The U.S. military keeps searching the horizon for a peer competitor, the challenger that must be taken seriously. Is it China? What about an oil rich and resurgent Russia?
But the threat that is most likely to hobble U.S. military capabilities is not a peer competitor, rather it is health care. In the 1950s, health care was 4 percent of gross domestic product — about the same percentage that defense spending now holds. Defense back then (during the Korean War) was around 16 percent of GDP. The two lines crossed in the 1970s with health consuming an increasing share of GDP and defense a declining share. Neither the Reagan buildup nor the war on terrorism after 9/11 changed things much. Health care reached the 16 percent mark after the millennium. It is now in striking distance, absorbing 18 percent of an admittedly battered GDP.
The defense spending squeeze is on and will become more constricted by health care reform. It is not apples and oranges. About half of the United States’ health care costs appear on the federal government’s budget, which directly affects revenues and expenditures. European nations plead poverty when it comes to funding their militaries in large part because of the squeeze of social spending (including health care). They spend a smaller, though rising, share of their GDPs on health than does the United States, but more of that spending is direct government expenditure.
Health reform is justified based on the need for controlling spending, and includes a promise that efficiency, regulatory, and patient incentive changes will cover the increases in costs that will come from covering more of the uninsured. For Democrats, closing the gap between the insured and uninsured and giving America a truly national health care insurance system has been a goal whose fulfillment has eluded their best efforts since the New Deal. Presidents Truman, Johnson, Carter and Clinton all tried. The late senator Ted Kennedy had made it a career quest. With the Democrats controlling the executive and legislative branches of government by large margins, the stars seemed aligned for President Obama to be the one to deliver the holiest of political promises. The outcome of the recent Senate election in Massachusetts may have derailed Obama’s opportunity, but not the growing burden that health care expenditures place on government and society.
Health care cost control is an illusion. No one truly can make the health care system efficient. For many illnesses, nobody knows what works and what doesn’t. An aging population assures more medical expenditures.
The demand for medical research and technology is insatiable. Rationing is how costs are controlled. But Americans are unused to rationing, except for the uninsured. Try denying someone care and be prepared to be run over. The Health Maintenance Organizations were invented to do just that. Congress passed legislation encouraging their growth, but as soon as they attempted real cost control — rationing — laws were passed that restricted their ability to do so. Today, HMOs are hated by the public more than car salesmen, members of Congress, or George W. Bush. The hostile reception to the recent panel report that recommended reducing mammogram screening is proof positive.
If heath care can’t be made more efficient and if access to health care can’t be limited, the only alternative is more revenue. Perhaps taxes will be raised. Some will be increased, but not likely enough to cover rising health expenditures. Democrats promise to only tax the rich. But, as the rich know, tax laws have loopholes. Republicans have run for years on a tax-cutting platform. The way to get revenue is to tax the middle class who are many and who are not as fleet of foot as the rich. But both Republicans and Democrats constantly say the middle class is the victim of everything, and surely overtaxed. Running up the deficit is an alternative, but the wars, the stimulus plan and the bailouts have already done that. The cries for controlling spending are already being heard.
The revenue for more health care exists in the form of defense expenditures, which have doubled since 9/11. The billions needed for reforming health will likely come, in one way or another, from cuts in defense spending. Personnel reductions will be hard to make because of the burdens that Iraq and Afghanistan deployments place on U.S. forces. Fewer and fewer aircraft and ships will be bought. There will also be less training and more restrictions on operations with and for allies. America has a powerful military that will take a while to unravel, but unravel it will. The nation’s defense budget is about to tangle with a really dangerous adversary.