Published Jul 2 2009 by Health after Oil
Archived Jul 2 2009

Debt, oil and healthcare reform

by Dan Bednarz, PhD

Congressman John Conyers recently quipped that most healthcare reform proposals circulating in Washington are a “cacophony of crap” that evade acknowledging medical care as a human right. With Canada across the Detroit River from his impoverished congressional district he knows firsthand how the Canadian health system bests its American counterpart. It’s cheaper by half; covers everyone; citizens don’t worry about bankruptcy –they merely get treatment as needed; and the politician who brought it into existence four decades ago, Tommy Douglas, was named the most important Canadian of all time (Wayne Gretzky finished second).

Ironically, Conyers’ National Health Insurance Act (HR 676) as currently envisioned, shares a premise with those he mocks. All sides of the reform debate presuppose a return to economic growth. It follows that none confronts the possibility that our massive debt and economic woes are not temporary but the beginning of an epochal transition to a reduced level of social complexity and economic activity, which translates into a lower standard of material living that cannot support the present structure of medicine.

Indeed, most of the reformers who claim healthcare is a human right see discussions about fiscal limits as a stealth way to kill reform. And those willing only to tinker with the financing of system assume a return to economic growth will allow healthcare to continue more or less as is. With its cost at about $2 trillion in 2008 and projected to climb to $4 trillion by 2015, attempting to maintain the current system will result in, in my view, one of two unacceptable outcomes: 1) healthcare only for the wealthy or 2) a crash of the system. There is a third way still possible, and it builds on Conyers’ plan with an acknowledgement that our present “Ferrari-Jalopy” (a nod to Congressman Roscoe Bartlett for this metaphor) health system is no longer viable. We should build a Honda Civic health system for all; it’s the best realistic chance we have.

From this vantage point, the ongoing healthcare debate in Washington is anachronistic. A future oriented analysis has to include two driving forces: first, the long-term consequences of the fiscal/economic crisis and, second, the arrival of geological peak oil, which is a symptom of the Bottleneck of ecological conditions (climate change, fresh water scarcity, population pressures, dying oceans, etc.) humanity must pass through.

Most Americans do not yet appreciate how dire our debt problems have become, in part because the mainstream media avoid the issue or characterize it as a bunch of addled and angry “teabaggers.” Still, people intuitively understand that massive debt is destabilizing, although many in the center and on the left confuse our current situation with a need for deficit-financed growth. It’s one thing for a government to borrow and spend to generate new taxes, useful infrastructure and encourage new economic activity. This can –and there is argument about this- create wealth and allow the debt to be paid off. It’s quite another to “borrow” from the Social Security Trust Fund and have the Federal Reserve in essence print money to fund further deficits, especially when it goes to financial institutions that–in my view- do not create wealth but cannibalize it.

What is omitted from this economic stimulus line of reasoning is 1) you can’t cure a debt problem by taking on more and more debt and, 2) no consideration is given to the availability of natural resources, in this case the peak of light sweet crude oil extraction makes this “stimulus” strategy not just ineffective but counter-indicated. I believe we are attempting to prime (stimulate) a well that’s going dry with borrowed water (money).

Let me digress to explain the consequences of a peak in worldwide oil extraction. Peak oil “direct” argues that the out of control financial “debt machine” was toppled because as oil production hit a plateau in May 2005 this imposed a limitation that eventually inhibited growth and wealth creation. This plateau triggered the subprime meltdown, $147.00 per barrel oil, and, overall, the exposure of enormous “systemic” debt that was no longer serviceable because real growth was constrained. Peak oil “indirect” holds that whatever caused the fiscal/economic meltdown of 2007-2008 the fact of geological peak oil –now almost confirmed- interdicts any return to the old pattern of economic growth. Either way, this makes peak oil pretty important to the socioeconomic panorama, including one of our most expensive institutions, healthcare. As we see, oil is now around $70.00 during the largest economic contraction since the Great Depression on the mere expectation that a recovery might begin.

I suggest, therefore, that healthcare reform be discussed in terms of fiscal and ecological realities, not shibboleths like this recently proffered by David Brooks. “There is the liberal way in which the government takes over … and decides who gets what. And then there is the conservative way, in which cost-conscious consumers make choices in the context of a competitive marketplace.”

But who in the healthcare reform debate makes this big picture connection between debt, oil and healthcare reform? The closest discussion I’ve heard is when Bill Moyers told David Himmelstein, of Physicians for a National Health Program, a few weeks ago, “I don’t want … you to get out of here without wrestling with this very fundamental question. We’re going to have to set limits, are we not?” (Aside: As a regular viewer of his PBS show, I note that Moyers has not forthrightly addressed ecological constraints on economic growth; so this elliptical question will have to do. Moyers has, to his credit, had Kevin Phillips on his show to elucidate our fiscal plight –and Phillips acknowledges the potential of peak oil and other Bottleneck conditions to “change the game”).

Himmelstein replied:

Ten years from now, with my colleague’s inventiveness in figuring out expensive new things to do [referring to medicine’s fascination with expensive and esoteric technology] we’re going to have to come to grips with that. But right now, we could reform this health care system. Do everything that’s helpful for every American for what we’re now spending.

Himmelstein presumes homeostasis when in fact our socioeconomic foundation is rupturing. Since he’s worked tirelessly on universal healthcare and practiced and taught medicine for many years I’m virtually certain he is correct in the sense that there’s a lot of fat to trim (I have countless anecdotes from doctors and nurses about excesses and waste). But this does not obviate our dire fiscal/economic state and the arrival of peak oil, the driving forces now unfolding and shrinking his ten-year time line.

Granted, the “public option” being debated in Congress –if defined properly- might bring temporary financial and psychological relief to millions of beleaguered and desperate citizens; but even this short-term possibility is unsustainable.

This brings up the issue of logical incrementalism, or the “science of muddling through.” Many healthcare analysts, like Himmelstein, assume societal homeostasis and find it easy to conclude that we are muddling our way to universal coverage. From this perspective the public option appears a significant incremental step. Given debt and peak oil, I think the time for incrementalism is past. As I write, California and several other states have budgets severely out of balance. They are facing devil’s choices that only a few years ago –when Alan Greenspan was “The Maestro” of the economy and President Bush was marketing an “Ownership Society” featuring private investment accounts for Social Security contributions- would have seemed incomprehensible. But here we are experiencing the limits to growth.

Dan Bednarz, Ph.D., is a former Associate Director, Center for Public Health Practice, University of Pittsburgh Graduate School of Public Health (until 2005) and is now President of Energy & Health Care Consultants.

~~~~~~~~~~~~~~~ Editorial Notes ~~~~~~~~~~~~~~~~~~~

Dan Bednarz is a frequent contributor about health issues to Energy Bulletin.

In discussing what will be affordable, certain massive expenditures are seldom discussed: wars and military spending. I'm not sure that spending on drug enforcement and prisons is more important than healthcare either. -BA

Original article available here