Thursday, January 03, 2013

America's broken healthcare system calculator

By Frank Moraes

In the past, I've written about little economic tools that the Wonk Blog people put up. They are fun and even enlightening. But they aren't that great. For example, the Fiscal Cliff Calculator only allowed you to try discrete binary budget items: you repeal the defense sequester or you don't. Of course, it is hard to create a web application that has too many options. This isn't a question of computing power; it is a question of usability.


David Rosnick of the Center for Economic and Policy Research has created a great tool. It has many advantages over the usual Wonk Blogofferings. Foremost is the fact that it deals with something I care about a lot: the effect of healthcare costs on the US budget. But also: it shows how the budget would be affected directly (by changing revenues and expenditures) and by comparison with other countries' healthcare expenditures.

It is a source of great frustration to me that the vast majority of the policy world is so focused on our supposed budget problems. To me, this is very simple: if we fix our over-priced healthcare system, we have no budget problem. And if we don't fix our over-priced healthcare system, we will have much bigger problems to worry about than our federal budget.




What is most interesting about the results of Dr. Rosnick's calculator is how it highlights Dean Baker's oft stated observation, "If we paid the same amount per person for our care as people in other wealthy countries we would be looking at long-term surpluses, not deficits." (Really, I wonder if he doesn't have it programmed as a keyboard shortcut.) You really ought to go and play with the calculator, but I'll provide a spoiler: all the other countries' systems would lead to "long-term surpluses." And the calculator provides life expectancies of each country so that you can see that everyone else not only pays less for healthcare, they live longer.

The other part of the calculator allows you to adjust revenues, healthcare expenditures, and other expenditures between the baseline and the CBO's "Alternative Fiscal Scenario." It isn't as interesting. For one thing, you can create some very unrealistic assumptions like healthcare costs going way up with the economy tanking. But it does show that even under the best of circumstances, doing nothing is bad.

Again: the problem is not budgets. Our healthcare market is free enough to drive prices way up but not nearly free enough to drive them down. In a sense, we have the worst of all worlds. But when conservatives offer up answers, they only fiddle around the edges. This is especially true now that the great conservative idea of Romneycare has become the evil communist plot of Obamacare.

There are conservative solutions to our healthcare problems. One is to allow a free market: no more drug patents, no more DEA, no more limits on healthcare workers immigrating here. But Republicans (and pretty much everyone else who calls himself "conservative") are against all these ideas. So our only option seems to be to head toward a more nationalized approach to the problem. As much as I hate the ACA, it is a step in the right direction. (That's in the calculator too!)

Afterword

Check out all of Rosnick's online calculators.

(Cross-posted at Frankly Curious.)

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