If only we'd listened to Nixon, Carter or Clinton
Over the course of the health-care reform discussion, we've gotten pretty good at talking about the insufficient benefits of reform. It doesn't cut costs as much as we'd like, and it doesn't cover all of the uninsured, and it doesn't have a public option, and so on. But one of the hardest things to convey is the terrible cost of inaction, which is much higher, both in human and economic terms, than many realize.
The big player on the cost side is that even small benefits compound over the years. Slowing the system's spending growth by 1.5 percentage points -- so the rate of spending inflation will be six percent, rather than 7.5 percent, in a year -- doesn't seem like a terribly impressive outcome. That still has the system growing faster than GDP, or inflation, or Europe's health-care systems. But over time, the benefits would be enormous.
The Commonwealth Fund, in a very smart piece, tries to show this by tallying the savings if we'd instituted the Nixon, Carter and Clinton reforms and they'd worked to slow spending by the aforementioned 1.5 percentage points. That's not, it should be noted, an unreasonable estimate. If anything, it's conservative, as these plans included hard government controls on the rise of provider payments or insurance premiums. That's a blunt stick to swing at the system, but it's an effective one (Paul Ryan's plan also caps spending, for any conservatives out there who're skeptical of the merits).
You can see the impact in the graph atop this post. The earlier you start, the more you save. These days, we spend a bit more than 17 percent of our GDP on health care. That comes out to more than $2.5 trillion. If we'd reformed the system in 1995, and our spending had slowed by 1.5 percentage points then, health care would only be 14.2 percent of GDP right now. If we'd followed Carter's schedule and moved in 1980, we'd be down to 11.5 percent of GDP. And Nixon's plan in 1975? A mere 10.75 percent of GDP, which as you can see on the graph, isn't that far from what Europe spends. The lesson is simple: The earlier you start, the more you save. And with each opportunity you miss, you lose years of accumulated savings.
March 15, 2010; 3:02 PM ET
Categories: Health Reform
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