Tuesday, June 1, 2010

Question #3: How Should We Address the Issue of A Gross Domestic Product of 17% Price Manufacturing and Jobs Out of This Country?

During the recent health care debate one of the stated goals was that any health care bill should not increase the federal deficit. There was no discussion on the effect that the percentage of gross domestic product (GDP) devoted to health care has on the overall economy and jobs. There was also no discussion on how a negative effect on the economy would decrease tax revenue and thus have a profound effect on the federal deficit. According to this line of reasoning two issues arise regarding the Patient Protection and Affordable Care Act:

(1) will there be a significant increase in the percentage of GDP devoted to health care and
(2) if there is a significant increase of GDP devoted to health care would this cause a decrease in good paying American jobs?

Answer to (1): The Chief Actuary of the Centers for Medicare and Medicaid Services, Mr. Rick Foster, has calculated that when this law is in full effect it will increase the percentage of GDP devoted to health care to 21% and that the cost containment efforts will be largely ineffectual.

Answer to (2):
In addition to the business roundtable assessment Cathy Arnst wrote in Bloomberg Businessweek July 23, 2010, “The rate of growth in U.S. health care costs has outpaced the growth
rate in the gross domestic product (GDP) for many years. In 1940, the share of GDP accounted for by health care spending was just 4.5%. By 1990, it had reached 12.2%, and 16% in 2005, when health care spending totaled nearly $2 trillion, or $6,697 per person, far more than any other nation. This year health care spending is on track to equal 18% of GDP” and that a recent Rand study revealed that this imbalance (especially when % GDP devoted to health care reaches 20%) versus other countries does have a negative impact on our economy and jobs. This newer information coupled with this statement from the Henry J Kaiser Foundation and the Health Research and Education trust, “Health care costs skyrocket in United States, threatening to bankrupt national economy”, adds credence to the concept that no matter how we pay for health care, our excessive costs must be successfully addressed for us to pass prosperity on to our children. Not only will these excessive relative health care costs cause jobs to decrease , but by hampering economic activity it will also decrease federal tax revenues adding complexity to an already difficult problem.

How would a rational society deal with the problem of meeting its need for universal coverage while at the same time get its percentage of GDP devoted to health care more in line with other countries?

1. Deal with the pivotal meaning of Dr. Relman’s statement, “Doctors, in consultation with their patients- not insurance companies, legislators, or government officials – make most of the decisions to use medical resources, thereby determining what the United States spends on health care”. (New England Journal of Medicine September 24, 2009).
2. Understand the forces (i.e., perverse payment system encouraging an overly technological style of medicine, unrealistic public expectations, adverse legal environment, excessive administrative costs and complexity) acting on the doctor-patient relationship that are causing American medicine to be so expensive.

3. Understand the changes that will be necessary to rectify these pernicious factors. Although the new health care bill makes attempts to control costs, most experts suggest that these attempts will be marginal at best. Seriously addressing the changes needed to bring our health care costs more in line with other nations will cause many powerful entities, (i.e. pharmaceutical and devise companies, intensive care units, some specialists) to have a decrease in income thus requiring greater political will to bring about real cost containment.

4. Adopt a process of doctor-patient agreement on the primacy of beneficial care and physician oversight to insure the practice of evidence-based national standards along with the creation of a health care agency that would be independent of lobbying activity. This agency would create national insurance options, a national electronic medical record, a rational physician payment schedule and many other administrative functions.

There is no doubt that the physicians in this country, if given the right tools, can provide universal coverage costing no more than 15% of GDP.

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