Why Our Deficit Problem Is A Medical Issue

Over at Mother Jones, Kevin Drum has nailed the real problem with the deficit-cutting ideas floated the other day by the the co-chairs of President Obama’s Commission of Fiscal Responsibility and Reform. Their trial balloon concentrates on discretionary spending and Social Security, while the real threat of fiscal collapse comes from the rising cost of health care. Yes, that’s a familiar theme in American political jabber, but in fact the problem is neither American nor political. It stems from the psychology of health-care, which has made rising medical costs a long-term menace to society all over the world.

When the British government launched its National Health Service in 1948, its supporters claimed that the cost of the program would even out, or even drop. In his report proposing the new program, Sir William Beveridge had written that with expansion of the new service there would be, over time, “a reduction in the number of cases requiring it.” Of course, that’s not what happened, for two reasons.

First, improvements in the population’s overall health led to many more people living longer. So success actually raises expenses, because old people place the most demands on any medical system. Second, when people’s medical care improves, they don’t sit back and thank their lucky stars. They expect it to continue to improve, and raise their standards for what constitutes minimal decent care. If you give dentures to a population that expected a toothless old age, they will eventually expect crowns and root canals. And each upward step on the ladder involves newer and more expensive technology.

As Kenneth Rogoff points out, most of the world’s nations are now caught in this spiral of expectations. He thinks it will eventually provoke a stampede away from capitalism, as people perceive that the system can’t provide them with the care to which they feel entitled.

A doctor named Ffrangon Roberts described where this would lead in 1949, in this acid but accurate critique (pdf) of the assumptions underlying the newborn NHS. An aging population with ever-rising expectations, he wrote, would eventually threaten “national prosperity.”

This is exactly the situation we face now, as the Congressional Budget Office described in 2007. That year, total American spending on health care (not just Medicaid, Medicare and other government efforts, but private spending as well) was 16 percent of Gross Domestic Product. That’s considered a serious drain on the economy. But on current trends, the report said, that will go up to 49 percent of GDP by 2082. That would choke the economy to death, and make the Federal deficit incurable.

What can be done? The most efficient solution would be to hand out cigarettes in every third-grade classroom, along with Twinkies: Though smokers and obese people cost a medical system more per year, they have fewer years. As analyses like this have shown, long and healthy lives end up costing society more than smoky, fatty short ones.

Killing the patient doesn’t count as a cure, though, so, um, never mind that idea. What’s really going to stop the spiral of health-improvements leading to more demands and higher expectations of the system?

Roberts’ cranky essay from 1949 foresaw the answer, which no one, Democrat, Republican, Marxist or Tea Partier will like: We must accept, he wrote, a moral responsibility to restrain our demand for medical care—perhaps by individuals thinking “twice and even three and even four times before sending for the doctor”; perhaps by society as a whole rationing medical care. Probably both.

We much prefer the 19th-century model of public-health improvements, when sewage systems, widespread vaccination, municipal garbage-collection and other collective efforts were the cause of gains in life expectancy. But as Rogoff notes, the economics of medical treatments are different from those of a sewage plant. The latter is expensive to build and then its yearly cost goes down and stays predictable. But heart bypasses don’t get cheaper. Because they’re constantly improved by newer, more expensive technologies, and because more and more people expect to receive them.

To really address the long-term Federal deficit, then, Americans will have to face a wrenching choice: On the one hand, economic and political collapse. On the other, accepting that we can’t afford to be as healthy as medically possible. When I think of the campaign slogans—”Don’t Be All You Can Be, For All Our Sakes”? “Vaccines Before Viagra”?—I’m not optimistic.

van Baal, P., Polder, J., de Wit, G., Hoogenveen, R., Feenstra, T., Boshuizen, H., Engelfriet, P., & Brouwer, W. (2008). Lifetime Medical Costs of Obesity: Prevention No Cure for Increasing Health Expenditure PLoS Medicine, 5 (2) DOI: 10.1371/journal.pmed.0050029