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If only we'd listened to Nixon, Carter or Clinton

nixonpsending1.jpg

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.

By Ezra Klein  |  March 15, 2010; 3:02 PM ET
Categories:  Health Reform  
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Next: More Paul Volcker anecdotes, please

Comments

The Senate bill being nothing more than a regulation and market solution, it doesn't have any spending caps, will this proposal curb costs that much (1.5%)?

Posted by: Dan_B | March 15, 2010 3:18 PM | Report abuse

"That's not, it should be noted, an unreasonable estimate."

Come on, Ezra, you should know by now that if you aren't parroting Fox News propaganda or Sarah Palin talking points, you aren't being reasonable at all.

Posted by: Lomillialor | March 15, 2010 4:28 PM | Report abuse

The folks getting the 7% difference between Nixon and now are really not about to give up their sweet deal without a real fight. A trillion dollars is a lot of money!

Posted by: Mimikatz | March 15, 2010 4:41 PM | Report abuse

It's the first day of the rest of our lives!

Posted by: eRobin1 | March 15, 2010 8:06 PM | Report abuse

Don't forget that Ted Kennedy single handily doomed the Nixon universal health care plan because he was more interested in the politics of the situation than on doing what was best for the country. Why do liberals glorify a man who got kicked out of college for plagiarism, cheated on his wife, killed a campaign aid, and ruined a golden opportunity for universal health care? He was just a worthless self serving human being.

Posted by: cummije5 | March 15, 2010 8:48 PM | Report abuse

cummij5 wrote>>>Why do liberals glorify a man who got kicked out of college for plagiarism, cheated on his wife, killed a campaign aid, and ruined a golden opportunity for universal health care?

Why do conservaties glorify a president who RAISED TAXES 3 times, TRIPLED the national debt and left office with a HUGE deficit?
Because they liked Saint Ronnie bashing Democrats.

Posted by: angie12106 | March 16, 2010 9:47 AM | Report abuse

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