The New Health Dialogue

Credit: Ken Hays

The House of Representatives recently passed a bill linking an increase in the debt ceiling to a constitutional amendment limiting federal spending to 18 percent of GDP, coining it “Cut, Cap, and Balance.”  While the bill was rejected in the Senate, it is still interesting to think back to the last time federal spending fell below 18 percent of GDP.  America was entrenched in an increasingly intractable land war in Asia, Clint Eastwood’s icy stare dominated the silver screen, and everyone wanted a mop-top haircut just like the popular musician of the day.

The year was 1966.*

Our government – not to mention our economy as a whole – has changed markedly since the 1960s. The Center for American Progress has put together an interesting infographic highlighting some of the striking differences in health care between then and now.

1. Medicare was just a year old in 1966 and had a mere 19 million beneficiaries (9.7 percent of the total population), compared to more than 47.6 million today (15.5 percent).
2. Since then, estimated life expectancy has improved from 70 to 79, but at a cost: the average per person cost of health care was $1,541 in 1966 compared to over $8,000 today.
3. Average spending on prescription drugs per capita has increased 526 percent, from $132 to $826.

There are more of us, we’re living longer, and we’re spending those extra years buying more health care in a more expensive system.  The state of our country and government in 2011 just isn’t what it was in 1966. As Ezra Klein wrote in Tuesday’s Wonkbook, “Ronald Reagan's entire presidency would've been unconstitutional under CC&B. Same for George W. Bush's. Paul Ryan's budget wouldn't pass muster.”  As many other policy experts have noted recently, Cut, Cap, and Balance doesn’t work in today’s economic and social landscape.

Norm Ornstein, of the conservative think tank the American Enterprise Institute, lambasted the idea as “disasterous”:

Accounting for population changes, the 16.7 percent limit would mean slashing Social Security and Medicare well below the levels contemplated by the bipartisan Simpson-Bowles fiscal commission, and cutting discretionary spending by half or more. It is hard to make the case that decapitating food inspection, air traffic control, scientific research, Head Start, childhood nutrition programs and more, as the amendment would almost certainly require, would lead to a healthier economy, itself a necessity to solve the debt problem. (Washington Post)

Returning government spending to 18 percent of GDP isn’t what the doctor ordered.  There are many savings to be found in the health care system, especially when Medicare and Medicaid account for 23 percent of all government spending.  But we need targeted cost reductions and delivery system reform, not a simple slashing that would likely leave the poor, disabled, and elderly without adequate coverage.

To learn more about health care costs, check out all our cost-related posts here.

*You may have noticed our examples aren’t from the 60s. Though our fiscal situation is strikingly different from the 1960s, history sure seems cyclical sometimes. Hey Justin Bieber, the Beatles called, and they want their haircut back!