Even Conservatives Get The Health Care Debate Wrong

This past Sunday, conservative columnist George F. Will faulted not only the government for our health care woes, but consumers and capitalism as well ("Medical dilemma: we want 2009 care at 1960 prices"). In my opinion, consumers and capitalists - much less conservatives - could do with less "advocates" such as George F. Will. Check it out:

http://tinyurl.com/lxxfyh

He gets a little bit of the argument right, pointing out that some of our current inflation in Health Care is due to aging Baby Boomers, however, he greatly overstates the extent to which Boomers have contributed to the problem. And his main contention is completely off the mark when he claims that "we want 2009 care at 1960 prices". Will points out that in 1960, Health Care was "5% of GDP as opposed to 18% now". He then goes on to justify most of the higher percentage outlay by referring to the wonderful new technology that exists, using 1960 era automobiles in comparison to their 2009 counterparts to make his argument.

Will gets it exactly wrong on several fronts:

1) In comparing a car from 1960 to a car produced today, Will concludes that modern cars cost relatively more because they have "GPS, satellite radio, antilock brakes, power steering, power windows and air conditioning". That's incorrect and misleading for several reasons: a) power steering, power windows and air conditioning all existed in 1960, just as is the case today, and all cost more, just like today; b) GPS and satellite radio - unavailable in 1960 - are extras that cost more on a 2009 car. Anti-lock brakes is the single technology he mentioned that is standard on all autos today and unavailable in 1960.

2) Will maintains that technological improvements automatically cost more; they don't. In fact, if Capitalism is allowed to work, they cost less, so his comparison of technologies from two different eras entirely misses the point. Yes, modern cars have better features; so does modern medicine. So do modern Televisions, which cost less than 1/4th what they cost in 1960, whilst delivering gigantic screens and unheard of picture quality and sound. So do modern telephones, providing a computer, GPS and worldwide calling in the palm of your hand. So do modern computers, too expensive for citizens of that era, while today, a person of the most humble means can purchase for $299 a computer that is more powerful than any that existed in 1960, including both color and sound.

And would it be unkind of me to further unravel Mr. Will's argument by pointing out that virtually all of the technologies that he praises in modern cars, including GPS, satellite radio, antilock brakes - as well as several he did not mention like electronic fuel management systems, safety systems, internal diagnostics, etc. - are explicitly dependent on the dirt cheap computers I cited earlier?

3) Will ignores the beneficial effects of Capitalism in making the nation wealthier and "growing" the overall wealth of the nation, and gives no heed to the notion that Health Care spending ought not necessarily to increase as a percentage of GDP. Think about it: why must Health Care have increased as a percentage of GDP? If we as a nation are six times wealthier than we were in 1960 but have only doubled in population, why should the percentage of GDP spent on health care have to change at all? And - dare I say it - if we experience enough market-driven low-cost technological improvement, might we contemplate the percentage of GDP devoted to Health Care to actually be reduced? Just like it is with TVs, phone service and computers?

Will never addresses the argument from this perspective, nor for that matter do most Conservatives, yet that is exactly what they should be doing.

5) The sum of Will's article would have us believe that any industry that improves itself through technology (or any other means, for that matter) is entitled to a larger piece of the economic pie. This is nonsense for the simple reason that there is only now - and ever has been - 100% of the pie to spread around. If Health Care goes from 5% of GDP in 1960 to 18% of GDP today, that's 13% less of GDP available to spend on everything else, including food, education, recreation, and - coincidentally - automobiles.

6) He also fails to address that Health Care as a percentage of GDP grew only one percentage point from 1960 to 1970. The reason this is important is that after 1970, Health Care costs skyrocketed, directly after the implementation of Medicare and Medicaid. This is where Will's argument comes completely off its wheels. Even he acknowledges that Baby Boomers have only of late started to impact the cost of Health Care. So how does he explain the obscene explosion in Health Care costs from 5% of a 500 Billion dollar economy in 1960 to 18% of a 14 Trillion dollar economy today? If there were no Baby Boomers putting artificial pressure on Health Care spending for the past 40 years, exactly what was?

There was no government intervention via Medicare and Medicaid prior to the late 60s, and thus, no inflation; after Medicare and Medicaid, there was. Not coincidentally, the totality of Public Sector spending (including all forms of government, government-mandated insurance and Health Care expenditures) grew from less than 20% of GDP in 1960 to over 50% of GDP today, and that doesn't even begin to include the unfunded mandates for Government pensions, Medicare and Social Security that are in place today, which ensure that the percentage will go ever higher.

Eureka! Could we have accidentally hit on the reason Health Care has increased as a percentage of GDP ? Could it be profligate government spending and government programs that are responsible for the economy tanking? You can't continually siphon an ever-greater percentage of wealth from the Private Sector without killing the economy for the simple reason that you have confiscated the money consumers and businesses would otherwise have used to sustain the economy.

More to the point, with his narrow focus on "causes", Will doesn't even entertain the prospect. That's no big surprise. Scratch a denizen of the Beltway, and you will find a person whose perspective is informed solely by the Beltway, their ability to reason clouded by the absorption of too much received Washington opinion, and too little of the reality of Heartland America. Mr. Will is no different from his brethren, and brothers, you are not his brethren. Trust me when I say that the Commentariat in Washington - Republican and Democrat - don't even know we exist. Middle America is as real to them than as Middle Earth, and their endless arguments are an abstract exercise whose only purpose is to allow them to demo their forensic skills, scratch each other's backs and validate their sense of self-worth, all while accomplishing absolutely nothing.

No big surprise: they've all got a righteous medical plan, and couldn't be happier with the status quo.