Obamacare had its days in the Supreme Court this week, and the justices’ decision could have sweeping consequences for the individual mandate provision in the Patient Protection and Affordable Care Act, and maybe even for the fate of the law itself.
Yet whatever the court decides, we will still be stuck with a problem that this contentious law was not likely to solve on its own: an out of control health care industry that threatens the stability of the U.S. economy and the federal government’s ability to deal with our long-term debt.
It is hard to overstate the gravity of the situation. A 2008 study by the consulting firm PricewaterhouseCoopers estimated that more than half of all health care expenditures provide no value — meaning we spend more than double what we should. In today’s dollars, that waste represents an extra $1.5 trillion a year.
Meanwhile, health insurance premiums have grown a breathtaking four times as fast as general inflation over the last decade. Projections by the Council of Economic Advisers show that virtually all growth in average job compensation from 1996 forward has been absorbed by health care. Another study finds that rising health care costs have added 2% to the rate of unemployment. Over the next 70 years, if current trends hold, health care entitlements will double the federal budget as a percentage of Gross Domestic Product, crowding out spending on other necessities like defense, education and infrastructure.
Wasteful health care spending is central to the federal government’s plunge into debt, and it directly threatens our national economic security. Failing to address health care’s excesses is really no different from refusing to avert a cyber-attack that would cripple the American economy.
Why can’t we muster the national will to address this problem? For all of the acrimonious debate triggered by Obamacare, the legislation contained no provisions that truly threatened the power of the health care sector to continue extracting money from the rest of the economy.
That’s because, by lobbying and cultivating deep relationships with government, various health care industries have captured the very regulatory mechanisms, especially those related to payment, that were established to oversee it. This vast sector — drug and device firms, health information technology vendors, doctors, hospitals and insurance companies — contributes heavily to develop and protect regulations that preserve the status quo.
Recent figures from the Center for Public Integrity show the health care sector’s outsized clout. In 2009, during the reform process, health care interests fielded 4,525 lobbyists — eight for every member of Congress — and spent $1.2 billion to ensure their influence. Describing the industry’s lobbying strategy, Julian Zelizer, a Princeton Professor of Public Affairs, said, “They cut it. They chopped it. They reconstructed it. They didn’t bury it. I don’t think they wanted to.”
Only one other group, non-health care businesses, has the heft and motivation to do battle with the health care behemoth. But this is a group with divided interests. Many of the largest seemingly non-health care firms — GE and AIG, for example — have significant product or service lines that benefit from an expanding health care sector. Business associations, like chambers of commerce, typically align with the interests of health care organizations, their biggest contributors. At one-sixth of the economy, the nation’s largest industry has insinuated itself throughout most institutions, effectively neutralizing opposition.
Unless champions from the business community outside of health care arise, we may be doomed to stand by as a rapacious health care industry sucks the rest of the American economy dry.