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October 16, 2013 11:39 AM America’s Projected Deficit Is Entirely About Health Care Costs

By Ryan Cooper

My colleague Paul Glastris was on the McLaughlin Group the other day, and made a good point regarding the doom-and-gloom debt projections that everyone always talks about. By 2072 interest payments will consume 40 percent of the federal budget, according to the CBO! Setting aside the inherent absurdity of trying to make meaningful predictions about the federal budget six decades from now, the important point is as Paul says: these predictions are entirely about health care. The CBO’s model has a factor which assumes that health care costs will continue to grow much faster than the economy forever—which means that if we get health care cost growth under control, our deficit “problem” will vanish entirely.

The conservative reply is that the way to get health care costs under control is to simply have less health care. We must “reform” entitlements; meaning raise the Medicare retirement age, cut Medicaid, etc. We can’t afford to be generous, and some people are just going to have to go endure hardship or we’re going to bankrupt the state.

But as the Monthly has long shown, this is nonsense. In fact, the United States’ world-record health care costs are driven by a combination of policy factors, both on the private and the government side. In 2010 Mariah Blake showed how a cabal of medical supply behemoths keep the innovations of smaller companies off the market. In 2011 Phillip Longman showed how getting Medicare out of the fee-for-service business would improve things, and earlier this year showed how a GOP effort that kept cost-benefit research out of Obamacare is harming the health care system. Finally, again this year Haley Sweetland Edwards showed how a secret committee of doctors heavily weighted with specialists fixes the prices of Medicare.

The stories are complicated, but what they all have in common is that they don’t have anything to do with cutting off people’s access. “Centrist” elites don’t seem to think that something counts as reform unless it’s punishing a poor person somewhere, but the real action is in the policy design. Health care is expensive because of inefficiency, monopoly politics, lack of research, and interest group lobbying, not because Medicare is too generous. In fact, health care cost growth has slowed considerably since the passage of Obamacare, so if the administration manages to fix its IT disaster we could be in good shape already.

Other countries manage to have both universal coverage and much, much lower costs. There’s no reason we can’t have the same.

Ryan Cooper is a National Correspondent at The Week, and a former web editor of the Washington Monthly. Find him on Twitter: @ryanlcooper

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