The fight to reform US health care is just getting started.Citi’s Steven Wieting says in a gloomy new report that the debate over the individual mandate “is very far removed from the end goal of defusing a dangerous secular threat to the U.S. economy.”
The basic problem is that US health spending per capita is nearly twice the average of other OECD members.
Wieting is “sceptical of any partial government solution.” In fact, the current solution bears a similarity with policy that led to the housing bubble:
The healthcare system in the U.S. reminds us somewhat ominously of the bubble in housing finance, a “public/private partnership.” Housing consumption still receives strong tax preferences, as does health insurance (reflecting underlying healthcare consumption). Most aptly, prior to quasi-nationalization, housing GSEs earned private profits from public subsidies for housing, as do U.S. healthcare providers.
The catalyst in this case lies in demographics:
Whether or not expanded new health care subsidies survive the Supreme Court Challenge, present law concentrates health benefits on the over-65 and costs on those below. Demographics dictate that such spending will rise much more, and for many years ahead, migrating onto government budgets which have no present means of financing the incremental spending.
Wieting calls for more aggressive reform out of Washington, which he says will get much harder as time passes.
Here’s one of many scary charts from the report: