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56
MAR / APR 2013 
I 
Healthcare Journal of New Orleans  
The (Fiscal) Elephant
in the Room
Anyone paying evenminimal attention to the never-end-
ing news coverage of the “fiscal cliff” over the past few
months would have noticed that the prime culprit in our
nation’s deficit woes is (you guessed it): HEALTHCARE!
More precisely: Government-run healthcare. According
to some, government itself can do nothing right and only
knows how to waste taxpayer money. At least that’s the
message from the right side of the political spectrum.
in the economy as a whole.
Healthcare is one of the most vibrant
sectors of the U.S. economy. An increasing
population provides growing numbers of
people who are elderly, obese, diabetic or
have numerous other diseases and condi-
tions, thereby assuring a lucrative custom-
er base for the healthcare industry. While
most medical providers entered the field to
make a contribution toward helping those
who need care, we can’t escape the fact that
the profit motive is alive and well and not
always beneficial.
And that brings us to “the elephant in
the room,” meaning that we (or more accu-
rately, our policymakers) are aware of the
healthcare budget problem but pretend it
doesn’t exist or refuse to do anything about
it. What most of us don’t realize is that the
elephant is growing and could conceivably
overshadow the entire U.S. economy.
TheAtlantic
recently published an article
explaining a Congressional Budget Office
report from June 2012 that projects feder-
al spending and deficits out to 2087. These
projections are measured as a percentage
of economic activity or Gross Domestic
Product (GDP) defined as the market value
of all goods and services produced within
a country including government spending.
CBOprojects the deficit will shrink to 5 per-
cent of GDP (from 10 percent in 2009), but
then will begin a relentless climb upward.
What is startling is total federal spend-
ing (including deficit spending plus health-
care, social security, defense, etc.) will
climb from about 23 percent of GDP cur-
rently to around 77 percent by 2087, more
than three-quarters of domestic economic
activity.
Furthermore, all other government
spending (Social Security, Defense, educa-
tion, etc.) will account for only 11 percent
of GDP in 2087. Subtract that from total
spending and that still leaves just health-
care (Medicare, Medicaid, etc.) and deficit
spending combined at about 66 percent of
I’m not sympathetic to that viewpoint, but
it’s just about the only perspective on gov-
ernment that is heard these days. Those
who dare to speak their minds in favor
of
more
government intervention in our
healthcare system are likely to be
flogged in public, verbally or
otherwise.
How does healthcare
spending figure into
the fiscal woes of the
United States, the
wealthiest nation in
the history of the
world? The “health-
care problem” did
not arrive overnight.
It has been building
up over the past three
or four decades with
medical inflation rates
typically two or three times
as high as general inflation
policy