Reminder of the Day: When It Comes to Long-Term Spending, It’s All Health Care, Baby


With the budget crisis now on its way to resolution, it’s worth reminding everyone that, in fact, the federal budget isn’t really in bad shape. As Ryan Cooper of the Washington Monthly notes this morning, long-term predictions of doom are essentially based on one thing: the rising cost of health care:

The CBO’s model has a factor which assumes that health care costs will continue to grow much faster than the economy forever—which means that if we get health care cost growth under control, our deficit “problem” will vanish entirely.

The conservative reply is that the way to get health care costs under control is to simply have less health care. We must “reform” entitlements; meaning raise the Medicare retirement age, cut Medicaid, etc. We can’t afford to be generous, and some people are just going to have to go endure hardship or we’re going to bankrupt the state.

But as the Monthly has long shown, this is nonsense. In fact, the United States’ world-record health care costs are driven by a combination of policy factors, both on the private and the government side….”Centrist” elites don’t seem to think that something counts as reform unless it’s punishing a poor person somewhere, but the real action is in the policy design. Health care is expensive because of inefficiency, monopoly politics, lack of research, and interest group lobbying, not because Medicare is too generous. In fact, health care cost growth has slowed considerably since the passage of Obamacare, so if the administration manages to fix its IT disaster we could be in good shape already.

Yep. The chart below shows federal spending through 2008 in order to illustrate historical trends clearly without the spike of the Great Recession. As you can see, domestic spending (“Other”) is declining; interest expense is declining; defense spending is declining; and Social Security spending is flat. It will increase a bit over the next few decades, but only by a point or two of GDP.

And then there’s Medicare, which is increasing. But Medicare is increasing because (a) the population is aging, and (b) overall health care costs are rising. We can’t do anything about aging, which means that essentially our entire long-term budget problem is caused by rising health care costs. That’s it. If you’re actually serious about this stuff, you’ll spend essentially 100 percent of your time on policy proposals designed to reduce America’s insanely high health care costs. Obamacare is a start, but there’s still a lot more to be done.

WE'LL BE BLUNT:

We need to start raising significantly more in donations from our online community of readers, especially from those who read Mother Jones regularly but have never decided to pitch in because you figured others always will. We also need long-time and new donors, everyone, to keep showing up for us.

In "It's Not a Crisis. This Is the New Normal," we explain, as matter-of-factly as we can, what exactly our finances look like, how brutal it is to sustain quality journalism right now, what makes Mother Jones different than most of the news out there, and why support from readers is the only thing that keeps us going. Despite the challenges, we're optimistic we can increase the share of online readers who decide to donate—starting with hitting an ambitious $300,000 goal in just three weeks to make sure we can finish our fiscal year break-even in the coming months.

Please learn more about how Mother Jones works and our 47-year history of doing nonprofit journalism that you don't find elsewhere—and help us do it with a donation if you can. We've already cut expenses and hitting our online goal is critical right now.

payment methods

WE'LL BE BLUNT

We need to start raising significantly more in donations from our online community of readers, especially from those who read Mother Jones regularly but have never decided to pitch in because you figured others always will. We also need long-time and new donors, everyone, to keep showing up for us.

In "It's Not a Crisis. This Is the New Normal," we explain, as matter-of-factly as we can, what exactly our finances look like, how brutal it is to sustain quality journalism right now, what makes Mother Jones different than most of the news out there, and why support from readers is the only thing that keeps us going. Despite the challenges, we're optimistic we can increase the share of online readers who decide to donate—starting with hitting an ambitious $300,000 goal in just three weeks to make sure we can finish our fiscal year break-even in the coming months.

Please learn more about how Mother Jones works and our 47-year history of doing nonprofit journalism that you don't find elsewhere—and help us do it with a donation if you can. We've already cut expenses and hitting our online goal is critical right now.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate