Costs vs. Coverage: $1.9 trillion vs. 47 million people

47 million. It’s the number constantly tossed around by supporters of health care reform. It's the number of people without any health insurance and numerous more who are underinsured. It's a significant number—15 percent of the entire U.S. population—but is 47 million the whole story? 

Coverage is only one aspect of the two-headed monster we call health care reform. The other? Cost. Health care costs make up 16 percent of the total U.S. economic output, or $1.9 trillion dollars according to the latest numbers available from the Bureau of Economic Analysis. That makes it the fourth largest “economy” in the world behind the United States, Japan and China. 

No other country comes close to spending as much as the United States does on health care.  

Reports on the rising insurance premiums that plague average Americans are commonplace. Prescription drug costs have become the demon and big pharmaceutical companies the villain—greedy corporations gouging consumers to make record profits. While a serious problem, it is only one problem in a completely broken system. What the real problem is depends on whom you ask.  

According to economist Dan Sullivan, it's the fundamental belief of American consumer culture: bigger, newer, more expensive is always better. We are seduced by the shiny, the new—without ever really knowing whether shiny and new is better than the proven and reliable. Those in the health care business abuse this belief. They strive for something else very American—record profits.  

Enter the drug lobby, the device lobby and the medical professional lobby. They have a specific strategy to convince the public to demand newer, bigger and better Sullivan said. One could spend years studying the intricacies of health care costs—from drug pricing to medical device costs, to the attempts by doctors to protect themselves from malpractice suits to cost and efficacy. 

At this point, the details aren’t so important. What’s missing from the discussion is the understanding that simply getting those 47 million fully covered will not solve the problem—it will lead to a cost explosion if costs are not reigned in. The solution for one does not necessarily follow the other.  

“If Obama gets the coverage passed without addressing costs, it might break the system to the point they will have to go in and fix it,” Sullivan said. 

Attempting to do both at the same time helped tank Clinton's plan in the early '90s, Sullivan said. What isn't clear about Obama's plan is who's going to pay for it. His current plan is to expand coverage to shift costs from private insurers—meaning those they insure—to the government—meaning American taxpayers. 

“Their plan is to shift costs from one pocket to a different pocket,” Sullivan said. “It's not clear that's a real good shift.”