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Health care debate discussed

John Tierney | Tuesday, September 29, 2009

Editor’s note: This is the first installment in a two-part series examining some issues in the health care debate in the United States.

The complex health care picture in the United States can be broken down into three major issues, according to Bill Evans, a professor of Economics and Econometrics who specializes in health economics.

Evans said the main issues in the health care sector are rising costs, limited access and the lack of sustainability of Medicare.

“We seem to have no handle on costs,” Evans said. “The cost of medical care is increasing at a much higher rate than inflation. The cost of insurance is increasing faster than inflation.”

One problem with the rising cost of health care is that it impacts wages, Evans said.

“Most people receive healthcare from private insurance, and most insurance is provided by employers,” Evans said. “The cost of insurance is coming from the wages of workers.”

Evans said a common misconception about employer-based health insurance is that the employer is paying for the insurance. However, he said workers ultimately pay in the form of receiving lower wages.

“Because of the rising cost in health care, there is a limited growth in other components of compensation,” Evans said.

The second problem of the U.S. healthcare system – limited access – is the easiest problem to solve, he said.

The uninsured rate can be lowered by heavily subsidizing insurance for low-income people and establishing individual mandates that require everyone to have health insurance.

These solutions to the problem of access have been proposed in the ongoing Congressional debates on health care, he said

But Evans said the proposals to expand access are not problem-free.

“Few of the proposals are doing anything on the cost side,” he said.

They also do not address the third major problem of the healthcare system, which is Medicare.

“Medicare is a time bomb that no one is doing anything about,” Evans said.

He said Medicare is in part a budgetary problem for the federal government.

“Medicare is going to go broke relatively soon,” Evans said, citing the projection that the number of people eligible for Medicare will double over the next 30 years.

Evans said Medicare is in part a problem because of inconsistencies in how much money the program requires.

Medicare spending is determined by counties, according to Evans.

“If you look at the county level, spending on Medicare varies by a factor of three from the highest to the lowest,” he said. “But the factors that influence the spending don’t vary.

“It appears that a lot of procedures are being done that aren’t medically necessary in the Medicare program.”

Evans also attributed problems with Medicare to the healthcare bureaucracy.

“Not all the dollars are going to patients,” he said.

He said the bureaucracy impacts the high cost of healthcare in general, and has ramifications beyond the Medicare program.

Reducing the overhead costs of healthcare “is going to be difficult,” Evans said.

The political proposals that seek to solve health care issues won’t address the fiscal problems of Medicare and costs.

“No one seems to want to touch the Medicare program at all,” Evans said.

Evans said he predicts legislation will ultimately work to solve one problem, but will ignore the other two.

“We’ll get something on access, but the cost of that is that you’re not going to make heavy inroads on costs,” he said.

The only viable way to reform the system is to overhaul it, and an overhaul cannot happen without making changes to Medicare, according to Evans.

“I think you have to show the political will to do something about Medicare before you can ever do something to the system,” Evans said.

An overhaul to the health care system will cost money and the government will have to be creative to find sources for that money.

“The money is going to have to come from somewhere and the most obvious place is Medicare,” Evans said. “It’s not going to be politically viable if you raise taxes.”

Despite the problems in the health care sector, Evans said it is not true that the sector’s size is a problem itself. He cited the tremendous advances in medical care over the past 30 years as a benefit of the size of the industry.

“The United States spends a lot of money on medical care, but if you take a look at particular examples, we are getting a lot out of it,” Evans said. “There’s good evidence that there’s a lot of waste, but there are also tremendous benefits.”

The second part of this series in Wednesday’s issue of The Observer will look at the relationship between health care and Catholic Social Teaching.