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“Affordability”, 2010 and the Health Overhaul
by Clark S. Judge, managing director, White House Writers Group
 
This morning’s Politico (here: http://tinyurl.com/yf8pchm ) headlines “Public Option resurfaces as an affordability issue”.  In the paper version, a bigger headline to the same story explains, “2010 Haunts Health Care Debate”.
 
You may be inclined to say, “duh.”  But though, as Politico also reports, Mr. Obama’s demand for a $900 billion cap on the planned program’s expenses came as a surprise to many Congressional Democrats, the White House move was a predictable response to intense public concern about health overhaul’s price tag.
 
Yet, to most Americans, $900 billion still looks like a big deal.   And it is, now and even more profoundly in the decades ahead.
 
In a stop last week at the Hoover Institution on the Stanford University campus in Northern California, I received a chart on Federal government budget outlays from 1795 to 2065.  It came from Hoover economist John Cogan, once President Reagan’s deputy director of the Office of Management and the budget.  Using 2005 data, it tracks government spending as a percent of GDP.
 
Here are the key points and why the “years ahead” loom so large in the health care debate:

• In 2005, spending minus Social Security and Medicare/Medicaid totaled about 12 percent of GDP.  It was expected to tick up a little over the next several years to about 14 percent, remaining flat as a proportion of the economy after 2030.
• Social Security, Medicare and Medicaid were a different story.  They were projected to double from ten percent of the economy to 20 percent, increasing the total U.S. government take in the economy to about 34 percent of GDP.  State and local government adds to the burden.
• Cogan warned, however, that this story is out of date.
• Enactment of the Obama Administration’s health takeover and other programs would jump the total federal number including Medicare, Medicaid, and Social Security up to nearly 60 percent of GDP by 2065.
• The previous peak was during World War II, when for one year Federal outlays topped 40 percent.
• We are entering, Cogan noted, “uncharted territory”.  We have never been here before.
  

Where does the road lead?  It is impossible to sustain the entrepreneurially driven economy that currently drives our growth and fuels our national dynamism with the government taking such a large portion of GDP.  We would necessarily move to a corporatist model, with the government owning or effectively directing large sectors that we now assume should be private and independent.  We are talking here about a fundamental transformation on the most profound levels of the American economy and American society.
 
In this morning’s Wall Street Journal, Arthur C. Brooks, president of the American Enterprise Institute, notes (Here: http://tinyurl.com/ykuekgv ), “The health-care debate is part of a moral struggle currently being played out over the free enterprise system…. Will we strengthen freedom, individual opportunity and enterprise?  Or will we expand the state and its power?”
 
So “affordability” is not just about budget numbers.  It is about who we Americans are… and what it means to have and pass along a free society.  These are the true issues “haunting” 2010.  Affordability is their surrogate.