EXCEPT THAT PENILE IMPLANTS ARE HEALTH CARE:

Obama’s Unhealthy Reform: It's hard to know whether Obama's healthcare proposal is naive, hypocritical or simply dishonest. (Robert J. Samuelson, Jun 15, 2009, Washington Post)

A new report from Obama's own Council of Economic Advisers shows why controlling health costs is so important. Since 1975, annual health spending per person, adjusted for inflation, has grown 2.1 percentage points faster than overall economic growth per person. If this trend continues, the CEA projects that:

*Health spending, which was 5 percent of the economy (gross domestic product) in 1960 and is reckoned at almost 18 percent today, would grow to 34 percent of GDP by 2040 -- a third of the economy.

*Medicare and Medicaid, the government insurance programs for the elderly and poor, would increase from 6 percent of GDP now to 15 percent in 2040 -- roughly equal to three-quarters of present federal spending.

*Employer-paid insurance premiums for family coverage, which grew 85 percent in inflation-adjusted terms from 1996 to $11,941 in 2006, would increase to $25,200 by 2025 and $45,000 in 2040 (all figures in "constant 2008 dollars"). The huge costs would force employers to reduce take-home pay.

The message in these dismal figures is that uncontrolled health spending is almost single-handedly determining national priorities. It's reducing discretionary income, raising taxes, widening budget deficits and squeezing other government programs. Worse, much medical spending is wasted, the CEA report says. It doesn't improve Americans' health; some care is unneeded or ineffective.

Not that this last paragraph is at war with the first two. We're a far wealthier people than we were fifty years ago and there's no empirical reason we shouldn't squander some of that wealth on the health care industry the same way we do on the electronics industry. In 1960, my in-laws had one tv--in the living room of their house. Today they have five in their condo. they're spending "more" on television, but we don't prattle on about rising costs because that's so obviously a consumer choice. But the reality is that medicine today is largely just a consumer good too. Indeed, it's mostly a waste of money as regards its effect on our health.

Posted by Orrin Judd at June 16, 2009 1:08 PM