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Why Does The US Spend So Much On Healthcare?

Today the Commonwealth Fund came out with a chart that it says is a “grim reminder” of what happens when health care doesn’t get reformed.

If only we had listened to Richard Nixon or Jimmy Carter.  We would have saved tens of trillions of dollars in health care spending.

Click to enlarge

Never mind that Nixon and Carter’s big cost savings were supposed to come from price controls.  Which, 4,000 years of history tell us, don’t work. It makes you wonder about that flat line in the alternate universe in which Nixon or Carter got their plans passed.  Beware of charts promising simple descriptions of health care problems.

Still, chart or no chart, it’s a very bad sign for a reform plan when its supporters try to drum up support by linking it to Nixon and Carter.

But the chart does beg another question:  why does the U.S. spend so much more?

There isn’t one answer, just like there’s no unitary health care “system” in the United States.  I’ve written a lot about before, so today I just want to focus on two points.

Other industrialized countries have restrictions on access to care that would be unacceptable to Americans.  We got a tiny taste of what this is like when that group came out earlier this year with a recommendation that women not get mammograms until they were 50.  There was an immediate uproar, and the group ended up re-writing its recommendations.  As an aside, it’s why some people think that a single-payer America would actually spend more on health care, since politicians would never vote for real restrictions on care.

To see what I mean, all you have to do is look at what is happening in state and local governments.  State and local government employees enjoy some of the most generous benefits packages in the country.  As the Boston Globe reported today:

A six-month review by the Globe found that municipal health plans, which cover employees, retirees, and elected officials, provide benefit levels largely unheard of in the private sector. Copays are much lower. Some communities do not force retirees onto Medicare at age 65. Many citizens on elected boards – some after serving as few as six years – receive coverage for life, too.

As medical costs across the board rose over the past decade, municipal health care expenses exploded, draining local budgets and forcing major cuts in services, higher property tax bills, and billions in new debt.

Some cities and towns around Boston are spending close to 20% of their budgets on health care costs.  Some towns spend more than $30,000 per year for family coverage – with almost 90% of that covered by the employer.  Large private employers pay about half that much on average for family coverage, and cover much less of the premium.  And it’s not just happening in Massachusetts.  Governments – for whatever reason – do not have in place the kinds of benefits offerings that have helped slow the growth in health care costs in the private sector.

So of course there should be some kind of reform in America.  But while politicians are arguing about a grab-bag of issues they aren’t grappling with the huge opportunities to improve health care costs right in their own backyards.

*This blog post was originally published at See First Blog*

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