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A GREATER DANGER IN HEALTH CARE COSTS

At a moment when the whole world is rightly celebrating the life of a man of faith, Pope John Paul II, it may seem perverse to write of the value of skepticism. But in a long span of years covering public affairs, I have come to value the contributions of the naysayers, those brave spirits who -- right or wrong -- challenge the conventional wisdom.

Two of them visited me this week, Dean Baker and David Rosnick of the liberal Center for Economic and Policy Research. Their skepticism attaches to the notion -- propounded by the Bush White House and accepted by most of the inhabitants of the political and journalism worlds -- that the Social Security system is in crisis.

I should say at once that I am not convinced by their argument that this is, as Baker contends in the title of a book he and Mark Weisbrot have published, a "phony crisis." The increasing life span of Americans and the shrinkage of the work force, relative to the number of retirees, are real and significant demographic changes that should not be ignored by current policy-makers. There are changes that could be made in Social Security that would extend its life and adapt to the altered economic and social realities of the 21st century.

But they are on solid ground in contending that the Social Security system is not the most endangered of our basic national institutions -- or the most in need of drastic overhaul.

Last month, Baker and Rosnick completed a paper that ought to be on the reading list of the White House policy office and the leadership of the House and Senate. It is called "The Burden of Social Security Taxes and the Burden of Excessive Health Care Costs."

They start from the official estimates of what it would take to make the Social Security system solvent over the 75 years that is the span economists use for their long-term projections. The Social Security trustees say the financing problem can be solved with a tax increase of 1.9 percentage points, split evenly between employers and workers. The Congressional Budget Office, using slightly more optimistic economic projections, says the increase would have to be only 0.7 percentage points.

By comparison, health care expenses have put a much greater dent in the pay packets of workers. Between 1980 and 2004, the growth in health care costs exceeded that of per capita gross domestic product by 12.6 percent. In just the next 10 years, that gap is projected to grow another 7.2 percent.

By either the CBO's or the Social Security trustees' estimates, the hit to the economy from runaway health care costs is far greater than the potential damage of a Social Security tax increase. The ratios range from four times to 18 times as great, depending on which estimates one chooses.

Baker and Rosnick suggest another way of making the same point. The tax increase needed to keep Social Security solvent for 75 years is the same size as the likely growth in health care costs (above per capita gross domestic product) in the next 48 months.

The implication is obvious. "Politicians and commentators who claim to be concerned about the living standards of future generations of workers seem to be misdirecting their energy by focusing on the comparatively minor problem of Social Security," Baker and Rosnick write. "Clearly the inefficiency of the U.S. health care system poses a far larger and more immediate danger to the living standards of our children and grandchildren."

Overall, Americans are paying more for health care than the people of any other advanced industrial nation -- and reaping fewer benefits, at least as measured by life-span statistics.

In a rational world, fixing health care would come first.

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