Rising health care costs: A race we're running willingly?

With even true-blue Democrats like Minnesota Gov. Mark Dayton and former President Bill Clinton lamenting "unaffordable" malfunctions of Obamacare, maybe America has achieved agreement on one basic proposition:

We haven't quite solved this whole health care riddle just yet.

If so, it may be a good time to consider alternative points of view — including an intriguing new study (http://www.nber.org/papers/w22669.pdf) that compares human health care with health care for our pets. Its findings suggest that the American health care system's rising costs may merely reflect the choices we make.

Current symptoms of distress under Obama's Affordable Care Act consist of soaring premiums and narrowing options in the individual insurance market. This market serves people who don't qualify for government coverage and also aren't covered through an employer's plan.

This is the population most affected by two key features of the ACA: 1), the "shall-issue" rule requiring insurers to cover applicants with preexisting conditions, and 2), the "individual mandate" that requires every American to carry health insurance or pay a tax penalty.

Putting it very simply, one problem seems to be that the "shall-issue" rule is working like a charm — while the "mandate" isn't. People with significant health issues are buying individual insurance eagerly. But the young, healthy people who were supposed to be drawn into the insurance "risk pool" by the mandate — balancing off the sicker folks — aren't taking the plunge in expected numbers.

That leaves underwriters selling health insurance to an unhealthy population. It's a crummy business model; insurers are hiking rates and fleeing the market.

One thing complicating efforts to fix this mess is that many remedies might prove unpopular.

The mandate, controversial from the start, may not be working as designed for the simple reason that its penalty is too gentle. For many people, it's cheaper to pay the "tax" than to buy insurance — and too many young healthy folks are apparently being tempted to defy the law.

But stiffening the penalty may be stronger medicine than politicians are ready to administer.

Setting aside the details of today's woes, it's the overall "unaffordability" of health care for America that confounds us. Yet almost everybody agrees that somehow or other it's the big role of private insurance and/or the big role of government that explain why America spends so much on health care.

Conservatives argue that there's too much government in American health care; progressives often think there's too little. Liberals see insurance-company greed driving health care excesses; free-market devotees think too much indirect insurance payment leads to careless spending and a dearth of competition.

But in a new paper for the National Bureau of Economic Research, economists from Stanford and MIT explore an altogether "alternative school of thought … that high and rising U.S. healthcare spending is an optimal outcome given individual preferences." In other words, maybe it's just a matter of a particularly rich society choosing to spend heavily on preserving life and improving its quality.

Economists Liran Einav, Amy Finkelstein and Atul Gupta came up with an ingenious way to test whether distorting influences of government or insurance are really behind high health care spending. They compared trends in human health care with trends in pet health care.

In pet care, neither government nor insurance play a major part. Yet as in human health care, veterinary medicine involves constant innovation and emotionally charged decisions.

So how similar are spending patterns in the two systems? Very.

The researchers found that in the 16 years between 1996 and 2012, inflation-adjusted pet care spending per pet-owning household soared by 60 percent. Human health care spending jumped 50 percent in the same period.

For contrast, the researchers also tracked real spending on two important nonmedical commodities — housing and entertainment. Spending on both rose and fell with the economic cycle but ended little changed overall between 1996 and 2012.

So something about spending on medical care — for pets no less than for people — looks different from spending on housing or entertainment. But the difference is not the involvement of big government or big insurance — which doesn't exist in pet care.

Unsurprisingly, the study found that household spending on all the measured goods rises with a household's income. But while the well-off (annual income above $70,000) spend three-and-half times as much as the poor on entertainment, and about three times more on housing, they spend less than twice as much on human health care and barely over twice as much on pet care.

In short, when it comes to medical spending — for their animals as well as for themselves — households of modest means dig deeper than they do for other goods.

Finally, it will surprise few animal lovers that medical spending on pets — even more than on people — explodes in the final months of life.

The economists are cautious about drawing conclusions from all this, beyond suggesting that the striking parallels "should give us pause before attributing the large and rising healthcare costs in the U.S. solely to the prevalence of insurance and government involvement."

It may simply be that as long as medicine, human or veterinary, keeps coming up with new ways to combat sickness and death, without winning the battle against those ancient enemies, spending will tend to rise in a rich and free society — at least until there is some collective decision to declare that enough is enough.

D.J. Tice is at Doug.Tice@startribune.com.