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.