By Aiya Anvarova
In
the recent time of severe economic crisis followed by the sluggish economic
recovery that the United States has been going through, it seems that the healthcare
issue is not a priority for the country. Thus, many argued that President
Barack Obama should have given up the Patient Protection and Affordable Care
Act (PPACA), commonly called Obamacare, and focused on the economy. However, in
reality escalating healthcare spending has become a significant burden for the
U.S. economy which makes it highly problematic to fix the economy without
fixing the healthcare system.
In
one of his June interviews, Governor Romney cited a book, “The Escape Artists:
How Obama’s Team Fumbled the Recovery,” by the liberal journalist Noam Scheiber.
In this book, the author put forward the idea that, early in his term, President
Obama was deciding whether to focus on the national healthcare law or to devote
more of his attention to the economic recovery. According to Scheiber, the
President considered healthcare reform as a bigger long-term achievement and
his corresponding choice of priorities postponed the U.S. economic recovery. Governor
Mitt Romney proceeded with his line of presenting Obamacare as a part of the
reason the economy was still sluggish by stating in the first presidential
debate that he did not understand how “the President could have come in the
office facing 23 million people out of work, rising unemployment and the
economic crisis at the kitchen table and spend his energy and passion for two
years fighting for Obamacare instead of fighting for jobs for the American
people”. Accordingly, the Republican presidential challenger believes that the
healthcare issue is not a sound economic issue and should not be on the President’s
immediate agenda.
However,
even though healthcare may not be a crucial economic issue for many countries
in the world, the United States is not one of them as healthcare is one of the
major expenditure items in the national budget and a sizable part of the
economy. In 2010, the U.S. spent nearly $2.6 trillion on healthcare. This approximated
to 17.9% of the country’s GDP, a substantially higher proportion than in any
other country in the world. U.S. healthcare spending is now 55% above the
average for wealthy countries. With that said, the quality of and access to care
in the country is no way consistent with the enormous amount of money the
federal government injects into healthcare. In 2011, the number of the
uninsured Americans was 48.6 million compared to 37 million in 1980. Also the U.S.
lags behind on life expectancy and the quality of preventive treatment. According
to the Institute of Medicine, a third of the U.S. healthcare expenditure does
not lead to improved health, that is, it is a substantial waste of the federal
budget that has to be eliminated.
Healthcare
spending is also creating long-term fiscal problems adding significantly to the
overall federal debt. Between now and 2050, Medicare and Medicaid spending will
rise from 5.5% of GDP to over 12%. In contrast, Social Security is projected to
rise from 5% to only 6% of GDP over this period. Consequently, healthcare
spending is the primary driver of future growth in government spending. Studies
of international medical costs suggest that, compared to other high-income
countries such as Canada and Great Britain, the U.S. healthcare system is
inefficient, which substantially increases the medical costs both for the
individuals and the government. There are a few areas in the U.S. healthcare
system, such as overwhelming administrative costs and fee-for-service payment method,
where changes have a tangible potential for savings and sustained cost
reduction.
Healthcare
spending is nearly a fifth of the U.S. economy and is the largest driver of
long-term U.S. debt. The way the healthcare issue is tackled will directly
affect the economy in the long run. In general, the issue of healthcare reform is
itself a major issue in terms of the economic recovery. In the context of the
upcoming presidential election, it is important to understand that the ability and
willingness of the next president to take hold of healthcare spending and
improve the productivity of the U.S. healthcare system will have a significant
impact on the country’s fiscal future and the economy in general.
List
of References
Collins,
S. R., Guterman, S., Nuzum, R., Zezza,
M. A., Garber, T., and Smith, J. (2012, October
2). Health care in the 2012 presidential
election: How the Obama and Romney plans stack up. Retrieved from the
Commonwealth Fund website: http://www.commonwealthfund.org/
Cutler
D. M., and Ly D. (2011, Spring). The
(paper) work of medicine: Understanding international medical costs. Journal of Economic Perspectives, 25,
3-25. doi:10.1257/jep.25.2.3
