When the presidential candidates talk about solving the problem of the uninsured, closing the holes in the Medicare drug benefit and investing in new health technologies, all I can think about is numbers.
The candidates have surprisingly thoughtful healthcare platforms, including measures to achieve meaningful cost control. Democrats and President Bush are pushing new efficiencies such as clinical protocols, disease-management programs and electronic patient records. The Democrats, of course, want to roll back some of the Bush tax cuts to pay for expanded access to care. As much as I applaud expanded access and efficiency, I keep going back to those numbers.
We are entering an era when demographics and actuaries will exert tremendous control over what the government can do. Nowhere is this more true than in healthcare.
It's worth a walk through some of these daunting figures. Fair warning: If you really want either universal coverage or permanent tax cuts, you may just want to turn the page.
For starters, we have a national debt-that's the accumulated unpaid deficits from past years-of well over $7 trillion. Paying off that debt will cost each taxpayer in excess of $100,000 in his or her lifetime, if you factor in the unaccounted-for future commitments to Social Security and Medicare.
The fiscal 2004 federal deficit is estimated to be $521 billion, the largest ever in dollar terms and one of the largest ever as a percentage of our economy. The budget Bush released last week anticipates a fiscal 2005 deficit of $364 billion, but that figure is filled with assumptions-such as a robust economy and Congress' ability to hold the line on spending-and doesn't include at least $50 billion for occupying Iraq.
National healthcare costs rose 9.3% in 2002 to $1.6 trillion, the fastest increase in a decade. Health premiums leaped by 14% in 2003.
The estimated cost of the Medicare prescription drug benefit has risen by more than one-third even before most of it takes effect, up to $534 billion for the first 10 years.
Take a deep breath now, because none of that is the really bad news. Read on.
As the baby boom generation begins to retire, the cost of entitlement programs skyrockets. The second 10 years of that drug benefit will cost from $1 trillion to $2 trillion, even without closing the famous doughnut hole in coverage.
By 2014, Medicare and Medicaid will cost more than $1 trillion per year, the Congressional Budget Office projects.
Also unaccounted for in current projections are the costs of fixing the alternative minimum tax, a system designed in the 1960s to ensure that wealthy Americans paid at least some taxes. This system, however, wasn't indexed to inflation, and unless it is fixed, more than 33 million middle-income taxpayers would fall under this rate by 2010, wiping out much of their tax cut.
The president proposes to make permanent his 2001 and 2003 tax cuts, which carry a 10-year cost of more than $1.7 trillion. But achieving that while fixing the alternative minimum tax will cost hundreds of billions of dollars more.
Finally, U.S. Comptroller General David Walker says long-term projections by his office show that even without the drug benefit, current federal spending policies mean that by 2040 a balanced budget would require a 50% cut in federal spending or a doubling of taxes.
All of this helps explain why rolling back tax cuts for the wealthy and streamlining the healthcare system, while both worth doing, are far from enough to pay for anything resembling universal coverage.
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