An Illustration of why we need an overhaul of national health care policy

Adapted from an email I sent to a friend yesterday:

I’m in a class this semester called “Writing and Reporting on Politics and Policy.” The thrust of the class is that each of us has picked a beat to cover for the semester, and mine is the city government of my hometown: Newton, MA.

Here’s the most interesting thing I’ve found: The city's costs have been increasing and will continue increasing at about 5.5% per year, and its revenues have been increasing at about 3.5% per year. Municipalities in MA are prohibited from having deficits, so they've kept the budget balanced by cutting city staff, deferring needed capital maintenance and investment, and not funding long-term pension liabilities. As a result, the city has a skeleton crew in city hall, a $300 million backlog of capital expenditure (ie roads and schools and fire-stations) and a $400 million unfunded pension liability. If the city were to start making incremental, responsible investment in capital and pension fund, there would be cumulative deficits of $174 million over the next 5 years, on a budget of $262 million for this fiscal year.

Here's the punchline: It’s all health care. The whole structural gap - growth in uses exceeding growth in sources - comes from health care. The city's health care costs have grown at 9.4% per year for the past 10 years. Together with the health care portion of pension benefits, it now makes up 20% of the city budget. If the cost of health care had grown at the same rate as revenues over that 10-year period, the city wouldn't have this structural gap at all. The increasing cost of health care has ripped the city's budget to shreds.