America’s next great disaster

“NEW YORK -- As Barack Obama's plan to overhaul the United States' costly health-care system falters, the U.S. economy could be headed for a disaster worse than the fallout from the burst of the housing bubble.

U.S. health-care costs about US$2.2-trillion a year, or nearly US$7,471 a person. That yearly expense - already the costliest in the world - equals 16% of the country's overall economic output and is projected jump to 25% by 2025.

Mr. Obama, the U.S. president, is pushing for a series of health-care fixes aimed at reining in the expense.

But with so much money at stake for so many vested interests - from doctors to pharmaceutical giants and insurance companies - any new legislation with meaningful reforms will have a hard time getting approved, industry observers said.

"The whole problem with these kinds of things is that they just accumulate over time and become bigger and bigger problems if nothing is done about until it is too late," said Steven Ricchiuto, chief economist with New York-based Mizuho Securities USA. "It starts to hurt economic growth and people start to lose their jobs. It was like that when debt was accumulating [during the housing bubble.] Everyone knew it was going to be a problem and they know this is going to be, too."

President Obama, who interrupted prime-time TV with an address this week to convince Americans of the importance of his proposals, continues an aggressive campaign to get new legislation approved.

He was dealt a setback late this week, however, when the U.S. Senate said it wouldn't vote on the bill until after the August recess.

The delay gives health-care reform opponents time to rally against so-called ObamaCare.

Already, conservative groups have come out with ads against an overhaul, including a misleading TV spot featuring Shona Holmes, an Ontario citizen who says she would have died if she'd waited for surgery in Canada rather than going to the United States for brain-tumour treatment.

"President Obama could have put health care on the backburner because he's got a lot of other big issues to deal with such as the wars and the economy," said Dean Baker, co-director of Center for Economic Policy and Research, a left-leaning think-tank in Washington.

"But by pushing for it, he's created a situation where, if it doesn't go through, the takeaway will be health-care reform isn't going to happen for a long, long time.

That's exactly what happened after the Clinton years, when their health-care reform plan went down in flames."

Mr. Obama is the first U.S. president to tackle the health-care issue since the failed attempt by Bill and Hillary Clinton about 15 years ago.”