Healthcare Costs & the Budget Deficit
I have posted numerous comments regarding the out of control cost of healthcare in our country, the broken system and at the same time the decline in quality of care. A quick review of the facts reveals that we have by far the highest per capita cost among all of the countries on earth. The average is almost triple that of the average for European Countries. The high cost exists in all areas: Hospital stays, prescription drugs, physician visits, surgery, medical equipment, physicians’ education, etc. At the same time there are 35 countries that are ranked higher than the US in quality of care by the World Health Organization. Our healthcare system is broken and merely tweaking it will not resolve the issue. It is frustrating that we refuse to evaluate other systems that are costing much less while providing a superior level of service.
Most civilized countries consider decent healthcare a right of citizenship and not a privilege. In most the cost is shared by the taxpayer through a single payer system similar to Medicare. While this system is likely a step in the right direction it would reduce only some of the costs. We still need to reduce costs in the area of physician education, prescription drugs, physician & surgery fees, hospital costs, our obesity epidemic and others. Specifics on these areas are addressed in earlier posts.
The per capita cost for healthcare currently exceeds $10,000. Imagine a young family of four with both adults working at $10 per hour. Let’s assume they have no tax burden. If they were required to pay their fair share of our healthcare system cost they would have virtually nothing left for subsistence. Now consider the median family income for a middle-class family of four which stands at $ 58,000. After paying taxes and their fair share of healthcare burden they end up with about $15,000 to cover housing, food, insurances, transportation, clothing, utilities, communications, entertainment, etc. How do they manage it?
How does this cost, which is currently accelerating, impact the national budget? The majority of healthcare cost is still being subsidized by the government. It is worth noting that the % paid by the citizen/consumer has increased substantially over the past several decades. Regardless, the cost of Medicare, Medicaid, Health Education and other subsidies will total about $1.7 trillion for 2018. About 2/3ds of this is subsidized by the government with the reminder paid via co-pays and private insurance premiums. The healthcare industry is by far the largest in the US and represents over 8% of GDP. It is also more than double the projected 2018 budget deficit!!
If the high cost of providing healthcare is scary (and it is) then the its impact on future costs is horrific. The current level of unfunded lability for future healthcare is enormous, currently standing at almost $28 trillion! If we could match the European average per capita healthcare cost here this action alone would balance our budget and provide a surplus and go a long way in mitigating future liabilities.