Fixing healthcare costs needs to be in the number one priority in America. According to the Bush administration estimate, the next president will inherit a record budget deficit of $482 billion, which dwarfs the prior record deficit of $413 billion set in 2004 (also under President Bush). As far as overall debt, the Treasury Department helpfully keeps an ongoing calculator of public debt at http://www.treasurydirect.gov/NP/BPDLogin?application=np, which at the time of writing is $9,556,571,346,593.61. A figure this large seems quite unimaginable, but before figuring out how to pay down the debt, we need to return out country to a balanced budget. To start, we need to examine the budget.

Over 20% of the 2008 budget of $2.9 trillion funding goes to Medicare and Medicaid (this $2.9 trillion dollar excludes the wars in Iraq and Afghanistan which are considered 'off budget'). The $595 billion for Medicare and Medicaid ranks second, just below Social Security's $608 billion and just above the $491 billion for the Department of Defense. Over 60% of the budget ($1.788 trillion) accounts for mandatory spending including Social Security, Medicare, Medicaid, unemployment, and interest on the national debt. Discretionary spending accounts for the remaining $1.112 trillion and is led by the defense and defense related spending. Even Libertarians agree that funding of a common defense is both allowed and required under the Constitution - so let's accept that defense spending is necessary (one could certain eliminate duplicative and wasteful programs such as the multiple next generation of jet fighters that are in the pipeline, but we'll save that for another day). Politicians who claim to balance the budget, if we can't cut non-discretionary items and military, only have total program costs of $452 billion that can be targeted for cuts. These include Health and Human Services, Education, the State Department, HUD, Department of Justice, Agriculture, Veterans Affairs, Department of Transportation, NASA, and Dept of Labor among the other smaller program funding. Unfortunately, these programs only account for 15% of the total budget and even if they are filled with pork, as critics proclaim, they do perform some useful services that constituents would not want eliminated. Even squeezing a 10% savings would only result in $45 billion in savings; 20% savings results in $90 billion in savings, and even if these programs were all eliminated entirely, it still wouldn't make up for a record $482 billion deficit.

Certainly we should re-examine the discretionary spending line items and I don't want to discount the importance of eliminating wasteful spending no matter where it lies, however, there is one area that could provide a tremendous and immediate difference in righting America's fiscal ship: Medicare and Medicaid. We've already written an essay on how we might start fixing our medical system (see our article here). In that essay, we see that based on life longevity, birth rate, neonatal care, doctor to patient ratio, hospital bed to patient ratio and other commonly used metrics to measure a country's success in its healthcare, America is far from number one. There is one category that America is number one: cost. Using just the Organization for Economic Cooperation and Development countries (OECD - the 30 most industrial nations) as a peer group, we spend 15.3% of our GDP, the largest of any OECD member and much greater than the OECD average of 3.0%. Per capita we average $7,110 per American, 20% higher than the next highest OECD state: Luxembourg, and twice as much as the average OECD member. Hypothetically, should we manage to reduce our healthcare costs per capita to Luxembourg's, we would save $119 billion dollars. Should we actually find a way to reduce our per capita healthcare expenditure to the OECD average, we could save almost $300 billion. If we reached the holy grail of reducing our healthcare expenditure to the OECD average of 3.0% of GDP we’d save $478 billion. To put this in perspective, Although we are a long way from paying down our debt, even if the figure for savings for Medicare and Medicaid was somewhere between $119 billion and $478 billion, we can see that we are within manageable distance of balancing the budget. With some luck, a turnaround in the economy and some intelligent cuts across the board, we could return to the Clintonian years of budget surpluses and begin reducing our overall debt.

The United States is the only industrialized nation that doesn't provide universal healthcare which provides the same level of coverage regardless of circumstances. Publicly funded health care systems models are usually financed through taxation or via compulsory social health insurance. The details for these models are numerous and they vary from government controlled rates for private practitioners to state run programs. One fact stands relatively consistent: these programs provide minimal level of standard of government provided healthcare with the option of additional private care. Those who wish and can afford additional insurance provides for (among other things) private hospital rooms and cosmetic surgery.

Clearly, just about any model that the US chooses would provide better healthcare per dollar spent than what we currently have. We have the worst of all worlds: a free market economy for the doctors, hospitals, and insurance companies, and a socialized requirement to treat all those who show up. (Apparently my idea that the compassionate conservatives platform should include putting up tents in parking lots of hospitals to allow those injured without insurance to die with dignity didn't get included). Without managed care, which takes advantage of low hanging fruit of preventive medicine, we find ourselves paying exorbitantly higher premiums. In a certain irony, conservatives that argue that healthcare should be privatized and not socialized are seeing the opposite happen. By having a privatized system, rather having each person pay their own way, we are seeing a distribution of wealth from the rich to the poor. Rather than having the 47 million uninsured Americans paying their way, those with coverage (safely assumed to be the richer 80% of Americans) are covering the costs of the uninsured through higher premiums and taxes.

We need to do something - anything - to make our healthcare system productive. Conservatives need not fear that the scarce medical resources will no longer be available to those with 'extra insurance', nor should doctors worry that any savings will come purely at their expense (after all free market economies ensure that), nor should radical liberals worry that the uninsured will fall through the cracks. The time has come for universal healthcare coverage. Now, if only the radical right will realize it is really in their best interests.