When will we stop spending?

The graph below compares American spending against other OECD countries. It comes from an article in the left-leaning American Prospect that basically argues that our spending isn’t really a problem.

OECD Spending
OECD Spending

A Million Here, a Million There ?
Why federal spending never goes down, and why that’s not a problem.

Politicians can fulminate all they want about the $2 million earmark or the silly sounding $150,000 research project. But the truth is that government spending is going to continue to rise, because neither Democrats nor Republicans really want government to get smaller — at least not badly enough to cut it in a meaningful way. It can rise at a slower or faster rate, depending on the decisions we make (the biggest source of future spending is Medicare and Medicaid, a problem the Affordable Care Act begins to tackle). But no matter who wins the election this year, or in 2012, or in any other year, it’s going to keep growing.

First, the comment that ObamaCare is going to “tackle” spending is absurd. Its tax and spending structure will move America way up on that graph. Next, the fact is that spending does matter for all kinds of reasons, particularly for a nation that doesn’t want to go down the path of sclerotic Europe.

No one knows if the Tea Party/Patriot movement is going to succeed in curtailing spending. I get the feeling that they just might. If the Republicans don’t curtail the rate of spending in some meaningful way, the loose network of activists will coalesce into a party.

For how long, and what level of success such a party has is an open question.

The answer need not be cutting spending below the previous year, but merely curtailing spending growth to a manageable number. Raise the retirement age, combine and means test Medicaid and Medicare, and outlaw public unionism at the state level.

Those 3 things alone will cure the spending problems. Get political power, and ram them through.

8 thoughts on “When will we stop spending?”

  1. Why would anyone get the feeling that the tea party movement will succeed in curtailing federal spending in any meaningful way? I haven’t seen any indications that the movement wants to cut funding for any of the big ticket items; defense, MEDICARE, or Social Security. Remember the tea party protests over Obamacare and the possible threats to MEDICARE funding – signs demanding that the government keep its hands off MEDICARE. I don’t think that the tea party/patriot movement is patriotic enough to demand cuts to programs that benefit themselves.

  2. It wouldn’t take much discipline to make the dollar the soundest currency in the world again. Actual spending cuts of less than 1% for a number of years, say .25% cuts indefinitely (or for as many years as we’ve had far larger annual increases), would preserve the wealth of the nation and force just enough attention as to how money is being spent to force better spending decisions. This doesn’t seem like such a hard pill to swallow given the profligacy of the last few decades.

    This kind of thing doesn’t seem like an onerous discipline to me but, is there any discipline possible when one is spending other people’s money?

  3. I disagree that the tea party movement is focused on “Don’t cut my Medicare” but that is a misstatement typical of Democrat talking points. First, Obamacare does cut Medicare and it has begun in Massachusetts. Second, the reforms that Paul Ryan is talking about do not affect present beneficiaries, unlike Obamacare. Social Security and Medicare reforms have to start with younger people and their expectations.

    Second, I can give you an immediate reform that would actually increase access to care for Medicare beneficiaries immediately and cut costs. If Medicare would end the “balance billing” ban and freeze payments, they would stop the escalating costs. That would be unpopular but it would end a phenomenon that is increasing while it is still invisible in the news. Doctors are dropping out of the Medicare system. Most right now are limiting the number of new Medicare patients they accept but the number who are just quitting is increasing.

    If they had the alternative to charge a reasonable fee for services and then get a reimbursement from Medicare for part of the fee with the patient responsible for the rest, it would make a huge difference. For those elderly who could not afford this, there will always be doctors or clinics who will accept the low Medicare payment.

    Anyway, the tea party movement is all about the cost of government and, if the Republican establishment balks, there are alternatives. The tea party people are very active in the local committees of the party and the establishment might just find it isn’t the establishment anymore.

  4. Much of the above discussion depends on what kind of intellectual pressure the think tank/C4 movement applies to the Tea Parties, and how that translates into Tea Party impact on Party Apparatus.

    Everyone interested in affecting change should become a precinct committeeman in the party of their choice. Even if you live in a more statist precinct, the ability to become either party’s PC is much easier than most think.

    Get 10 signatures, get a few votes more than the other candidates, and you are part of that party’s apparatus. You can effect change.

    Spending cuts are one of the top priorities of the movement. If the Republicans don’t cap spending, they will lose massively in ’12 & 14.

  5. Michael Kennedy:

    As you are a physician, I respect your opinions on these matters. I come at this from the viewpoint of a patient, or rather, having been the health-care-power-of-attorney holder for aging parents, essentially mediating the major health care decisions for the past 12 years.

    My father was a Ford salaried retiree, where he was kicked out of one of the more generous Medicare-supplement plans and on to Medicare Advantage. It was a cost-saving plan that helped rescue Ford Motor Company. Now it looks as if Medicare Advantage is history on account of Health Care Reform, and by the time I retire, I see the alternatives to be personal savings or, what my Momma used to call in her immigrant, Yogi Berra-esque English, “the ice float” (i.e., supposed Innuit custom of letting their frail elders drift out to sea).

    As you are a doctor, I have a question for you about Medicare Advantage. From a consumer standpoint, the restriction on access to doctors was not a problem as Dad was confined to a nursing home and wasn’t going anywhere far, and his primary care physician was one seriously dedicated man with a large cliental of frail-elderly patients. But, holy smokes, the fee reductions to come out of Medicare Advantage! The reimbursement to a urologist to remove a bladder tumor endoscopically was paid something like 40 cents on the dollar. Someone sending a scope up Poppa’s ha-ha was being paid less than an auto-repair mechanics.

    Was I doing the right thing to have Poppa on Medicare Advantage, or should the family have paid for a full-blown Medicare Supplement plan, or should I have taken him out of Medicare completely as most of his expenses were unreimbursed long-term care anyway? I kind of feel guilty about what his doctors were getting in payment.

    As for myself, I am not a flaming Libertarian, but I have seen employer health insurance being hollowed out, now we are seeing Medicare being hollowed out, and I see Health Care Reform as a general long-term devolution, where your level of care will be at the graces of doctors who see their work as a vocation in the manner of clergyman combined with the ability to have family backing you up to squawk the loudest (I don’t have children) — when I end up in 20 years with what Dad had, I see myself on that “ice float.”

  6. Paul:
    You’re right, in a word. And, I am a physician.
    Look at outpatient cancer care. While nobody is technically rejecting treatment, payors (Medicare, private, you name it) have made the process so Byzantine and the reimbursement so marginal compared with costs of delivery, that senior physicians increasingly look at their financial burdens, their medicolegal exposure, and the risk:benefit ratio and decide, “Why am I still doing this?”

    Many physicians are leaving private practice to work for hospitals or universities. No problem, right? Wrong. They make less; they will also, however put in shorter hours. Which translates into fewer net physicians available for an increasing patient population.
    University-based care? Newsflash, for all: it’s NOT patient-friendly. Too much there to put into a single post.

    Physician fees account for about 15% of all costs of care paid out by payors in the US. And yet it’s the focus of many payors in their efforts to cut costs. Wait’ll someone throws a lung cancer treatment party, and nobody shows up: no medical oncologist, no radiation oncologist, no thoracic surgeon, and no pulmonologist. Let’s see Joe Biden explain that one to the electorate.

    Medicine is a rewarding career; after >20 years, I’d never change my decision to practice. But it is WORK. Hard. Work. For which all of us expect to be paid. I haven’t missed my kids’ games, left home before and arrived after they went to bed, given up most hobbies, and let active friendships wither from inattention without expecting something in return. That’s the social contract for medical care. Reduce the reward-end of the equation? No problem. We’ll spend more time with our kids, sleep in late, and—well, the best of luck to you all. Maybe alternative medicine has something to offer: it worked so well in China before the 20th Century, I’m sure it’ll cure everything all up, reeeal good-like.

  7. The reimbursement to a urologist to remove a bladder tumor endoscopically was paid something like 40 cents on the dollar.

    That was pretty good. I’m retired after 30 years of practice and a 14 hour back surgery for a college injury that got worse with time. I go to a pain specialist who is an old friend. He gets paid $11 on a $120 bill.

    The suggestion I made above is actually a version of the French health care system and theirs is the highest rated by patients in Europe. I have a whole series about it on my blog from several years ago. The first of the series is here.

    Many doctors are now dropping out of Medicare. The busiest hip replacement surgeon in Orange County CA has quit Medicare. What he does is charge about what Medicare paid him but it is in cash. His office staff is half of what it would be if he had to deal with insurance.. I believe he has quit all insurance. I did some blog posts on that, too. I know of a number of specialists who have quit insurance and gone to cash only. It sounds suicidal but what they have done is cut their fees to what they were actually getting paid. Even private insurance is discounting up to 80% and, if you drop your fee to the amount your getting paid, they will discount that. That’s why the bills look so big when physicians’ incomes are dropping.

    We may be evolving a private market alongside the public system. This is what is happening in Canada even though private practice is banned there. The first reaction to this trend can be seen in Massachusetts where a bill has been introduced forcing a physician to accept the public system as a condition for licensure. You know they are noticing the trend when they start to go that way.

  8. Figures that Massachusetts would pull something like that. So much for a physician’s’ right to choose their patients.
    I look forward to a lawsuit in MA challenging that rule, if passed by the legislature.
    I anticipate a (presumably) liberal appellate court to compel physicians to accept the rule. Followed by an exodus of physicians from Massachusetts.
    What is not prohibited is compulsory…

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