Tim Leeds Havre Daily News tleeds@havredailynews.com
A Montana economist says that suggestions to reform health care and health insurance won’t solve the underlying problems causing the cost of health care to skyrocket. “There are so many changes needed from what we do now,” said Patrick Barkey of the Bureau of Business and Economic Research at the University of Montana, “it will be very difficult.” Barkey, who presented his paper at the 33rd Annual Montana Economic Outlook Seminar in Havre last week, said the way health care is run in the United States causes its cost to grow. He said that, tied in with greater use of health care services as more treatments become available and as the average age of the population grows, makes it nearly impossible to rein in costs even with changes in insurance coverage. There are several causes to the growth, Barkey said, including the fact that nearly no one pays for the service themselves. Instead, almost all service is paid by thirdparty providers such as insurance companies, the federal government or charities. The most recent data he had, Barkey said, showed that in 2004 only 15 percent of health care customers paid for the services themselves. In 2003, 11 percent of health care consumers were carrying medical debt, Barkey said, with a surprising twist. While 21 percent of people without insurance were carrying medical debt, 7 percent of people who did have insurance were also carrying debt. Part of the problem is that having third parties paying for the health care stops people from shopping around, Barkey said. In most situations, people who are paying for something themselves will look at price and value before making a purchase. “You look at something on the shelf, you look at the cost and you either put it in your basked to you don’t,” Barkey said. "That is largely absent when you purchase health Care.” Part of the problem is the shifting of costs when service isn’t paid for. Barkey said, for example, that starting in 2004 the federal government tried to make some changes in Medicare, and gain more control over reimbursements. That resulted in increased charges to people paying privately, he said. “This is a frustration in health care cost control,” he said, comparing it to a balloon. “You push in on one side and it comes out somewhere else.” And the government entitlement programs like Medicare and Medicaid are not only part of the reason the costs are going up, they are ballooning in expense in an unsustainable fashion, Barkey said. Barkey said that, historically, the entire revenue base of the federal government has been about 18 percent of the gross domestic product. By 2030, that entire amount will be taken by Medicare and Medicaid, he said, requiring taxes to be increased to pay for anything else. Barkey added that, while Americans are paying more for health care than anyone else, they may not be getting the best result for their money. In the industrialized world, 22 countries are ahead of the United States in average life expectancy. “Where we go to the top is when you look at how much we spend,” Barkey said. The United States has the highest per-capita spending on health care, double the average and 20 percent higher than the next highest country, Luxemburg, he said. The only solutions are to rethink medical care, he said. Part of the problem in doing that is that no one agrees what the problem is, he added. Once the exact nature of the problem is agreed upon, Barkey said, some incentives could be put in place, such as tax incentives or incentives to increase consumerism. One option, which has not been used much yet in Montana, is policies with increased deductibles coupled with tax-incentived savings plan to help cover the deductible. Whatever is done, it has to be done quickly, he added. He quoted David Stockman, budget director for President Ronald Reagan, when he said in 1981, “I’m just not going to spend a lot of political capital solving some other guy’s problem in 2010.” Now it is almost 2010, Barkey pointed out. “That is what had led us to where we are,” he said. “ There are certainly a lot of harder things we have to do.”
