In my view: The U.S. health care model falls short, fails to contain costs

Jay Evensen writes "between 1980 and 2011, the spending for each person in poverty jumped from $4,300 to $13,000. And for what? Do politicians ever stop to examine where this spending has gotten us" ("War on poverty has been an abject failure," Editorial, July 15)? I will attempt to provide an answer to this question from the perspective of a budget manager with the Utah Department of Health, which manages the state Medicaid program.

Medicaid is by far the single largest federal program for the poor and probably makes up the majority of the $13,000 per person spending above. Every state in the union has the option to participate in the Medicaid program with a 70/30, federal/state, funding participation ratio for Utah. One needs to be a very poor adult with children to qualify for this program with little income and no assets. The state can control much of the cost by determining who qualifies and what optional services they will cover under the State Medicaid Plan.

Since 1980, the Medicaid program has been under the control of a very conservative Republican legislature. In spite of this most conservative political philosophy, the program has expanded from 52,459 clients in 1980 to 232,853 clients in 2011 — a 4.5-fold increase. There has been a dramatic increase of 73,000 clients since the 2008 Great Recession. However, Medicaid service expenditures have increased from $88 million in 1980 to $1.869 billion in 2011 — a 21.4-fold increase.

The exceptional rise in expenditures can be attributed not to the war on poverty programs in Washington but to uncontrolled, inflationary costs in the medical industry as a whole, which have averaged over 10 percent per year over the same period of time. Total medical costs in the United States have grown from about 6 percent of GDP to 18 percent of GDP in the same time span.

When we compare the U.S. with other countries in terms of cost of care vs. average life expectancy, our costs are two to three times per capita compared to other developed countries with national health care systems, with better health outcomes. The big difference is our inability to control health care cost in the U.S.

Clearly the U.S. model for financing and providing care falls way short of what other countries are able to deliver. In America, over half of the health care expenditures in the U.S. are paid by taxpayers for Medicare, Medicaid, CHIP, VA, active military and civilian public employees. But since our costs are two to three times as high relative to other countries, we already pay as much in taxes as the countries with national health care systems that provide universal coverage. From a conservative perspective, the socialist countries seem to have a superior model for cost control and delivery of care.

The political right is unhappy with "Obamacare" for expanding government health care to the uninsured. The political left is equally unhappy for its failure to provide universal coverage at an affordable price. The fundamental problem is high and uncontrolled cost, and no political party is discussing a workable solution to the problem.

The Brookings Institution fails to do a proper analysis in the root cause of the increase in welfare per capita expenditures for the poor. The war on poverty will be a bottomless pit unless we can control runaway health care cost.

David E. Rabiger is a budget manager with the Utah Department of Health and a certified public accountant.