Cost Shifting Is Not Cost Cutting

You’ve heard that the U.S. spends more on health care than anywhere else on the planet. If you want to see this for yourself, spend some time with this page of charts, graphs and tables compiled by the Kaiser Family Foundation. And what makes the amount we spend even more pathetic is that our overall results do not stand up to that of other nations that spend far less.

Now the Global Health Leadership Institute points out that while we spend much more on health care costs than those other countries, we spend a great deal less on other social services — “rent subsidies, employment-training programs, unemployment benefits, old-age pensions, family support and other services that can extend and improve life.”

We studied 10 years’ worth of data and found that if you counted the combined investment in health care and social services, the United States no longer spent the most money — far from it. In 2005, for example, the United States devoted only 29 percent of gross domestic product to health and social services combined, while countries like Sweden, France, the Netherlands, Belgium and Denmark dedicated 33 percent to 38 percent of their G.D.P. to the combination. We came in 10th.

What’s more, America is one of only three industrialized countries to spend the majority of its health and social services budget on health care itself. For every dollar we spend on health care, we spend an additional 90 cents on social services. In our peer countries, for every dollar spent on health care, an additional $2 is spent on social services. So not only are we spending less, we’re allocating our resources disproportionately on health care.

Our study found that countries with high health care spending relative to social spending had lower life expectancy and higher infant mortality than countries that favored social spending. While the stagnating life expectancy in the United States remains at 78 years, in many European countries it has leapt to well over 80 years, and several countries boast infant mortality rates approximately half of ours. In a national survey conducted by the Robert Wood Johnson Foundation, four out of five physicians agreed that unmet social needs led directly to worse health.

This suggests to me that one of the several factors driving up health care costs is our low rate of “safety net” support for people in need. Here’s an eye-opening statistic:

The Boston Health Care for the Homeless Program tracked the medical expenses of 119 chronically homeless people for several years. In one five-year period, the group accounted for 18,834 emergency room visits estimated to cost $12.7 million.

In other words, it would almost certainly be less expensive to the rest of us to provide the 119 with basic shelter, food and health care than to just leave them on the streets. And there’s a chance some of them could become self-sufficient with a little help.

The conservative argument is that benefit programs make people lazy and dependent. So what does being chronically sick and cut off from health care (other than emergency rooms when they’re in crisis) make them?

My suspicions are that there is some optimum amount of government social services that gives you the best overall result for the buck, and trying to get by more cheaply just shifts costs somewhere else. So the “saving” is an illusion. In fact, the “saving” may be driving costs even higher.

The other argument a conservative might make (albeit with different framing) is that if the Glorious Free Market isn’t finding a place for some people, then they are surplus population that should just die already. Because, you know, people exist to serve the needs of the Holy Free Market Economy, not the other way around.

That kind of thinking is the only way conservative ideology makes sense.

7 thoughts on “Cost Shifting Is Not Cost Cutting

  1. Conservatives:
    Never mind those stupid facts and statistics.
    You know who invented those numbers?
    A-rabs!
    So why would anyone trust Muslim numbers, when we should trust in Christian faith?

    And speaking of Chrisitian faith – It’s the CHRISTMAS season! (There, I said it – all of you ‘Happy Holiday’s’ screeching DFH, Heathen Liberal assholes).
    And so, in keeping with Christmas and the spirit of taking, let’s talk about lordly Randian Christmas hero’s.
    NO!
    Not Cratchit or the ghosts in Dickens great warning fable about a great Galtian Conservative’s decline into simpering, weepy, Socialism.
    Or that lick-spittle, draft-dodging, Communist – George Bailey, and his efforts to let people who don’t deserve, and can’t afford them, buy and keep homes!

    But, the real hero’s!
    You Liberals are sooooo screwed up!
    You don’t understand that the real hero’s of Christmas are Ebeneezer Scrooge and Mr. Potter!
    That Bob Cratchit was a lazy money-sucking leech, with a needy and whiny child who needs to pick himself up by his own boot and crutch straps.
    And George Bailey was a seedy little Socialist with a hero-complex, who should have done his Christian duty and jumped off that bridge, and not gotten in the way of American progress in the person of John Galt Potter (YES – that was his name!).
    You want to see the “Ghost of Christmas Future?”
    One year from today – Newt Gingrich and Michele Bachmann will be celebrating as the soon to be sworn-in President and VP. And sworn-at by lazy, Communist vermin like yourselves.
    So, enjoy your last Liberal Christmas, you Heathens.
    MERRY CHRISTMAS!
    And for our Conservative Jewish friends – “Sasquatch Israel!” or “Happy Chutzpah!” – whatever…
    ______________________________________________

    And no, if you remember, I’m not making that up about Scrooge. I’m simply not anywhere near that clever.
    Here’s the defense of Scrooge, by that great Libertarian/Conservative-American Imbecile – Michael Levin:
    http://mises.org/daily/573

    Here’s Bill Maher’s LOL take on the subject:
    video –
    http://www.dailymotion.com/video/xmabcr_episode-232_shortfilms?start=8#from=embediframe

    and for those who can’t watch, or won’t because it’s definitely NSFW, here’s the transcript –
    http://seminoledemocrats.blogspot.com/2011/11/christmas-2011-ebeneezer-scrooge-is-gop.html

    I know it’s a little early, and I had a post similar to this a little while back, but I felt like having some more fun.

  2. As I read your illuminating article, you anticipated what I would guess conservatives would say:

    if the Glorious Free Market isn’t finding a place for some people, then they are surplus population that should just die already. Because, you know, people exist to serve the needs of the Holy Free Market Economy, not the other way around.

    They don’t have the guts to say it out loud yet, but this is what they’re thinking: “Emergency room services should only be available to real Americans. Problem solved.”

  3. “My suspicions are that there is some optimum amount of government social services that gives you the best overall result for the buck, and trying to get by more cheaply just shifts costs somewhere else.”

    I’m all about reality-based, pragmatic plans that WORK. As opposed to charter schools, abstinence-only sex-ed, “9-9-9” taxation, and other ideology-driven gimmicks.

  4. The perversities of American health and social spending can be explained by through class effects. American public policy is designed to direct as much public money into the hands of the wealthy as possible. American health spending largely winds up in the hands of doctors, shareholders, and managers. Social spending, in contrast, winds up in the hands of poor people.

    There’s no way America will alter its spending priorities vis a vis health and social spending because channeling money upwards–not helping the poor–is the intended outcome. $13 million in medical revenues for doctors, managers and shareholders to treat 119 people is not a bug, it’s a feature.

  5. The didactic and moral value of the spectacle of those homeless people being homeless is worth 13 million dollars to someone.

    There’s a price at which every market clears. Edifying tableaux vivants and feelings of superiority, it would seem, aren’t cheap.

  6. We’ve got to face the fact that for at least 30 years our economy has (successfully) grown into a full-blown capitalist economy. Confirmed capitalists don’t care about, think about, perhaps even know that there are millions of Americans living in poverty (40 million) and another 50 million living close to the poverty line.

    Successful capitalism is about accruing capital, as much as possible. It is about having access to the cheapest labor possible, to the cheapest raw materials possible and being able to ‘buy’ a government that makes it all possible. Sound familiar?

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