Big problem with health care is the cost

WASHINGTON — The angry town hall meeting will be remembered as a hallmark of the health care overhaul effort. But just a few months ago, the folks filling town hall meetings were pretty upset with Congress about bailing out the banking system.

In both cases, worried and angry Americans grappled with their lawmakers over exceedingly complicated problems. The issues were high-stakes and personal. Fingers wagged in all directions.

As health care heats up with the summer congressional recess, it’s worth remembering the financial crisis. We argued then about who got the economy into such a mess, and we’re arguing now about health care culprits. Then as now, the blame falls widely.

The banking crisis that triggered this recession had its roots in a housing bubble. The federal government urged financiers to relax their standards so more Americans could buy a home. Lenders gave mortgages to buyers without the means to pay. Many of these lenders and borrowers assumed prices would go up enough to cover the risk of default.

The loans, meanwhile, were bundled into complex financial derivatives aimed at dispersing still more of the risk and in turn were bought by banks worldwide. Risk was spread again when companies such as AIG — without enough collateral — insured these derivatives against default.

The federal government, meanwhile, relaxed its regulation of derivatives trading, not seeing a train wreck in the making.

The big problem with health care is the cost. It’s consuming more of the economy every year. It’s starting to crowd out spending for other things.

It also crowds some people out of health insurance. Fewer companies are offering health insurance to their employees. Those that do offer insurance charge more for it, either with increased premiums, fewer benefits or smaller raises.

Add the amounts spent by employers and employees on insurance premiums, plus deductibles and co-pays, and medical care will cost an average family of four in Dallas $16,849 this year, according to a survey by risk management company McQueary Henry Bowles Troy.

That’s nearly a third of an average family’s income in Dallas County ($51,780 for 2007). True, most of that medical cost ($10,000-plus) is paid by employers, so it seems invisible to patients in a doctor’s office or a hospital bed. What a company spends on employee benefits, however, is part of an employee’s total compensation. More for health insurance means less for everything else.

So who’s to blame?

Finger-pointing

President Barack Obama is blaming insurance companies. Insurers blame government for inadequate Medicare and Medicaid reimbursements to hospitals and doctors, which shifts the costs to the privately insured.

Doctors and hospitals blame insurers and government for maddening, detail-obsessed and miserly claims procedures. Some health care economists blame medical care providers for excessive treatments.

Many people who have insurance blame the uninsured. The irregular but expensive health care of the uninsured is paid by other people’s higher taxes and insurance premiums.

When the housing bubble popped, the destruction of wealth and the urgency to stop the bleeding was unlike anything since the Great Depression. People were angry. The House of Representatives initially refused a $700 billion bailout but then returned from election-recess town halls to vote for it.

What happens when Congress returns from a recess dominated by health care arguments remains to be seen. The wealth destruction is in comparatively slow motion, and the urgency is less apparent.

X Jim Landers is a columnist for The Dallas Morning News. Distributed by McClatchy-Tribune Information Services.