We are about to start the cycle again. By most accounts, President
Bush plans to highlight health care in his forthcoming State of
the Union address. His proposals may or may not have merit, but
they surely won't fix the health system in any fundamental way.
The reason is that most Americans don't want to fix the system
in that sense. Most are satisfied with their care. Most don't
see (or pay directly) most of their costs. Because politicians
-- of both parties -- reflect public opinion, they won't do more
Unfortunately, tinkering isn't enough. As everyone knows, health
spending has risen steadily. In 2004, it totaled 16 percent of
national income, up from 7.2 percent in 1970. As health insurance
becomes more costly, the number of uninsured, now about 46 million,
may grow. Worse, health costs may depress wage gains, raise taxes
and squeeze other government programs.
Here's the paradox: A health-care system that satisfies most
of us as individuals may hurt us as a society. Let me offer myself
as an example. All my doctors are in small practices. I like it
that way. It seems to make for closer personal connections. But
I'm always stunned by how many people they employ for non-medical
chores -- appointments, record-keeping, insurance collections.
A bigger practice, though more impersonal, might be more efficient.
Because insurance covers most of my medical bills, I don't have
any stake in switching.
On a grander scale, that's our predicament. Americans generally
want their health-care system to do three things: (1) provide
needed care to all people, regardless of income; (2) maintain
our freedom to pick doctors and their freedom to recommend the
best care for us; and (3) control costs. The trouble is that these
laudable goals aren't compatible. We can have any two of them,
but not all three. Everyone can get care with complete choice
-- but costs will explode, because patients and doctors have no
reason to control them. We can control costs but only by denying
care or limiting choices.
Disliking the inconsistencies, we hide them -- to individuals.
We subsidize employer-paid health insurance by excluding it from
income taxes (the 2006 cost to government: an estimated $126 billion).
Most workers don't see the full costs of their health care. Nor
do Medicare recipients, whose costs are paid mainly by other people's
We're living in a fantasy world. Given our inconsistent expectations,
no health-care system -- not one completely run by government
or one following ``market'' principles -- can satisfy public opinion.
Politicians and pundits can score cheap points by emphasizing
one goal or another (insure the uninsured, cover drugs for Medicare
recipients, expand ``choice'') without facing the harder job:
finding a better balance among competing goals.
Every attempt to do so has failed. Consider the ``managed care''
experiment of the 1990s. The idea was simple: herd patients into
health maintenance organizations or large physician networks;
impose ``best practices'' on doctors and patients as a way to
encourage preventive medicine and eliminate wasteful spending;
and cut costs through administrative economies. But managed care
upset doctors and patients. After a backlash, managed care relaxed
Now, some say that because the ``market'' has failed, greater
government control is the answer. Private insurance has high overhead
costs and generates too much paperwork. True. Still, there's not
much evidence that over long periods government controls health
spending any better. From 1970 to 2003, Medicare spending rose
an average of 9 percent annually. In the same years, private insurance
costs rose 10.1 percent annually.