He argues:
Democrats and Republicans generally have different approaches to controlling the growth of health care spending. Democrats often favor a top-down approach: a panel of experts set up by the recent health care law will decide which medical procedures are cost-effective and which are wasteful. Republicans tend to prefer a bottom-up approach: empower consumers to make their own choices, they say, and the power of competition among private providers will keep costs down.
One thing that the two parties share, however, is the belief that controlling health care costs is possible. Yet many economists believe that the rise in health spending is largely the result of medical advances, which prolong and enhance life at a high cost. Perhaps health spending will inevitably, and even should, keep rising as a share of national income.
This possibility raises a question: If health care becomes an increasing share of the economy, how will we allocate it, and how will we pay for it? That is, if controlling the cost of health care fails, what is Plan B?
What he seems to be saying if I read it correctly is that the future is most likely just more of the past but just more of more. Namely health care is inevitably an ever increasing burden on the economy.
Now I would like to argue a different future, and I do so by also looking at the past, the distant past, and also looking at the future, especially the genetic medicine future we have been writing about herein. I have been accused by some in a lighthearted manner as being idiosyncratic, covering a disparate set of issues but in this one statement by Mankiw I believe I can try and tie some of them together.
Fifty years ago if one had congestive heart failure we just took care of you until you died. It was relatively cheap. The average weight of a recruit into the Army in 1943 was about 135 pounds and obesity then was not an issue. If a patient presented with a breast tumor or melanoma we gave then six to nine months of care which was relatively cheap.
We are in a stage in medicine where the tools for diagnosing and treating are massive and costly. But we are seeing tremendous changes and developments in genetic medicine. The imatinib in CML and the recent approaches to melanoma which we have written about, as well as the advances in prostate cancer, and of course our understanding of the costs of obesity and its sequellae.
Thus we will most likely see this growth of genetic tools explode and putatively reduce costs by catching disease early and treating it medicinally. Life style disease is still a conundrum which I see no way other than "taxing" the one making the choice and placing the tax in a future fund to treat them. We kind of do that with smokers. We must do that with the obese.
So what is the counter to Mankiw:
1. Medicine is not a stable field of science. Massive sea state change can occur and we are seeing them now. Looking at the future we see based upon the facts we have discussed herein clearly shows that change and we see a medicine dramatically different and in reality potentially less costly, except for life style choices, which we have discussed in detail.
2. Plan B may very well be this effort. More genetic developments, better understanding disease at the pathway level as we have described it and taxing the life style costs.
There is a second issue Makniw considers, the payment for Medicare, I believe that is what he meant. He states:
Democrats want to increase taxes on the rich to fund the looming fiscal gap, which is driven largely by soaring health costs. Republicans object, saying higher taxes create economic distortions, discourage work and impede growth. Last month, John A. Boehner, the House speaker, said that we should instead consider means-testing Medicare. But what does that mean?
But as we have shown this week in our analysis in response to the Washington Post discussions, we have a Medicare system which taxes the rich to pay for the poor. In fact the super rich are already super taxed. The Democrats want to further increase the tax and we proposed a level adjusting along with an age adjustment. The Medicare problem is really solvable by those to means and also can be further improved if we deal with the excessive use, namely people playing the system to maximize income but to no benefit to the patient. Medicare should really focus on catastrophic coverage; cancer, end of life, accidents, debilitating disease, and we should raise the bar on the rest. The new law through the ACO play I believe will do just the opposite. We have discussed that in detail as well.
Discussing health care and its future must be done in a holistic manner, not just as an economist would do by simply looking at the past and projecting the future, but as a scientist, engineer and physician would, looking at the changes and integrating them in the path forward. It is only by understanding what the future as we see it currently unfolding is going to bring and how to assist its movement forward that we will best understand health care.
It is a pity that no one in Washington seems to either understand or articulate that issue.
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