That there should be a discussion in the nation's Congress about whether to adjust the debt ceiling so that the United States government may honor financial obligations to its own citizens and foreign creditors - obligations such as previously authorized by the very same Congress - is beyond my comprehension.
While not being an expert in law, on the United States Constitution or otherwise, I nevertheless wonder whether there is a legal basis for the current political carnival.
The United States Constitution, in its Section 8 which deals with Powers of Congress, reads as follows:
The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defense and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;
Section 8 empowers Congress further:
To borrow money on the credit of the United States.
The Constitution's Section 9 deals with the Limits of Congress and states in part:
No Bill of Attainder or ex post facto law shall be passed.
When the Constitution grants Congress a power, I find it reasonable to assume that there is also an implied duty associated with this power. The section about "... to pay the Debts and provide for the common Defense and general Welfare of the United States; .....", taken in context with "no ex post facto law shall be passed." would - at least to me - imply that Congress has no business even thinking about defaulting on obligations that, after all, have previously been authorized and passed into law by that very same venerable institution.
The Constitution's empowerment of Congress to "borrow money on the credit of the United States" to me sounds an awful lot like that the nation's founders did not consider the nation's credit as something to be trifled with.
Take note, all ye conservatives who proclaim a wish to return the nation to the purity of its origins of principle.
Monday, July 18, 2011
Saturday, July 16, 2011
WHAT IS THE MATTER WITH U.S. HEALTH CARE?
All developed economies struggle with keeping their health care systems good, as well as affordable. The United States struggle more than most. Much more.
I have been looking at the situation in the United States and comparing it with a representative group of other countries, the citizens of which, to my knowledge, are reasonably satisfied with their health care systems (Canada, Denmark, Finland, France, Germany, Israel, Italy, Japan, New Zealand, Norway, Sweden, Switzerland and the United Kingdom). This is what emerges:
Additionally, in the United States there are 156.4 million individuals covered by private insurance companies through employer sponsored programs (6.9 million fewer than 10 years ago), and 27.9 million covered through individual private policies, all for an additional total annual cost of $1,500 billion.
During the last 45 years U.S. health care costs have consistently been growing twice as fast as the the nation's Gross Domestic Product. A 2005 report published by the Congressional Budget Office generally attributes this cost inflation to a relentless growth in the use of ever more sophisticated and expensive medical equipment and procedures. The tendency of U.S. physicians to order a battery of costly medical tests to guard against frivolous malpractice lawsuits was also highlighted in said report. Were this trend to continue unchecked, health care expenditures would in the next 45 years have surpassed 50% of GNP and have reached 100% before the end of the current century, an obvious fiscal impossibility. Something will have to give long before that.
But what?
The truth is that nobody has the slightest clue of how to get health care cost growth under control, with the added problem in the United States that the starting point already is absurdly high in comparison with other advanced economies around the world, which face health care cost escalations of their own.
The U.S. health care system is basically a for-profit environment where hospitals, pharmaceutical companies, doctors and insurance providers strive to maximize revenue and earnings. Who isn't sick and tired of relentless prime-time television ads for costly prescription drugs that we ought to consider taking for this, that or the other potential illness or physical malfunction? Like the case of alcohol and tobacco, such advertising should be banned, as it indeed is in most other countries around the world.
On the other side of the equation, the "health care customer" has no direct notion of the costs of the services he is induced to or feels entitled to seek, whether that is because the person is uninsured and is treated "for free" at taxpayers' expense in hospital emergency wards, is covered by Medicaid or Medicare with substantial built-in taxpayer subsidies which the beneficiary does not see, or by miscellaneous employer-provided insurance plans, the true cost of which is not apparent to the beneficiary.
It does not take a doctorate in economics to spot the perverse incentives for run-away cost development in the U.S. health care environment. It may, however, take a magician to do something about it, particularly as long as one declines the option to deal with health care in the same manner as the rest of the world does, while also refusing to provide for the necessary funding through adequate taxation.
The whole concept of a separate health insurance scheme for those over 65 - while wonderful for those enjoying its subsidized benefits - is ludicrous from a conceptual insurance point of view. Insurance works best when premiums and risks are spread as widely as possible, which in practice means shared equitably across the entire working population. And for that to make sense, sharing the costs in this manner would mean that the corresponding benefits would also have to be universal. This is exactly how all those "socialist" foreign countries have dealt with the problem, and the statistical highlights referred to above show that the loser here is the United States, not the "socialists".
No society can afford to spend nearly 20% of its Gross Domestic Product on health care. Universal cradle-to-grave coverage through general taxation would go some way towards solving the problem, in as much as it is cheaper to administer, is not for-profit based, and gives increased possibilities for cost control. But this being - at least for now - political anathema in the United States, health care rationing in one form or other is the only option. This possibility was met by cries of "Death Panels!" and "Pulling the Plug on Granny!" during the health care legislation debates of 2010. Some of the very same politicians now want to eliminate Medicare all together.
You may not have noticed, but the American health care rationing option of choice is to make coverage too expensive for 52.6 million of its citizens. The per capita cost of treating those through hospital emergency wards is only 30% of the average cost of the Medicare patient. That is certainly a market-driven way of solving the problem, but is it the right one?
Medicare is, logically enough, per beneficiary the most expensive portion of the U.S. health care system. Old people generally require more, and more expensive, care. 5% of Medicare fee-for-services beneficiaries account for close to 50% of total Medicare spending. Another estimate indicates that end-of-life treatment costs represent 10% of total U.S. health care expenditures, which in turn would be equal to 55% of current total Medicare costs. Both statistics tell the same story: it is extremely expensive to prolong lives of the terminally ill.
Chronic conditions are closely linked to high expenditure levels: more than 75% of high-cost beneficiaries have one or more of seven major chronic conditions for which there is no glimmer of hope for a permanent cure on the horizon.
David Brooks' New York Times column Death and Budgets is a good read on this issue. Says David Brooks in part: "This (current) fiscal crisis is about many things, but one of them is our inability to face death - our willingness to spend our nation into bankruptcy to extend life for a few more sickly months." Dear I add that this is also an extremely lucrative practice to the health care industry?
In order to significantly roll back out-of-control health care costs I cannot see any other realistic solution than to have less of it, at least in the manner practiced today. But it will be a cold day in hell when we see a politician willing to step forward and grab this nettle.
I have been looking at the situation in the United States and comparing it with a representative group of other countries, the citizens of which, to my knowledge, are reasonably satisfied with their health care systems (Canada, Denmark, Finland, France, Germany, Israel, Italy, Japan, New Zealand, Norway, Sweden, Switzerland and the United Kingdom). This is what emerges:
- In the United States current annual health care costs per capita have reached $11,700. The average among the above mentioned nations is $4,300.
- The United States spend 17.0% of its Gross Domestic Product on health care, the other nations average 9.1%.
- Average life expectancy from birth is 78.4 years in the United States, against an average of 80.6 years in the sample countries.
- There are 2.3 physicians per 1,000 inhabitants in the United States, but an average of 3.0 in the above mentioned nations.
- The United States have 3.3 hospital beds per 1,000 inhabitants, while the other countries have an average of 6.2 beds.
Additionally, in the United States there are 156.4 million individuals covered by private insurance companies through employer sponsored programs (6.9 million fewer than 10 years ago), and 27.9 million covered through individual private policies, all for an additional total annual cost of $1,500 billion.
During the last 45 years U.S. health care costs have consistently been growing twice as fast as the the nation's Gross Domestic Product. A 2005 report published by the Congressional Budget Office generally attributes this cost inflation to a relentless growth in the use of ever more sophisticated and expensive medical equipment and procedures. The tendency of U.S. physicians to order a battery of costly medical tests to guard against frivolous malpractice lawsuits was also highlighted in said report. Were this trend to continue unchecked, health care expenditures would in the next 45 years have surpassed 50% of GNP and have reached 100% before the end of the current century, an obvious fiscal impossibility. Something will have to give long before that.
But what?
The truth is that nobody has the slightest clue of how to get health care cost growth under control, with the added problem in the United States that the starting point already is absurdly high in comparison with other advanced economies around the world, which face health care cost escalations of their own.
The U.S. health care system is basically a for-profit environment where hospitals, pharmaceutical companies, doctors and insurance providers strive to maximize revenue and earnings. Who isn't sick and tired of relentless prime-time television ads for costly prescription drugs that we ought to consider taking for this, that or the other potential illness or physical malfunction? Like the case of alcohol and tobacco, such advertising should be banned, as it indeed is in most other countries around the world.
On the other side of the equation, the "health care customer" has no direct notion of the costs of the services he is induced to or feels entitled to seek, whether that is because the person is uninsured and is treated "for free" at taxpayers' expense in hospital emergency wards, is covered by Medicaid or Medicare with substantial built-in taxpayer subsidies which the beneficiary does not see, or by miscellaneous employer-provided insurance plans, the true cost of which is not apparent to the beneficiary.
It does not take a doctorate in economics to spot the perverse incentives for run-away cost development in the U.S. health care environment. It may, however, take a magician to do something about it, particularly as long as one declines the option to deal with health care in the same manner as the rest of the world does, while also refusing to provide for the necessary funding through adequate taxation.
The whole concept of a separate health insurance scheme for those over 65 - while wonderful for those enjoying its subsidized benefits - is ludicrous from a conceptual insurance point of view. Insurance works best when premiums and risks are spread as widely as possible, which in practice means shared equitably across the entire working population. And for that to make sense, sharing the costs in this manner would mean that the corresponding benefits would also have to be universal. This is exactly how all those "socialist" foreign countries have dealt with the problem, and the statistical highlights referred to above show that the loser here is the United States, not the "socialists".
No society can afford to spend nearly 20% of its Gross Domestic Product on health care. Universal cradle-to-grave coverage through general taxation would go some way towards solving the problem, in as much as it is cheaper to administer, is not for-profit based, and gives increased possibilities for cost control. But this being - at least for now - political anathema in the United States, health care rationing in one form or other is the only option. This possibility was met by cries of "Death Panels!" and "Pulling the Plug on Granny!" during the health care legislation debates of 2010. Some of the very same politicians now want to eliminate Medicare all together.
You may not have noticed, but the American health care rationing option of choice is to make coverage too expensive for 52.6 million of its citizens. The per capita cost of treating those through hospital emergency wards is only 30% of the average cost of the Medicare patient. That is certainly a market-driven way of solving the problem, but is it the right one?
Medicare is, logically enough, per beneficiary the most expensive portion of the U.S. health care system. Old people generally require more, and more expensive, care. 5% of Medicare fee-for-services beneficiaries account for close to 50% of total Medicare spending. Another estimate indicates that end-of-life treatment costs represent 10% of total U.S. health care expenditures, which in turn would be equal to 55% of current total Medicare costs. Both statistics tell the same story: it is extremely expensive to prolong lives of the terminally ill.
Chronic conditions are closely linked to high expenditure levels: more than 75% of high-cost beneficiaries have one or more of seven major chronic conditions for which there is no glimmer of hope for a permanent cure on the horizon.
David Brooks' New York Times column Death and Budgets is a good read on this issue. Says David Brooks in part: "This (current) fiscal crisis is about many things, but one of them is our inability to face death - our willingness to spend our nation into bankruptcy to extend life for a few more sickly months." Dear I add that this is also an extremely lucrative practice to the health care industry?
In order to significantly roll back out-of-control health care costs I cannot see any other realistic solution than to have less of it, at least in the manner practiced today. But it will be a cold day in hell when we see a politician willing to step forward and grab this nettle.
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