Health Care Dysfunction Pushing Disability Program Costs Up

Mathematica Policy Research has a new study out looking at federal spending on working-age people with disabilities that confirms, once again, how fundamental problems in the health care system are to the overall budget. You’ll see that real spending in this area is rising at a likely unsustainable rate:

But that’s not because some striking policy change has made benefits wildly more generous. There’s just a hefty health care component to it:

My takeaway from this is that it once again underscores the need for systematic solutions. The tendency instead is to look for cost-shifting. People look at Medicare costs and say “let’s make patients bear more of the load” or “let’s reduce the number of people who are eligible.” They look at Medicaid costs and say “let’s cover fewer services.” They look at the cost of providing health care benefits to state and local employees and say we need to reduce their compensation. But this exact same problem keeps popping up everywhere. Defense Department spending on health care services is rising at an unsustainable rate. Federal disability spending is rising at an unsustainable rate. But if you look at it, the more statist programs actually do a better job than the private sector of containing costs.

Meanwhile, over in the totally private swathe of the economy where workers are employed by private firms who buy them insurance on the private market health care costs are increasing so fast that they’re eating up all possible compensation gains. You can save the government money by shifting even more costs onto the shoulders of employers or families but that’s just going to crush the economy even harder. We need to actually tackle the underlying drivers — high prices, and poor coordination of care.