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Haverford College
Department of Economics

Alums Discuss Economic Perspectives on the Health Care Reform Debate

Unraveling the source behind excessive and growing health care costs in the United States is one of the missions of economists currently analyzing health care reform and determining just how the five bills currently facing Congress will affect these costs is especially pressing. Two Haverford Economics alums discussed this complex debate Wednesday evening, October 21st, in front of a crowded Sharpless Auditorium.

Gerard Anderson '73 (left) and Timothy Taylor '82

Gerard Anderson ’73 professor of health policy and management at Johns Hopkins University Bloomberg School Public Health has held various positions in the Office of the Secretary, U.S. Department of Health and Human Services where he helped to develop Medicare prospective payment legislation. He and Journal of Economic Perspectives Managing Editor Timothy Taylor ’82 began the panel with a short history of health care programs in the United States and abroad and then segued into the challenges facing the current health care system and how the proposed bills facing congress may change policies and practices in the industry. The Department of Economics and the Center for Peace and Global Citizenship sponsored the talk and Dan Sacks ’08, doctoral student in Applied Economics at the Wharton School, served as the moderator.

Taylor reported that there are currently 46 million uninsured people in America, with the vast majority under 54 years of age. Most do have jobs and are not ‘poor’. Of the 46 million, 10 million are not U.S. citizens. Anderson pointed out that health care costs are currently 18% of the U.S. GDP, a percent that is rapidly rising. However the portion of GDP paying for health care is much lower in other developed countries, many of which have some version of universal care. This cross- country gap in costs needs to be better understood as economists seek to “bend the curve” of health care costs.

Anderson underlined the complexity of health care reform by noting that the 5 bills facing congress (3 in the House and 2 in the Senate) are each 1000 pages with “no one possibly understanding all the provisions in the various bills”. How the providers, the consumers, and the uninsured respond to legislative changes will impact overall coverage, overall costs, and the distribution of benefits and costs across different constituencies. Because health care reform has not yet been tackled in this country, models theorizing these responses are being presented to Congress. Anderson is skeptical that any of these bills will contain the rising costs because much of the change is incremental and in order to get physicians, the hospital industry, the managed care industry, and pharmaceuticals on board with the health care reform, compromises had to be promised.

However Anderson foresees that Congress will hand over the management of Medicare, the health care plan for elderly citizens, to fifteen senior elders with expertise in health management. In addition, Medicaid, the health care program for the poor and needy, will cover more poor people by expanding income thresholds. Finally individuals and self-employed persons will be able to access lower premiums through the exchange program, a “one-stop-shop” concept based on the Massachusetts prototype.

In analyzing costs across countries, the panelists agreed that prices paid for medical services are higher in the US and high cost medical technology is more pervasive. But cutting costs in the US will not be easy. Anderson thoughtfully pointed out that issues that the public focus on are not always in alignment with what “policy experts” consider to be most critical, and because health care is an emotional commodity, convincing the public to curtail spending at the expense of ‘saving a life’ requires delicate negotiating.

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Download and view the full powerpoint presentations from the symposium