Rising Health Care Costs

January 19, 1993

For anyone who anticipated quick action on President-elec Clinton's vow to deal with the country's health care crisis, a new report brings sobering news. According to the Commerce Department, health care spending rose last year to more than 14 percent of the nation's total economic output, which represents one out of every seven dollars in the economy. The increase follows a disturbing upward trend that will be repeated again this year, when health care costs are expected to rise by another 12 percent.

Not surprisingly, as costs rise in the health care industry, so does employment -- which has increased 43 percent in a mere four years. That might sound like good news, but the fact is that as more people earn their living on health-care dollars, more people have vested interests in resisting change. Moreover, the increase came at a time when private employment increased only 1 percent overall. Much of the medical industry's increase represents the legions of administrators required to manage the red tape and bureaucracy that characterize an inefficient and inequitable system of providing and paying for health care.

Canada, France, Germany and Sweden spend about 8 percent of their gross domestic product on health care, compared with 12.2 percent in the United States. And we don't even get our money's worth. Despite the vast amounts spent on health care, millions of uninsured Americans don't get care when they need it. And while millions of dollars are spent to warehouse the elderly, the quality of their later years leaves much to be desired.

There must be better, fairer and cheaper ways to care for Americans, young and old. The challenge facing Mr. Clinton is to push the issue with such persistence that change is not only inevitable but also productive and positive. It will be impossible to please everyone, but surely the support of the nation's employers -- who bear the brunt of health care costs -- is essential to any plan.

Like the federal debt, health care costs are spiraling out of control, and the resulting crisis threatens to undermine the entire economy. An employer facing the kinds of cost increases nTC indicated in the Commerce Department's report has to make up that money somewhere. No wonder Mr. Clinton has pinpointed health care reform as crucial to any sustained economic recovery. Without significant reform, health care will continue to leech resources away from education, infrastructure and other critical areas, and Americans will continue to pay for a Cadillac health-care system that leaves too many people in the dust.

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