Tackling runaway costs

Monday, September 21, 2009

All agree the projected runaway costs of Medicare, Medicaid and Social Security must be addressed.

However, the current U.S. House and Senate Democratic majority reform plans appear to only add to the costs, which threatens our country's economic future.

It's not just the identification of some of the problems but the proposed government solutions that have me uncomfortable.

In the Sept. 7 issue of the New Yorker magazine, commentary by Nicholas Lemann included the following:

"'One of the traditional methods of imposing statism or socialism on a people has been by way of medicine. It's very easy to disguise a medical program as a humanitarian project. Most people are a little reluctant to oppose anything that suggests medical care for people who possibly can't afford it.' This was Ronald Reagan, in 1961, speaking in opposition to an early version of Medicare, the big federal health-insurance program for senior citizens. An important station on Reagan's road from actor to politician -- coming between the national barnstorming he did as a spokesman for General Electric and his sensational campaign speech for Barry Goldwater, in 1964 -- was the eleven-minute recording from which this quotation comes. It was called 'Ronald Reagan Speaks Out Against Socialized Medicine,' and the American Medical Association distributed it to its members.

"Reagan believed that government health insurance for senior citizens was a Trojan horse: the real goal was universal health care and then full-on socialism. So it was important to resist sentimental appeals: 'Now, the advocates of this bill, when you try to oppose it, challenge you on an emotional basis. They say, "What would you do, throw these poor old people out to die with no medical attention?" That's ridiculous, and, of course, no one has advocated it.'"

In the Sept. 7 Forbes magazine, publisher Rich Karlgaard wrote the following:

"Our health care crisis: age, obesity, lawyers -- This is how President Obama should start a speech on health care: 'My fellow Americans: We are old. We are fat. We are afraid of lawyers.'

"Our PC president would never begin a speech like that. But with his polls plummeting, maybe he should. I think the country is in the mood for such straight talk.

"n We are old. Here are the facts about so-called mandatory entitlement spending in the U.S.: Out of a typical year's federal budget about half goes to transfer payments of various sorts -- Social Security, Medicare, Medic aid, unemployment compensation, disability programs, etc. Together Social Security and Medicare suck up nearly $1 trillion annually and, because of the country's aging boomer population, are the fastest-growing part of the entitlement pie.

"n We are fat. Here are the alarming facts about obesity in the U.S.: Nearly one-third (31 percent) of Americans are clinically obese (Body Mass Index of 30 or more). According to American Sports Data, '3.8 million people are over 300 pounds, over 400,000 people (mostly males) carry over 400 pounds, and the average adult female weighs an unprecedented 163 pounds!'

"Obesity leads to a legion of ills, from heart attacks and strokes to gut cancers and diabetes. The annual cost of treating diabetes and its effects exceeds $200 billion. This number is sure to grow. Adult onset diabetes is of epidemic proportions in some communities and has reached down to hit teenagers, the vast majority of them overweight and underexercised. President Obama should borrow a page from John F. Kennedy and commit our public schools to vigorous fitness goals. And parents: Stop driving your kids to school! Buy a computer game called 'Go Outside and Play.'"

"n We are afraid of lawyers. The biggest cost is not malpractice awards, which annually drive up U.S. health care costs by 1 percent to 2 percent -- $20 billion to $40 billion a year -- although that's bad enough. Most costly is the individual doctor's perceived threat of a career-ending malpractice award and his or her incentive, therefore, to practice defensive medicine. This occurs when a doctor, fearing a lawsuit, orders a battery of costly diagnostic tests to rule out the highly improbable, even when the obvious cause of sickness or injury is staring him in the face.

"A Massachusetts Medical Society study discovered that in one year Massachusetts wasted $1.4 billion on defensive medicine. Prorated for the entire U.S. Population, the cost would be about $66 billion a year. Another study cited by the American Academy of Orthopedic Surgeons puts the cost of defensive medicine much higher -- $100 billion to $178 billion per year. I believe it.

"Age, obesity and defensive medicine are the trillion-dollar elephants in the room. Whether your preference for health care reform springs from the political left or right, you have to start with these three facts. Otherwise, you're just a political bloviator.

"If you want to learn more about market-based solutions to our health care cost crisis, go to the National Center For Policy Analysis (ncpa.org) and read anything written by John Goodman Ph.D."

The following anonymous Internet comment illustrates the point that good intentions do not always give good results:

Cash for Clunkers results are in -- I guess I must be on the wrong page ...

A vehicle at 15 mpg and 12,000 miles per year uses 800 gallons a year of gasoline.

A vehicle at 25 mpg and 12,000 miles per year uses 480 gallons a year.

So the average clunker transaction will reduce U.S. gasoline consumption by 320 gallons per year.

They claim 700,000 vehicles, so that's 224 million gallons/year.

That equates to a bit more than 5 million barrels of oil.

Five millions barrels of oil is about one-fourth of one day's U.S. consumption.

Five million barrels of oil costs about $350 million dollars at $70 a barrel.

So, we all contributed to spending $3 billion to save $350 million. How good of a deal was that?

They'll probably do a great job with health care.

Gary Rust is chairman of Rust Communications.

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