LAS VEGAS – In a fireside chat at the HX360 conference, Nobel Prize-winning economist Paul Krugman said there are reasons for optimism even as the U.S. healthcare system faces serious financial challenges. In a fireside chat with HIMSS CEO Hal Wolf, Krugman said the demographic challenge is serious, “but not as serious as one would think.”
LAS VEGAS – In a fireside chat at the HX360 conference, Nobel Prize-winning economist Paul Krugman said there are reasons for optimism even as the U.S. healthcare system faces serious financial challenges.
In a fireside chat with HIMSS CEO Hal Wolf, Krugman said the demographic challenge is serious, “but not as serious as one would think.”
He said that healthcare has been absorbing about 18 percent of GDP since 2010 but that there has been a flattening of the cost curve. He believes that healthcare’s share of GDP should remain constant for at least a few years.
Wolf said that he has concerns that as baby boomers live longer and the financial burden of treating disease kicks up, the population takes on more costs.
Though the U.S. still has the highest healthcare costs in the world, there are a few options that could be used to dig out of that — any of which would be better than the current state, said Krugman, which he described with a quote from Homer Simpson: “The U.S. government is an insurance company with an army.”
To Krugman, “Medicaid looks more like the systems in other countries and is a well-established system. But if the goal was the cheapest care, we’d do something like the NHS — but I don’t see that happening in my lifetime.”
While a single-payer system is expensive, costs can be mitigated by a system that would more carefully scrutinize unnecessary elective treatments.
The Veterans Health Administration, which has been working to improve its system since the 1980s, presents a good model for how to overhaul healthcare, said Krugman. They were pioneers, the first to implement EHRs and shifted a lot of their care from hospitals to health centers. It was a precursor to the private sector.
“We have the capacity, but it would require that you have capable leadership,” said Krugman.
Krugman also explained that healthcare costs aren’t necessarily in a crisis, “but it still needs improvement.” And that means everyone is going to have to find a solution to limit costs.
“It’s not that the whole structure of healthcare is unsustainable. But it has the historical pattern of ever-rising costs that cannot continue,” he said.
Reflecting on the Dot-com bust and the real estate crisis, Krugman said we were able to dig out of those situations, “but right now, we’re still reeling from what feels like a permanent hangover from the last crisis. And it’s not at all clear that we resolved the issues that brought us there in the first place.”
Though the country has low interest rates, the private sector debt is still high, said Krugman. But he’s less worried about that,than the fact that “when these crises hit, no one sees it coming.” We’re all set up to do it again one of these days.”
Adding to the worry is America’s deficit. “When the next crisis comes along, it’s going to increase debt,” he said.
Krugman called the latest tax cuts passed by Congress a really bad policy that could make things much worse if a trade war breaks out. What’s worse is that the tax cuts were “not designed for anything really. There were a bunch of people that wanted a tax cut, and they were obliged to that.”
That might make our current situation worse when combined with the trade wars. Calling it a “really bad policy,” he did specify that it doesn’t necessarily mean “tremendous risk.” It does mean, however, Krugman said he checks Twitter “every 40 minutes to see if the trade war has broken out.”
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