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Health-care reform will not be remembered for its price tag


The numbers came first. The Senate bill, we now know, costs a smidge under $850 billion during its first 10 years, cuts the deficit by $127 billion, and covers 31 million people. In the second decade, it cuts the deficit by an improbably large $650 billion. But we don't know anything else. We haven't seen the CBO's full score yet, nor do we know any of the specifics in the bill. Reid's office released the numbers before it let anyone see the language. It wants the numbers burned into the media's mind. They're the message, at least for now.

In a way, it's fitting. Health-care reform is increasingly hostage to numbers that are disconnected from the reality of the bill and its purpose. It's a real victory to push your bill below $850 billion if the point is to get it below $900 billion. But what if that's not the point? Most experts think the bill needs about $1.2 trillion to be truly affordable. Compromising beneath $900 billion might be necessary, but it's nothing to celebrate. It's a concession, not an accomplishment.

It is, in fact, quite far from the questions that will determine the bill's success. In 10 years, no one will remember whether the bill cost more or less than $850 billion, and I doubt that the public option, if it remains in the legislation, will be particularly relevant either. They'll remember whether the bill worked -- whether it covered people at a price they could afford, and began the overdue and urgent work of cost control. And we pretty much know the policies that will figure into the analysis.

First and foremost are the subsidies. And not just the premium subsidies. Keep an eye on the limits placed on out-of-pocket costs and the generosity of the basic benefit package. Helping people pay the premiums on a plan they can't afford if they get sick, or that doesn't really help them, isn't much of a victory.

Then come the exchanges. Are they open to all employers, or just small employers? And if it's the latter, does the bill include specific language and a concrete timetable for opening them to all employers? Further, are the exchanges managed, with an administrator who chooses the options carefully to make sure they're worth including? Or is it a free-for-all? Regulating the insurance market is nice, but the real work is in building a new insurance market. That's the job of the exchanges, but they can only accomplish it if they're large enough and strong enough.

The delivery-system reforms are more difficult to evaluate, but no less important. There are a lot of moving parts here, but watch to see if experts -- not columnists, or even bloggers, but the folks who actually work on this stuff -- agree that this takes the first steps towards building an infrastructure that can support value-based purchasing, and payment based on quality and evidence rather than volume.

The cost control should also be real. The excise tax is controversial, as is the strengthened MedPAC commission, but the two put together are our best chance at getting a real start on cost control. The consequences of a continued rise in health-care costs -- national bankruptcy and falling real incomes, namely -- are so severe that the political system has been unable to communicate them effectively. The prognosis is too dire, and the treatment too radical, for politicians to deliver either. But the excise tax and the commission lay down an infrastructure for really attacking costs down the road.

We should know more on all these fronts later tonight, and definitely by tomorrow.

Photo credit: AP Photo/Harry Hamburg.

By Ezra Klein  |  November 18, 2009; 6:31 PM ET
Categories:  Health Reform  
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Next: Primary sources on the Senate bill


Ezra says we want " infrastructure that can support value-based purchasing, and payment based on quality and evidence rather than volume."

And yet the news today the suggestion of a modest reduction in testing for breast cancer results in a controversy that swamps the logic of the recommendation. Most depressing.

Posted by: Neal3 | November 18, 2009 7:42 PM | Report abuse

President Obama promised that the negotiations would take place on C-Span. That failed to happen.

President Obama promised that legislation would be posted on the internet for at least 72 hours for the media and the public to review same prior to any movement by Congress.

Let us hope that promise is kept!

Posted by: mwhoke | November 18, 2009 7:43 PM | Report abuse

and here it is via the Republican's thru Politico:

Posted by: visionbrkr | November 18, 2009 7:57 PM | Report abuse

"The delivery-system reforms are more difficult to evaluate, but no less important. There are a lot of moving parts here, but watch to see if experts -- not columnists, or even bloggers, but the folks who actually work on this stuff -- agree that this takes the first steps towards building an infrastructure that can support value-based purchasing, and payment based on quality and evidence rather than volume."

Ha. Or academics. Folks like Cortese and Halvorson have been consistently clear that the legislation fails on delivery system reform. Pay for quality? There is more that has already been accomplished than is in the bill. Medicare/government is far behind private insurance on this score. Value-purchasing? Dollars are being offered up without the parallel structural reforms to make these a reality.

MedPac? Love the idea, but its better in theory than practice. The mammogram brouhaha-- which is solely about what's most CLINICALLY effective-- no cost considerations are in play-- and we can't even get alignment on the right scientific answer, even though the level of rigor here will far outweigh the average recommendation from MedPac, which will also be balance clinical effectiveness AND cost.

The term "first step" provides a lot of leeway, but the reality is that the legislation fails on meaningful progress on cost control and delivery system reform.

Posted by: wisewon | November 18, 2009 8:22 PM | Report abuse

I think this bill is a start which is a good thing. Of course the devil is in the details and the Senate's focus will be on COST CONTAINMENT.

Posted by: maritza1 | November 18, 2009 8:33 PM | Report abuse

Oh, Ezra, the bill -- except for the financing mechanisms and the abortion provisions -- is a lot worse than the House bill.

The bill sets the minimum actuarial value at 60 percent. The House bill sets this figure at 70 percent -- which I thought was already too low. And HELP and Finance Committee Democrats explicitly defeated Mike Enzi's amendments to set the minimum actuarial value this low. No way this won't cause political backlash. I'd like to know what Reid is thinking.

Also, the 3:1 community rating will still put health insurance out of reach for a bunch of older adults. And the smoking status rating just has to go. It's just not a good idea, and I say this as someone who has never smoked before.

Posted by: BradGabel2002 | November 18, 2009 8:36 PM | Report abuse

The usual with no mention that a single payer model would be the least expensive but this would not be in the interests of the private health insurers.

Americans have to pay more because of the interests of the private health insurers. Wait until Americans find out that the private health insurers will be exporting the jobs to handle and process claims overseas to lower expenses and increase profits.

Why not, Americans already speak to someone on the phone overseas regarding their banking, why not also in regard to their health insurance. This will make sense since the data centers for the health records of Americans will probably be overseas.

Posted by: bsallamack | November 18, 2009 8:50 PM | Report abuse

on top of the good points by BradGabel2002 and wisewon here's several more:

a 75% loss ratio on individual and 80% on group coverage that terminates on 12/31/13. Is that because of the start of the exchange and then they feel it won't be necessary??

a very minimal increase in the individual mandate penalty in the early years and no increase later from the SFC version. (I'm stunned they got CBO to say it gets to 94% enrolled).

Posted by: visionbrkr | November 18, 2009 9:07 PM | Report abuse

The quality of the insurance sucks. Effectively they strengthened the individual mandate by watering down the definition of insurance. At least the penalty stays at $750 and there's still an 8% affordability exemption--but fewer people will qualify.

Also note pages of legalese in defense of the constitutionality of mandates. Someone seems a little paranoid...

I see the deals with industry survived, as did Anna Eshoo's biosimilars giveaway.

I'm surprised by what appears to be a fledgling employer mandate! We'll need to hear more about this for sure.

Posted by: bmull | November 18, 2009 9:14 PM | Report abuse

Would it be effective PR/marketing to compare the national health care cost (~16% of GDP ? )to a demographic breakdown of American families, centered on who is suffering above the national pay rate?
In other words, are there families pushed past that 16% ? Way past?

Should this be a communication venue?

Posted by: senor_crews | November 18, 2009 9:26 PM | Report abuse

No, it will be remembered for its unfunded liability

Posted by: cprferry | November 18, 2009 9:49 PM | Report abuse

Well, I'll give anyone 10-1 odds on the bill actually costing what they say over 10 years. Chances are it will cost a lot more, particularly if subsidies are later increased. A 10-year cost estimate on a bill is largely a fiction; what matters is what the policies and agencies are that the bill creates. Once those are created, the cost will probably escalate, as most government entities do. It would be as silly to believe 900 billion means 900 billion, as to arbitrarily choose 900 billion to begin with. So don't worry, I'm sure you and the rest of the wonks will get your 1.2 trillion soon enough.

Posted by: Ulium | November 18, 2009 10:01 PM | Report abuse

The Reid bill will indeed be remembered for its price tag if Congress enacts it as now proposed, with an $8,500 price ceiling on a person's annual health insurance premium before a 40 percent surtax applies, found in Section 4980I, subparagraph (b)(3)(C)(i)(I), for 2013.

A person 60-65 years old living in the Northeast is currently likely to to be charged an annual health insurance premium of $9,000 to $11,000 for mid-level coverage. With estimated increases of 6.5% per year, by 2013 that will be about $11,500 to $14,000, triggering an "excess benefits" tax of $1,200 to $2,000.

Those are not excess benefits at all. They are just consequence of being in the last few years before eligibility for Medicare. This kind of attempt to legislate the laws of economics will turn into another yearly dust-up of enraged older people with Congress, exactly like the annual dust-up over physicians' Medicare service fees that we have seen since the ill-fated and obviously foolish Balanced Budget Act of 1997.

Posted by: AppDev | November 18, 2009 10:05 PM | Report abuse

No. If it passes (pray God it won't) it will be remembered for helping make our children, and our children's children, slaves of the state.

Posted by: majcsmith | November 18, 2009 10:11 PM | Report abuse

This is exactly how we got in trouble in the first place...The attitube of.. "let us pass this bill in a hurry now and let's not worry about the real cost and how is it going to be paid for is downright silly. The idea of dismissing the real cost of such a huge spending bill is grossly irresponsible, impractical and unsustainable. And to tell us this would not add to our deficit is a full of crock and I for one dont buy it nor any average american you ask.

Posted by: johnrick | November 18, 2009 10:13 PM | Report abuse


seniors age 60-65 like everyone else will be able to opt for insurance whenever they feel like it if they're not chronically ill. Or should I say they'll opt for insurance whenever they get sick. The individual mandate penalty that STARTS at $95 (seriously $95) and grows to a max of $750 is a slap on the wrist. Anyone that's healthy will pay that tax.

Let me see, an insurance premium of $8000 a year for a 60 year old or $95. Which would ANYONE pay?

and yes bmull the quality of the insurance sucks but the crappy mandate more than makes up for it. I can't honestly see yet how they're getting to 94% coverage.

Posted by: visionbrkr | November 18, 2009 10:30 PM | Report abuse

i also think that years down the line we'll look at this legislation as a real opportunity missed to get real cost controls included (kind of like how we're saying now about the bank bailouts and why we didn't force regulations on them in return for the bailouts). What is Tim Geithner somehow involved here with his fantastic negotiating skills?

Oh and when the doc-fix gets approved (and pushed by the White House as per below) then we'll continue with the NO COST CONTROL but that will get little press coverage.

That is what you call "PAYBACK TIME".

Posted by: visionbrkr | November 18, 2009 10:39 PM | Report abuse

"costs a smidge under $850 billion during its first 10 years, cuts the deficit by $127 billion"
I guess that's a nice way of saying raises taxes by $977B over ten years??

It's too bad we can have actual care that costs less instead of layering even weirder regulation on the insurance industry that is just going to drive my costs up. We need a system that incentivizes cheaper care. We need cheaper insurance with higher co-pays, real insurance that covers the big stuff, not the special interest focused care that is driven by governments.

Posted by: staticvars | November 18, 2009 10:47 PM | Report abuse

No, I don't think the price tag will be relivent; I don't know many bills that pass that come in under projected cost. I am concerned by a local news report tonight about the current cost, however. Pharmacys In my area are charging wildly varieing prices for TAMIFLU which is the only drug that works for flu symptoms. Prices range from $40- $160 for the same product. With sound healthcare reform and ethical management these swing in price would not be tolerated. All Americans, the haves and the have nots should be able to to receive the same quality health care. The price tag should not determine life and death or quality of life where health is concerned. Where is the social conscience of the GOD BLESS AMERICA crew?

Posted by: julieb5556 | November 18, 2009 11:09 PM | Report abuse

In reporting what Democrats say health reform will do or cost, WaPo should require the same journalistic standards that are applied to reporting on criminal activities.

That is, words like "claim" or "alleged" before any statement of "fact" alerts readers that nothing is yet proven, that no crystal ball exists to accurately predict what something may be like tomorrow (let alone a decade from now).

Afterall, the "projections" at the inception of Medicare and Medicaid on the cost of those programs were woefully short.

Unfortunately, most of the politicians who profited in subsequent elections off the rosy predictions of affordable costs are no longer alive to see the rest of us heavily burdened with an unsustainable cost.

Hmmm, will that too be the case with the Democrats' plan for health reform if it passes?

Posted by: bbahler | November 18, 2009 11:14 PM | Report abuse

c'mon, people, let's be consistent here...let's leave the details aside for now, but anyone opposed to the concept of health-care reform for all Americans needs to support the repeal of Medicare and Medicaid. How come we have socialized medicine that works for old people and poor people, but it won't work for everybody else?

Posted by: flarrfan | November 19, 2009 6:13 AM | Report abuse

The only things taxpayers can count on is it will cost far more than advertised, not accomplish what's promised and lead to higher taxes for everyone!!!!!!!

Posted by: Jimbo77 | November 19, 2009 8:23 AM | Report abuse


Why have the hearings televised? We have already seen the GOP say "NO" a thousand times. Then when they don't get their way, they act like little children. Actually little children have a lot more decorum and class.

Posted by: AugustWest1 | November 19, 2009 8:34 AM | Report abuse

"The cost control should also be real."

Yeah, right. On today's front page is this administration's move away from a panel's recommendation for less frequent mammograms, a cost cutter based on science. Politics trumping science is inevitable when government gets into the medical field and will be a cost driver, not a container.

Posted by: edbyronadams | November 19, 2009 8:42 AM | Report abuse

I want to see the language that prohibits private insurance companies from being jerks.

Posted by: poppysue85 | November 19, 2009 9:14 AM | Report abuse

Ezra Klein, WaPost: “The consequences of a continued rise in health-care costs -- national bankruptcy and falling real incomes, namely -- are so severe that the political system has been unable to communicate them effectively. The prognosis is too dire, and the treatment too radical, for politicians to deliver either.”

Note the description of the parasite Trypanosoma brucei, which causes African sleeping sickness: “The parasite's survival strategy hinges upon its ability to change its surface coat. When the host's immune system has just about killed all of the parasites, some surviving parasites rearrange their DNA and switch their coat, initiating another wave of infection. During this cat-and-mouse game, the immune system never gains the upper hand and the victim dies.”

Among people, the Brucei Effect, is known as ‘gaming the system’ where the parasite changes its ‘skin’ in order to participate in the health care system. There is always a percentage of system members that are purely parasitic, so how do you get a net gain for those who are trying to improve their own well being when a mechanism for doing that (usually tax wealth) comes under increasing attack by the parasites? Free health care in its current forms costs some $400 billion a year evenly divided up by ‘patients’, ‘providers’, ‘legal administrators’ and ‘investors’. The libertarians say that if the health system didn’t exist, then no one would be able to ‘game’ it (except themselves) and the socialists say that the health system is owned by whoever acquires the votes to ‘game’ it (especially the administrators). How, under the Constitution’s six covenants, do you protect people from the Brucei Effect when both the right and left have a vested interest in installing gaming mechanisms as a self serving end ?

Perhaps it is time for a constitutional conventional or referendum that defines the governmental and citizen responsibilities in terms of a Wellness Right or even a Right of Being in the manner that the Bill of Rights protects people against Brucei Effect excesses by the government. In the case of a Right of Being (the enhancement of the mind, body AND soul), you would have to have a rights definition that protected each individual from each other and not just from a government. Aside: is America hated by the world’s ruling elites because it has constitutional protections for its citizens? The current House and Senate bills both have attributes of such a Right of Being but until EACH healthcare process is treated as a Rights attribute, even when the Right doesn’t exist, that Brucei Effect can easily consume the American host over the next ten years whether it is appropriated at one billion or one trillion dollars or ten trillion dollars.

Posted by: arjay1 | November 19, 2009 9:56 AM | Report abuse

"i also think that years down the line we'll look at this legislation as a real opportunity missed to get real cost controls included"

I agree with you there visionbrkr. This was an opportunity for the Democrats to propose real reform with a path to a sustainable universal model. Instead, they folded to every known industry player and left citizens with more of the same thing that got us where we are.

I read somewhere that this bill is like moving furniture into a burning house. Ezra, etal. can talk all they want about working on costs "later" but by 206, the tide of the baby bomers will hig full force and no one in Congress will have any stomach fr cutting costs.

Posted by: Athena_news | November 19, 2009 4:11 PM | Report abuse

"seniors age 60-65 like everyone else will be able to opt for insurance whenever they feel like it if they're not chronically ill."

I was reading about healthcare in Australia the other day and noticed that private insurance premiums there include a 2% surcharge for each year after 30 that the individual went without insurance (up to 20%)...a surcharge that is permanent. In other words, if you wait until your are 45 to take out private hospital insurance, your premiums are permanently 20% higher than someone who has been covered since 30. That serves as a significant deterent to waiting around until one is sick before getting fully insured.

BTW, the reason I was reading about Australia because it is the only place I know of that has a public insurance company to compete with private insurers. The thing is, the "public option" there is not the primary payor for its policy holders; it's a publicly run plan to supplement the tax financed universal coverage (sort of like a publicly run MediGap plan). It's completely different from what liberals here are talking about in the public option.

Posted by: Athena_news | November 19, 2009 4:29 PM | Report abuse


i liken it to having a car careening (sp) towards a cliff and instead of hitting the break you hit the gas and make sure you throw your spouse and kids in the back of the truck so they go over the cliff too. All this after the President helped saved us from Depression. Very very sad.

Posted by: visionbrkr | November 20, 2009 9:29 PM | Report abuse

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