Flying Pink Unicorns

The most important issue facing the world.

I have come to believe that with the possible exception of global warming, the single greatest issue that the world's governments face is health care costs in the United States. I realize that sounds preposterous, but bear with me. I think I can make the case.

First some big picture background. Among the other startling changes in the world which have taken place since the end of World War II in 1945 is the absolutely unprecedented aging of the world. That is, the average age of a human being has shot up very dramatically in the entire rich world, to totally unprecedented levels. This is both because people are living much longer than ever before and, in a related phenomenon, the birth rate in the rich world has plummeted. This has, to say the least, been heavily commented on in recent years.

The average age of a human being has also gone up dramatically in most of the non-rich world, but this post focuses on the rich world (not least because I know a whole lot more about it).

In the rich world, which I am crudely defining as the US, Canada, Japan, all of Western Europe (even Greece), and a select few other countries which share rich world characteristics, specifically Taiwan, Hong Kong, Singapore, South Korea and Israel (these last two are two of the post-World War II world's most inspiring, unbelievable success stories-- I really should write a post about that someday). At the end of the Korean war South Korea was among the poorest countries on earth-- that was 1952. In 2009, South Korea has a per capita GDP very close to that of Italy! Its per capita GDP is about 59% that of the United States, and about 84% that of France, a staggering figure given the complete abject poverty it faced in 1952, the existence of a nutty, implacably hostile regime bordering it, etc. In raw #s, the United States' per capita GDP is about $46,000, and South Korea's is about $28,000.

www.wikipedia.org/wiki/list_of_countries_by_GDP_(PPP)_per_capita.

The entire rich world as I've defined it has one particular hugely significant demographic fact: the population is aging quite rapidly. In a select few countries, notably Japan and Italy, the number of people is actually falling for the first time since 1946, as more deaths are recorded than births. There are a series of reasons for this monster demographic shift which have been the subject of many hundreds of books. In the US, this trend is very much in place. However, our average age is increasing less rapidly than in any other medium sized or larger rich country because we have higher immigration than most and a higher birth rate than most. Nevertheless, this trend is very much in place here in the US.

One other "minor" note on demographics before I move on. China is not yet rich, though if you visited the big cities you could be forgiven for thinking otherwise. But due to the infamous one-child policy, and mass industrialization in the last 30 years, China's demographics have moved hugely towards those of the rich world.

Put simply, as I recall it, and I have not researched this point, the entire US will have the age profile Florida does now in circa 30 years. Imagine that for a second-- a US the same age as Florida. WOW! Also in around 30 years, China will have the same average age as the US does now. In the lifetime of a single person, China's demographics will have swung from those of a dirt-poor country to those of a rich country! In any event, the demographic changes since 1945 have been utterly astounding, truly amazing!

And old news. Ok, flyingpinkunicorns, shut up about demographics and get to the point! As people get older their health care costs rise. This is something less than a revelation.

As you've heard a lot in the last year unless you've lived on the moon, health care costs in the US are very VERY VERY high, per person. In fact, these costs are almost exactly TWICE the costs of France, per person. (Very slightly more, based on the latest figures). France is a large wealthy country with a health care system that works quite well thank you very much. I'm not picking some small, obscure, quirky country that isn't remotely similar to the US. France is also not an outlier- Japan spends less per person, Germany about the same. Now the US is richer than France, so perhaps somewhat higher costs per person might make sense. We're also world beating world leaders in the most expensive forms of health care, which might also justifiably drive per person costs up somewhat. However, we have about 310 million people and France has about 65 million, so perhaps maybe we should have some better economies of scale. Anyway, we spend slightly more than twice per person what France does on health care each year, and the gap between France and the US grows inexorably each and every year. This difference is just HUGE. We spend something like a TRILLION DOLLARS more every year on health care as a nation than we would if we spent what France did per person. A trillion, for those not used to these sorts of numbers is a million million!!! That's every year. Our entire GDP is about $13 trillion. So 1 out of every 13 dollars worth of value that Americans produce each year is spent on additional spending on health care spending above and beyond what we'd spend if we spent like France. Our health outcomes are worse than France, but that's beyond the scope of this post.

Worse, as I said, the gap between what we and France (and every other rich country) spends per person grows every year, and not by a little. In just 10 years, by my back of the envelope calculations, we'll spend about 1.8 TRILLION DOLLARS more per year as a country than we would if we spent what France does per person. This is insane, and unsustainable.

I think its actually crystal clear that with the possible exception of global warming, health care costs in the US are the biggest issue our government faces. Health care is everything, in my not-humble opinion! But the most significant issue in the entire world????

Yes, the entire world. As I said above, every rich country (and most emphatically China too!) has the same demographics, with slight differences in timing (large differences in the case of China). So every rich country is facing the same explosion in health care costs that we do. Its as predictable as the sun rising in the east tomorrow.

This next point may seem quaint, even silly, but I believe it to be quite real. The rich world looks to the US as an example! Now in recent years our politics have become quite silly, and thus no one is really looking at us except as a model of how NOT to do things. But since every rich country faces precisely the same problem in one fashion or another, a significant US effort to tackle health care costs would be watched very closely in Berlin, Tokyo, London, Seoul, etc. And yes, Paris too. Conversely, if after all the effort the last year, we fail to tackle the issue, that failure will be noted in those same capitals. After all, their politicians, elected all, (Beijing a huge and notable exception) face the same electoral pressures that ours do. If the super-rich huge US can't tackle its HUGE increases in health care spending, how can we in modest little Rome (or wherever) hope to take it on? I don't want to overstate this, but a successful US effort will redound positively in various world capitals, while an abject failure will redound negatively.

And make no mistake about it, health care costs are huge, huge issues in nearly every (really every) rich country. Follow any election anywhere in the rich world if you don't believe me. One reason the Tories are about to take back power in the UK is that the UK public believes they can now be trusted with the much loved, (and in some cases much loathed) and much abused National Health Service ("NHS"). (In order to give you an idea of how popular the NHS is in the UK, a politician running to abolish the National Health Service in the UK would have about as much success as one running in the US on a platform of abolishing Social Security and Medicare-- not much at all!). Canada's Medicare system (the identical name is a coincidence) is a huge political issue. It has had huge problems in recent years, many of which have been worked on and partially solved. Ditto the NHS in the UK. As Western Europe ages (faster than the US), managing the graceful decline of the welfare state just as more people need it is highly likely to be one of the defining issues in elections there for decades. It is difficult to overstate the critical importance of health care costs and delivery to the future of that portion of humanity that lives in the rich world.

Everyone who studies these things knows that the rich country with the most out of control health care costs is, by far, the US. Because of the huge problems in our health care system, the huge effort by Obama and the democrats to take it on over the last year, and the still out sized size and importance of the US, the outcome of our health care battle will be felt and heard around the rich world for years, perhaps decades. That's why I consider health care the most important issue facing the world, as well as the defining issue of our time in the United States.

Damn it, Congress, PASS THE SENATE BILL. Now. Then fix it as best you can during reconciliation. Then, after we lose seats in 2010, improve it in 2011. Then, after Obama rides my long-predicted economic expansion to a 40 odd state reelection landslide in 2012, improve it some more. Then improve it some more. This is a generational project. It took generations of bad policy to get in the hole we're in, now start the process of digging us out!