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The US Is Number One…

… in national health care expenditures, that is. This, of course, is nothing new: spending on health care in the U.S. has long out-paced any other industrialized country. What is noteworthy is “the largest one-year increase in [health care's] GDP share since the federal government began keeping track in 1960″ blogs Chris Fleming, of Health Affairs. He writes that a new study shows that health care spending increased by an estimated 5.7 percent since 2008 despite a projected decline in the gross domestic product (GDP) in the same period.

The recession is having a big impact on respective roles of the public and private sectors. “Health spending by public payers is expected to have grown much faster in 2009 (8.7 percent growth, to $1.2 trillion) than that of private payers (3.0 percent growth, to $1.3 trillion)” Fleming writes, which is attributable to an increase in “projected growth in Medicaid enrollment (6.5 percent) and spending (9.9 percent) as a result of increasing unemployment related to the recession. Conversely, enrollment in private insurance is expected to have declined 1.2 percent in 2009, despite federal subsidies for Americans who have lost their jobs to extend their private insurance coverage via the Consolidated Omnibus Budget Reconciliation Act (COBRA) that increased participation in these plans.”

“For the first time, government programs next year will account for more than half of all U.S. health-care spending, federal actuaries predict, as the weak economy sends more people into Medicaid and slows growth of private insurance”, writes Peter Landers in the Wall Street Journal.

Free-market advocates would be loath to admit it, but in an employer-based private insurance system, when people lose their jobs, they also lose their coverage, unless the government steps in to provide it. If it wasn’t for Medicaid and the government subsidies for COBRA coverage, far more Americans would have been without health insurance during this recession.

And for all of the anti-government sentiment among much of the electorate, I don’t see people demanding that Congress repeal Medicaid or eliminate COBRA subsidies, or get rid of Medicare or the VA, for that matter. People dislike government, except when they need it.

What the health reform bills propose to do is replace the current patchwork system with an improved safety net – expanded Medicaid for the poor and near-poor, tax credit subsidies for people up to 400 percent of the federal poverty level, limits on pre-existing condition exclusions, and subsidies and purchasing pools to make coverage more available and affordable for small businesses. They would build upon what the government already does – provide people with affordable coverage when the private, employer-based system fails them – but in a more organized and coherent way.

Today’s question: What is your reaction to the new estimates on government and private sectors spending on health care?

*This blog post was originally published at The ACP Advocate Blog by Bob Doherty*


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