Thursday, February 16, 2017

Beware of geeks bearing gifts marked “free stuff”. They lie.

Occasionally some member of America’s health-policy leadership triumvirate – a politician, a government bureaucrat, a starry-eyed pundit  - repeats the notion that Americans have a “right to healthcare” and that America can, and must, provide “free healthcare” for everyone.  The details differ, but the schemes are most often called Medicare-for-all, or single-payer.  Regardless of the details, about how much would the “right” of “free healthcare” actually cost?

First please, let’s observe that healthcare is already “free”.  Anyone can cut down on smoking - that's free.  Anyone can exercise, choose a healthy diet, get plenty of exercise.  Free, free, free.  Anyone can drive carefully, reduce alcohol use, avoid drugs, get enough sleep.  These healthy behaviors cost nothing, or so near to nothing that the cost is no obstacle.  Yet people cling to unhealthy behaviors even as they cling to the notion that this country has a problem with its "healthcare" costs.  Maybe the main "healthcare" problem we have, is denial. 

For some reason our health policy leadership triumvirate promotes this denial and confuses the issue by failing to distinguish between health care and medical care.  It’s medical care that is expensive; it's the cost of medical care that is the obstacle to getting it; and it’s the cost of medical care that makes medical insurance so costly.   Once we’re clear on that, it’s possible to re-state the question, look at the factors, and come up with an answer:  How much would the "right" of “free” medical care actually cost?  A rough answer to that question turns out to be sorta straightforward. 

How much do Americans spend for medical care today?   The federales  - specifically CMS - recently released its update of national medical expenditures (of course, they call it “Health” Expenditures).  Here is a summary.

In this summary, CMS reports that national medical expenditures reached $3.2 trillion in 2015.  Elsewhere in another report, CMS estimates that 2016 medical costs rose 4.8% above 2015, and projects that 2017 medical costs will rise 5.7% above 2016.  In other words, CMS projects total national medical spending will rise from $3.2 trillion in 2015 to $3.55 trillion in 2017.  That's roughly how much the "right" of "free medical care" costs.  

Next logical question:  what resources do the federales have?  Total US tax revenues for 2017 are estimated to be $3.64 trillion.  (That’s the highest ever, by the way). 

So according to the best government estimates, 2017 medical costs will equal 98% of all 2017 federal revenues. A very fancy price tag for something that we’re told should be “free”.   It seems obvious the federales cannot afford it and neither can the taxpayers.

Another conclusion is obvious: calling something “free” is misleading when someone else is paying for it.   It’s my understanding that the taxpayers presently finance nearly half of total US medical expenditures.  Still, I think it is misleading to suggest the federales have anywhere near the means to pay for the rest of it – to pay for “free” medical care to all Americans - without an enormous increase in taxes.  It would not be enough to levy such taxes only on “the wealthy” unless perhaps you define “wealthy” as, say, anyone who is paying federal taxes today.   Oh, and don’t forget the federales have a few other duties that cost money to guarantee: to establish Justice, to insure domestic Tranquility, to provide for the common defence, and to secure the Blessings of Liberty to ourselves and our Posterity.  Besides which, the national debt is $20 trillion and, on top of that, Medicare and Medicaid have enormous unfunded liabilities that are not included in the official national debt number.  The federales are simply not in a position to chase after "free" medical care for all Americans.

[btw, the preceding illustrates an obvious fact that our health policy leadership triumvirate does not like to point out.  Medical care is not “free”.  Medical care is either pre-paid; paid at time of service; or paid afterward, via some combination of out-of-pocket payments, insurance premiums, government subsidies, write-offs of bad debt, or charity care. In no case is medical care “free” even if there is some “right” to it.]
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