Hidden Costs Delay Urgency

Kevin Drum is a realiable font of clear thinking, but I think he misses the mark on this one:

But in the end, both as individuals and as a society, we’re going to spend as much on healthcare as we feel like spending. And why not?  We should spend our incomes on whatever we value the most, and for a lot of us that’s healthcare.  If that turns out to be 30% of GDP, then it’s 30% of GDP.

And that’s what will eventually bend the curve in healthcare costs: when we all finally decide that we’re spending enough. Whether we’re doing it as individuals, as employees with healthcare insurance, or via tax dollars, we’ll get serious about controlling costs when we decide that costs have gotten too high.  Until that happens, though, well-designed incentives may make things more efficient but won’t appreciably reduce the rise in total spending.  I don’t think politicians can afford to say that in public, but it’s probably true.

That’s true, but as anyone trying to make the “what’s in it for me” argument for health reform knows, one of the big problems is that we really aren’t aware just how much we’re spending already. From the Washington Post:

Benefits now devour 30.2 percent of employers’ compensation costs, with the remaining money going to wages, the Labor Department reported this month. That is up from 27.4 percent in 2000.[…]

[…]Since 2001, premiums for family health coverage have increased 78 percent, according to a 2007 report by the Kaiser Family Foundation.

This cost is almost entirely obscured from view. It’s one of the key arguments behind ending the employer tax deduction. The theory goes that with the precipitous rise in health costs exposed, building national consensus around reforms that really bend the curve — i.e., dread rationing — will be much easier.

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