession every 8 years, the last one began 9 years ago. With the occurrence of our next recession, you will be vindicated including nationalization, ala Bernie.

  2. Yes, a recession could come along at almost any time probably with little advance warning. When this happens, by definition our economy will contract and tax receipts will go down. Then our deficits will increase even faster than they are already. This will make our fiscal position even more precarious than it is already and hasten the occurrence of a new debt crisis.
    I am not optimistic that our national leaders have the political will to address this problem before the next crisis occurs but I’m still advocating for it.

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