Editorial: Health costs endanger nation

One reason for the past week's stock market turmoil is investor feeling that governments in Washington and Europe aren't on top of the world's economic problems. In fact, our nation's foremost long-term financial problem is barely on the radar.

That problem is soaring health care spending. A new report by the federal Centers for Medicare and Medicaid Services' Office of the Actuary, which provides nonpartisan analysis, predicts that health care spending will gobble up nearly 20 percent of gross domestic product by 2020, versus 17.6 percent in 2010 -- and just 9.1 percent in 1980.

Back then, U.S. health care spending wasn't too far out of line with other industrialized nations. But by now we spend proportionately twice the average of 34 similar countries. People in those places tend to live longer and enjoy better health, too.

The good news, if you can call it such, is that the new report predicts medical spending will grow just 5.8 percent a year from 2010 to 2020. That's a lot less than the 8.3 percent rate from 1980 to 2010, but still far beyond any likely growth in population or income.

The report also says that by 2020, taxpayers at all levels of government will bear 49 percent of the nation's $4.6 trillion health care bill, up from 45 percent in 2010. The growing government share is driven in part by aging baby boomers, more of whom will qualify for Medicare, and in part by the Affordable Care Act, which will expand Medicaid and provide subsidies for those who can't afford private coverage.

But ACA, pushed through Congress by President Barack Obama and expected to cover an additional 30 million Americans, will probably increase overall health spending by only one-tenth of 1 percent annually, the authors found, because higher government spending will be mostly offset by slower growth of private health spending.

Yet our level of government health spending per person is already so high that it exceeds the entire medical-care tab per capita in Britain, Australia, Italy and Japan. But here, all that money covers less than half of total medical costs.

Why are we so high? All affluent nations face similar medical cost pressures, including aging populations and expensive innovations such as CT scans and costly new drugs. In fact, most are graying faster than we are. And while Americans are more likely to jeopardize their health by overeating, other countries struggle with more smoking and alcohol abuse.

The real difference is that most comparable nations have a national or regional cost-control system that sets reimbursement rates for medical care. America's fragmented system, a strange hybrid of socialism (as in Medicare or the Veterans Hospitals) and for-profit medicine, makes cost control more difficult. Few Americans even have a clear idea of who pays for what, because in this country health care is financed via a complex web of employer-provided insurance, tax subsidies and government payments. The resulting cost spiral endangers our economic well-being.

How can we ever get on top of this problem? First, we must educate families and encourage physicians to make better decisions on end-of-life care. Roughly a third of health-care resources are spent on patients in the last year of life, often to no useful purpose. Hospice care is often cheaper -- and can prolong life.

We must also make better use of information technology -- a priority in Obama's health reforms -- to wring inefficiency and errors from the system. It's absurd in this day and age to rely on hand-scribbled prescriptions, spotty patient recollections and reams of paper records. Finally, we have to live healthier lives, acknowledging that medical care is but a small part of good health and can't cure every ache and pain.

Politicians can wrangle till the cows come home, but soon enough we'll run out of other things to cut -- and then we'll have to get medical spending under control. Failing to do so would be hazardous to our national health. hN