Wednesday, March 27, 2013

Dean Baker and Economic Realities

I don't think I've mentioned economist Dean Baker on the blog before. I've been a fan of his since he spoke locally at a Jobs Now! Coalition event about 10 years ago. His appearance last month on Up with Chris Hayes, along with Paul Krugman, was one of the best moments I've seen in recent television.

Baker produces a constant stream of reasoned, coherent critiques of what passes for economic journalism and commentary in the Washington Post and New York Times. Honestly, there are so many of them that I can't keep up, but there was one this morning that grabbed my attention.

In it, he takes on NPR Planet Money's recent series about the increase in Social Security disability claims. In light of Ezra Klein's 21 graphs that show the incredibly high amount Americans pay for health care compared to the rest of the world, Baker writes, the amount spent on disability coverage is nothing. Emphasis has been added by me:
While the cost of the disability program has increased due to the economic collapse, once the economy recovers it is projected to cost less than 0.9 percent of GDP, a bit more than one tenth of the excess cost of our health care system. In fact the entire cost of the combined Social Security retirement and disability program are projected to peak at under 6.4 percent of GDP in the mid 2030s, less than 80 percent of the excess cost of the U.S. health care system. NPR has no problem pronouncing the cost of the disability program as unaffordable, implying to its listeners that it must be changed, but it doesn't make the same pronouncements about the U.S. health system.

The failure of the media and politicians to focus anywhere near as much attention on the excess cost of the health care system as they do on the cost of programs that benefit low and middle income people is especially striking since one of the obvious ways to reduce costs is to simply take advantage of the lower costs in other systems. (Yes, it would make more sense to fix our health care system, but trade is a hell of a lot simpler.)

Yet, the media and politicians, including those who talk about "free trade" as a god equivalent, never mention health care as an item that should be subject to trade. As Klein's charts show, there are enormous potential savings from allowing people to have major medical procedures in other countries, from allowing seniors to use Medicare to buy into other countries' health care systems and of course in bringing in much lower paid doctors from other countries.

But the media and politicians don't have these items on their agenda. Instead they produce lengthy pieces telling us that we can't afford to provide insurance to people with disabilities that keep them from working. Did I mention that rich and powerful interest groups make huge amounts of money from this waste?
I have to repeat that one statement:

Social Security -- including both retirement and disability -- will peak in the mid-2030s at 6.5 percent of GDP, and that will be less than 80 percent of just the excess costs in the U.S. health care system.

Financial interests surely have something to do with the fact that we never hear about this from the media, but it's also an example of status quo bias, as described in a nice op-ed by philosopher Sarah Conly in this morning's Star Tribune. The media is just as inured to the status quo as anyone else.

That's why we need Dean Baker to keep pulling our coats about this reality and lots of others.


An earlier post about Social Security disability

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