Welcome to the New Health Economics

02/25/09 19:19

Remember New Math? We are seeing the New Economics, and New Health Economics, and what I call the new economics of Alternative Health.

The current economic problems began as people financed and spent more than they had on homes and toys, and so now home prices are cratering with deleveraging. The $787 billion The Economic Stimulus Act is supposed to put money out in buyers hands, but people are focused on paying off debt, not buying new toys, let alone moving up in their home.

In my opinion, little of this will help the economy ( hich will eventually improve despite the politicians) but it will make radical changes in our society. Healthcare spending is spinning out of control with more and more uninsured, so Washington included more than $150 billion for health care in the stimulus package, consisting of:

  • $90 billion or so will bailout states to pay for Medicaid shortfalls The Congressional Budget Office (CBO) says Medicare/Medicaid spending is growing from $720 billion today to $1.4 trillion in 2019, and spending will hit a “unsustainable”17 percent of GDP if the pace continues by 2050.
Sooooo....in their wisdom Obama and Congress are requiring states to cover more people...but only for two years or so. AND THEN? Does anyone think addiction to government funding is easier to kick than other drugs? Four Governors have said they will refuse the money because of this hook (but don't worry....they stimulus package is designed so that it will be relatively easy for the state legislature to accept nonetheless)

  • $40 billion to help people keep the insurance from the job they just lost. Nice, but putting off any meaningful reform. And unofficially bailing out the insurance companies, which with their vast real estate holdings will be in line for a soon to be urgent bailout.

  • $21 billion will go to modernize and computerize the national health care technology, but this will merely be s a "down-payment" on putting $50 billion into health care tech. Sounds great...but ask ANYONE in tech...it always costs way more than you budgeted...and half of corporate new tech programs never get implemented because of the complexity and cost overruns. And according to the CBO, and savings will be "overshadowed” by added government costs.

The administration's target is national health insurance. Whether it's national Medi-Gov or a mandatory Govi-Health Plan, both will create higher premiums and less coverage for everyone. President Obama told us we will have to take greater fiscal responsibility. but realize we will ultimately be forced to take greater personal responsibilty for our physical health as well.

Steven Weiniger