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The danger of the status quo

I'm continually annoyed by the punditocracy's tendency to judge the health-care bill in comparison to some ideal health-care bill (that doesn't have any votes in Congress) as opposed to the status quo. If health-care reform fails, the status quo is a certainty, while the perfect bill is but a dream. Ron Brownstein does a nice job arguing this case in his column today:

If Obama's plan fails, as President Clinton's did, it's likely that no president will attempt to seriously expand coverage for many years. The independent Medicare actuary has projected that under current trends, the number of uninsured will increase by 10 million, to about 57 million, by 2019. Providing uncompensated care to so many uninsured people would further strain physicians and hospitals -- and inflate premiums as those providers shift costs to their insured patients.

Some fiscal conservatives want to attack rising costs without expanding coverage. But that approach looks impractical, politically and economically. While Republicans controlled Congress after the 1994 election, they never built enough of a consensus to pass the cost-control ideas they are now pressing on Obama, such as medical malpractice reform. Meanwhile, Nichols warns that imposing meaningful cost control on hospitals without reducing the number of uninsured patients they must treat "would bankrupt many and strain most to the breaking point."

Weighing such factors, Nichols concludes that the "risk of doing nothing" exceeds the risk of passing the bill. In interviews, Emory University's Kenneth Thorpe and Stanford University's Alan Garber, two other leading health economists, guardedly echoed his conclusion. Both men believe that the current proposal could move faster to control costs. But both also agree that it contains valuable first steps and establishes what Garber calls "a good platform" for further reform. By contrast, Thorpe says, "under the do-nothing scenario, everything gets worse." For Democratic fiscal hawks uncertain that approving Obama's plan will cure what ails U.S. health care, the real question may be whether defeating it guarantees that the system's chronic afflictions will metastasize further.

I'd also take note of the political incentives here: If health-care reform goes down in a giant ball of flaming wreckage and Democrats lose seventy bazillion seats in the next election, not only will presidents leave this alone for awhile, they'll be very careful to avoid the unpopular parts the next time. And what were the unpopular parts? Reforms to Medicare. The excise tax. The cost controls, in other words. Conversely, pass the bill, and it's a lesson that you can pass these sorts of bills.

By Ezra Klein  |  March 12, 2010; 3:32 PM ET
 
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Comments

The current estimate of "status quo" healthcare costs says it will be 19.5% of GDP by 2017; if Obamacare passes and costs exceed 20% of GDP by 2017, will you guys finally admit that the status quo would have been better?!

Posted by: JakeD2 | March 12, 2010 3:37 PM | Report abuse

Brownstein is too kind: the states that implemented "malpractice reform" have seen the same medical inflation and malpractice insurance premiums as those that didn't. It's not a cost control measure.

Posted by: WarrenTerra | March 12, 2010 3:41 PM | Report abuse

Reforms like MICRA and Prop 103 seemed to have worked here in California.

Posted by: JakeD2 | March 12, 2010 3:51 PM | Report abuse

I disagree with the premise that if this bill fails, the next attempt at reform will be even more moderate.

With the number of uninsured swelling, and with the cost of insurance and medical services skyrocketing, I believe that all future political pressure will be for single payer. The political lesson from 1993 and 2010 will be that when Democats step to the right in order to find common ground with Republicans, the Republicans step further to the right. The Democrats will never begin from an already compromised position again.

"Medicare for All" will be a much simpler program to explain and to sell, and the public will see no alternative to keep a lid on costs other than to bring in the leverage of a single payer.

For me what is significant (and ironic, considering the unified opposition of the Republicans) is that this will likely be the last time that health care reform will be proposed in a way that would preserve the private insurers. If this effort fails and the problems intensify, the eventual solutions will need to be far more radical than anything in the current legislation, and the public will support that more radical approach.

Posted by: Patrick_M | March 12, 2010 3:51 PM | Report abuse

I have NYS employees insurance. A 'good' policy according to a large doctor's office in Manhattan from the staffer who does nothing but 'hondle' an appropriate fee for an exceptional surgeon that insurance companies want to pay peanuts. (He did NOT charge me the difference which he could do as an out-of-network, don't ya love it,physician.)
I checked the president's 10-year projection of doubling premium costs. If we do nothing-status quo.
In 1999 my employer paid $6,700.00 (rounding) for a family plan: in 2009, same family, pretty much the same plan (WE didn't change it) $14,300.00 That's just little me.

YOU do the math.

Posted by: dcunning1 | March 12, 2010 3:59 PM | Report abuse

Best of all, if reform passes maybe we won't have to hear from the concern trolls and hyperbolic liars about how bad things will be with reform. And Mitch McConnell will have been dealt a significant defeat, the Dems' electoral prospects will improve, and maybe the filibuater will recede as a weapon.

Posted by: Mimikatz | March 12, 2010 4:02 PM | Report abuse

dcunning1:

I did the math already. The current estimate of "status quo" healthcare costs says it will be 19.5% of GDP by 2017; if Obamacare passes and costs exceed 20% of GDP by 2017, will you admit that the status quo would have been better?

Posted by: JakeD2 | March 12, 2010 4:02 PM | Report abuse

I was going to note that the marginal percentage-of-GDP increase would still be a good deal if everyone was covered, but Krugman said it first & better:

"Even if this prediction were correct, it points to a pretty good bargain. The actuary’s assessment of the Senate bill, for example, finds that it would raise total health care spending by less than 1 percent, while extending coverage to 34 million Americans who would otherwise be uninsured. That’s a large expansion in coverage at an essentially trivial cost."

"And it gets better as we go further into the future: the Congressional Budget Office has just concluded, in a new report, that the arithmetic of reform will look better in its second decade than it did in its first."

--------

Then again, I confess to being a liberal who doesn't really delight in sacrificing peasants for the sake of profit-skimming. Obviously some feel differently, especially if it increases their own considerable self-regard to know that others are worse off.

Posted by: latts | March 12, 2010 4:24 PM | Report abuse

JakeD2, I can only speak for myself, but I think it's more complicated than that. If we pass HCR and cover nearly everyone in the country and by 2017 healthcare spending accounts for 20% of GDP rather than 19.5% of GDP under the status quo (and keep in mind that under the status quo millions more people will lack insurance), I'll consider that a win. Under that scenario we'll be paying much less per person than we would have under the status quo.

What you would need to show me is that we'd be spending so much more per person that it outweighed the benefits of the increase in coverage. Even then though, I'm guessing that 2017 me will say, "Ok, now that we've got near-universal coverage, let's agree on some cost controls".

Posted by: MosBen | March 12, 2010 4:32 PM | Report abuse

It's so frustrating how the Right goes on about "freedom" and not wanting to pay their hard-earned money in taxes for health care for lazy slobs who will be entitled under the new bill, but refuse to see how they are paying for them right now through sky-high insurance premiums and hospital fees because of all the uninsured who can't be turned away. Why is it only TAXES that are considered to be gouges on the ordinary hard-working citizen?

And also, I think Patrick_M is dreaming.

Posted by: herzliebster | March 12, 2010 4:32 PM | Report abuse

Breaking news: Huff post says Pelosi will NOT include public option in bill, so maybe it will pass.

Posted by: rjewett | March 12, 2010 4:40 PM | Report abuse

Patrick_M, unfortunately all the history we have to draw on shows a pattern of failure being followed by scaled back attempts at reform. I agree that there might be a breaking point somewhere in there where people take to the streets with pitchforks, but I don't know that you can say for sure that it will happen, or if so, when.

And what if instead of going for single payer the industry pushes some kind of massive cut back in public expenditures for healthcare rather than an expansion. They could sell it as "personal responsibility" and dress it up in rhetoric about the budget. I just don't know that you can count on better outcomes in the future, though I do so wish you could.

Posted by: MosBen | March 12, 2010 4:40 PM | Report abuse

rjewett, why would there be a public option in the House bill? If they're going to pass the Senate version then there wouldn't be a public option anyway. If the Senate passes a Public Option sidecar through reconciliation it would be a different story, but it won't be part of the main HCR bill voted on by the House.

Posted by: MosBen | March 12, 2010 4:44 PM | Report abuse

Pass the crappy bill! It's better than the status quo.

Posted by: AuthorEditor | March 12, 2010 8:26 PM | Report abuse

Guess who really loses if reform fails...

It's the two groups that seem to like the status quo: people with great big-employer policies, and private insurers.

Why?

Because the *individual* market is where private insurers have been making the most profit.

That means that the individual market has been subsidizing the large-group market.

...

There is no status quo good outcome for those that have been sitting pretty.

Without reform what will really happen: more individuals will abandon unaffordable comprehensive insurance, thus the large-group market will lose their subsidy support, thus large-group employers will look to trim costs, thus employees with great plans will face rising out-of-pocket in a big way.

So, I think reform will pass because enough people, in most every setting and situation, have started to realize that they are better off under reform than under the status quo.

Posted by: HalHorvath | March 12, 2010 9:42 PM | Report abuse

"Patrick_M, unfortunately all the history we have to draw on shows a pattern of failure being followed by scaled back attempts at reform."

MosBen,

I know that.

And scaling back has only led to continuing failure. Proponents of reform will see that pattern very plainly if this effort goes down in flames.

I don't believe the pattern will repeat.

If there is failure this time, the conventional wisdom of the post-mortem analysis will be that Democrats dithered in the fruitless Senate Finance Committee search for bipartisanship through moderation. The resulting legislation took too long, reformed too little, and was too complex for Democratic leaders to easily sell to a nervous public. The moral of the story will be: Don't compromise against yourself, and don't endure significant delay hoping for compromises from across the aisle -- delay just plays into the hands of the opposition.

In the years ahead, the cost crisis and the growing number of individuals and businesses that will inevitably be priced out of the market will create a rapidly detriorating situation that will be too dire for half measures.

If the private system is not reformed this year, it will be on its final lap, and within the next decade the crushing costs will result in a successful push for single payer reform, with strong government-imposed cost controls on every aspect of the health care system.

Posted by: Patrick_M | March 12, 2010 10:26 PM | Report abuse

"The independent Medicare actuary has projected that under current trends, the number of uninsured will increase by 10 million..."

And what does the actuary say about the solvency of Medicare...especially after stealing half a trillion dollars from it?

Is this what you do when you're personally broke....just go out and run your credit cards to the MAX with no plan to pay them off??

Posted by: WrongfulDeath | March 13, 2010 9:46 AM | Report abuse

"The resulting legislation took too long, reformed too little, and was too complex for Democratic leaders to easily sell to a nervous public"

Yeah, that goddam public again....getting in the way of the Marxists.

Bastards!!

Posted by: WrongfulDeath | March 13, 2010 9:48 AM | Report abuse

I think Democrats lose more seats if this monstrosity passes than if it fails. There is so much garbage in the bill, it's going to be an easy target. Of course, the bill doesn't actually kick in for years, so even if they do pass it now, it's just a tax increase. Still time to cut the benefits before they come online.

We're already seeing the market it do its magic on the low end of healthcare, where people aren't paying for it with other people's money. If people are spending their own money, they care how much it costs. Right now, it's hard to even find out how much most healthcare costs.

Posted by: staticvars | March 13, 2010 8:32 PM | Report abuse

Today's medical professional liability system is too adversarial and too expensive. There are alternatives. More at http://www.healthcaretownhall.com/?p=2217

Posted by: JEngdahlJ | March 14, 2010 8:07 PM | Report abuse

The fallacies of health insurance reform:

1) Insurance is the exclusive currency by which patients purchase goods and services offered by health care providers.
2) Health care is only affordable if covered by insurance.
3) The inability to obtain health insurance translates into a failure to access health care.
4) The intrinsic value of health care is unique and therefore, cannot be entrusted to the free market.

When reform is based upon fallacy, it is doomed to fail by design.

Posted by: e-doc | March 15, 2010 5:14 PM | Report abuse

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