The Long-Term Debt Issue Is Health Care Costs

Matt Yglesias posts a couple charts to make the argument that, contrary to what Paul Ryan and the right-leaning Washington Post editorial board would tell you, preserving Medicare as we know it is an option.  He points out, correctly, that the US is a low-tax country.

He’s right, of course, but there is more to the story.  It’s not just that we could bump taxes up a few percentage points, still be a low-tax country, and thereby maintain Medicare.  It’s that the problem with our debt is the problem with our economy generally: our unique, and spiraling, cost of health care.

We get not-so-great results even though we pay way more than anyone else in the world for health care:

And the long-term problem with Medicare isn’t that the population is growing; it’s that our already-insane price levels are projected to spiral.

In words, from the CBO, “[t]he bulk of that projected increase in health care spending [on Medicare and Medicaid] reflects higher costs per beneficiary rather than an increase in the number of beneficiaries associated with an aging population.”  Or, in a picture:

As a wise man put it this morning:

Here’s an analogy: think of Medicare as a footbridge that is deteriorating and will eventually become unsafe. You could propose structural repairs to fix its faults; Ryan doesn’t do that. Instead, he proposes knocking the bridge down and replacing it with trampolines, in the hope that pedestrians can bounce across the stream. And the Post declares that he deserves credit for pointing out that the bridge is falling down, and proposing a solution. Um, we knew that the bridge was in bad shape — and his solution is a fraud.

The mature policy response is to work on the cost of health care in the economy altogether, not just telling seniors, “good luck with the trampoline.”   (Or, sillier still, asking Congresses ten years in the future to bounce seniors on trampolines instead of maintaining the bridge.  That’s not how future legislators will actually react, so it’s debatable whether Ryan’s “plan” is even a plan at all).

Happily, the US did a lot last year to reduce the long-term cost of health care, although the political debate hasn’t caught up:

The details of the ACA’s cost-containment are wonky, and few people paid attention to them. Staunch liberals either didn’t care about cost containment, or devoted their energy to agitating for more sweeping alternatives. Moderate liberals supported the measure, but, taking their cue from policy wonks, took the very honest posture of conceding that some parts might not work as planned, and thus contributed to a massive asymmetry of passion. Centrists simply assumed that any deficit plan that wasn’t a grand bipartisan deal could not be a real deficit plan, since their fundamental premise is that a grand bipartisan deal is the only way to address the deficit. And the whole health care issue was sucked into the vortex of an unhinged debate, so that millions of conservatives understand the whole package as nothing more than an assault on freedom, with little or no grasp of the particulars.

The end result of all this is a debate around an issue with a peculiar backwards character.

ADDED: I should have included this chart, from CBPP, as well:

ADDED: Very late addition, I should be clear that in the short term (next 20 years or so), our aging population is a greater contributor than health care cost growth to spending:

From page 10 of the linked pdf, CBO’s 2011 Long-Term Budget Outlook

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