“If we want to create jobs and rebuild our economy, then we must address the crushing cost of healthcare this year, in this administration,” President Barack Obama recently claimed. “By a wide margin, the biggest threat to our nation’s balance sheet is the skyrocketing cost of healthcare.”
The president’s claim—echoed by his Office of Management and Budget Director Peter Orszag—is ridiculous.
Yes, we do spend more on health care than any other country, about 16 percent of our GDP. But we also spend more on cars than any other country, and the administration is trying to get us to buy even more of them—especially “green” cars.
The president says if we don’t buy more cars people will lose their jobs, and companies—especially the automakers—may close.
But people work in health care too. In fact, it’s one of our growth industries. Wouldn’t people in the health care industry lose their jobs if we cut back? That is, if he actually wants a cut back. While many health economists agree that our current health care system is inefficient and we spend too much on care, the president has proposed spending $634 billion more in his budget.
How the president plans to spend more on health care at the same time that he plans to spend less is a bit perplexing. But he’s claiming he’ll do the same for the federal budget, so at least he’s consistent.
It is certainly true that health care costs have been rising significantly faster than inflation. But that is primarily because people are insulated from the cost of care; they have little reason to control their spending.
So how does the president propose to address the problem of consumers being insulated from the marginal cost of their health care decisions? Why, make even more people even more insulated than they are right now, obviously. So he wants to give them an economic incentive to spend more in the hope they’ll spend less.
This is getting really confusing.
Finally, the president wants to save the economy by making health care work more like Medicare, which—with some $86 trillion in unfunded liabilities, according to the Medicare trustees—is the biggest long term financial threat facing the economy. Yet that’s his model for creating an affordable, efficient health care system?
Actually, a good argument could be made that the biggest threat to the nation’s balance sheet isn’t health care but … President Obama.