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The risk of health-care reform

billsvstrills.jpgThe polarizing forces of a legislative debate have a tendency to amplify the certainty of supporters and magnify the doubts of advocates. So I'd recommend Ruth Marcus's skeptical, pro-reform column. I think she actually overstates the amount of disagreement there is in the literature over whether health-care insurance saves lives (see here, here, or here for more on that), but in general, I agree with her caution.

The only twist I'd add is that the issue, in my mind, isn't so much the risk of this bill as the expectations around it. I think the cost controls are likely to work, but that's largely because they're much more modest than people realize. The bill doesn't strike me as a big "risk" insofar as the worst case is pretty much that we insure 32 million Americans and that proves somewhat more expensive than we'd anticipated. Given that the projected spending of the bill -- with no savings or revenue taken into account -- is only 4 percent of our annual spending on health care, I'd take that deal and I'll gladly sign my tax return to help pay for it. If that's the cost of a decent society, so be it.

But we're not done. Even if the bill does a better job than CBO projects, health-care costs will still bankrupt us. This is one small step for cost, one giant leap for coverage. My great hope is that the bill makes the next steps easier. But there's still no guarantee we'll take them. And the debate and difficulty Congress had passing a bill that was too small and deeply compromised has left me very pessimistic about our system's capacity to make harder decisions. The danger is not that we can't solve our problems, but that we won't. And that's the biggest risk of all.

By Ezra Klein  |  March 24, 2010; 4:20 PM ET
Categories:  Explaining health-care reform  
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Comments

Just wait -- if everyone's insurance rates don't drop precipitously right now, the Rs will be screaming this is a failure come Oct.

Posted by: AZProgressive | March 24, 2010 4:47 PM | Report abuse

It's time to seek out single payer candidates. Volume buying and cutting out the middleman.

It's not a government takeover because there would no restrictions on high-end clinics and hospitals.
England does fine with both and so can we.

We can't save money until we get at the root of the problems - a useless middleman and inflated health CARE costs.

It's what used to be covered in Business 101.

Posted by: ThePoliticalStraycom | March 24, 2010 4:50 PM | Report abuse

"If that's the cost of a decent society, so be it." If health care ultimately has to be funded by a general tax increase (rather than various fines, fees, fraud reduction, and cuts), I sincerely hope it will still have as many advocates.

All the talk of potential savings to the Federal budget has overwhelmed discussion about the mechanisms by which each state will come up with the funds to cover the 50% (or so) portion that Federal Medicare dollars do not pay. Despite the fact that the Senate exempted itself from enforcement of the unfunded mandate act, the unfunded mandate itself is still there. Keep your taxpaying pen handy.

Posted by: rmgregory | March 24, 2010 4:53 PM | Report abuse

@AZProgressive:

This thing was signed into law on Sunday, and my insurance still hasn't gone down any. Lies! All lies!

Posted by: Kevin_Willis | March 24, 2010 4:56 PM | Report abuse

"And the debate and difficulty Congress had passing a bill that was too small and deeply compromised has left me very pessimistic about our system's capacity to make harder decisions."

That's why we have to focus on reforming the process - end the damn filibuster!

Posted by: randrewm | March 24, 2010 4:58 PM | Report abuse

I don't want to alarm you fellows, but a few days ago I printed a copy of the HCR bill and sometime last night it morphed into a 90 foot, three headed python and ate my house! Then its eyes turned red, it spat fire, and it said, "The end is nigh! Because of your health care bill the world will end! I will devour you all and use your bones to clean my teeth!"

It then impregnated all my pets, took credit for covering 32 million uninsured people, and left.

So I guess it really was a Republican bill after all.

The downside is that now I have no house and soon I'll have 32 dogs running around in whatever residence I find to replace my snake-eaten house.

Stupid health care reform bill.

Posted by: nisleib | March 24, 2010 5:06 PM | Report abuse

I agree with AZP. Rising health care costs will almost certainly be blamed on this bill. But the bill is a law now so that's out of the way at least. Hopefully the push to do something about cost will result in.... a..... public option.

Posted by: simmonslcsw | March 24, 2010 5:12 PM | Report abuse

"I'd take that deal and I'll gladly sign my tax return to help pay for it. If that's the cost of a decent society, so be it."

Two points on this.

1) The new taxes on this bill are not going to hit you unless the WaPo is paying bloggers >200K.
2) In the last few years that you've been a successful blogger, how many uninsured people have you volunteered to buy health insurance and/or health care for? If you're so willing to pay, there's nothing stopping you from doing so, you didn't need this bill to do that.

Posted by: ab13 | March 24, 2010 5:23 PM | Report abuse

All I know is that they asked me "bd, now that HCR is law, what are you going to do next?" and I said, I'm gonna go see Green Day!

Posted by: bdballard | March 24, 2010 5:28 PM | Report abuse

In some ways, expanding coverage will accelerate the process of cost control because if they are not, the govt goes bankrupt sooner, plus more people are insured in the meantime. Cutting costs is much harder than expanding coverage, so the hard work is really ahead. Hope you're ready.

Posted by: srw3 | March 24, 2010 5:34 PM | Report abuse

I wonder what would happen in 2013, when the individual mandate kicks in, if millions of people all over the country refused to purchanse health insurance or pay the fines? Guess it would keep those 17,000 new IRS agents busy.

Posted by: RobT1 | March 24, 2010 5:41 PM | Report abuse

"Even if the bill does a better job than CBO projects, health-care costs will still bankrupt us. This is one small step for cost ..."

So, is this your way of admitting that all of this rah rah rah crap you've been peddling over the past weeks about how the Dems' HCR will help reduce costs is actually nonsense?

Posted by: ostap666 | March 24, 2010 5:50 PM | Report abuse

AZProgressive is right. The Democrats now own the healthcare issue. If people like what they're doing, good for them. But if people still get angry over their premiums or their coverage, that's now the Democrats' problem.

RobT1, the mandate will essentially amount to a tax only on the working class. It won't be an issue for middle and upper classes with employer coverage, and poor people will just ignore it. I can't imagine that the Government is going to issue tax levies against thousands of poor people for failure to comply.

Posted by: tomtildrum | March 24, 2010 5:57 PM | Report abuse

It's no wonder the expectations are so high- most of the punditry including you- were so high on this bill that you couldn't contain your unfounded enthusiasm. Although I certainly hope something positive will come from this- it is far, far from being a comprehensive healthcare bill. No price controls and no real changes to one of the many broken systems that control our life. Just as the Obama financial team put band-aids on a major gash- so too this is hardly a change we can believe in. Didn't hear anyone discussing the big pharm secret deal that got outed along with all the other handcuffs put on any substantive and useful change. You guys will be the first with amnesia to jump on the problems that will arise in a few years. The American people aren't that dumb. When something sounds too good to be true is surely is. 17% real unemployment rate yet we will insure another 20-30 million people and it won't cost the average guy anything more? I've got a bridge to sell you in Brooklyn.

Posted by: BB60 | March 24, 2010 6:38 PM | Report abuse

Ezra,

I wish you had demonstrated in your blog the last few months the kind of humility (and intellectual honesty) that Ms. Marcus commends in her column.

Steve

Posted by: FatTriplet3 | March 24, 2010 6:42 PM | Report abuse

Hypothetical scenario:

I am a manufacturer of plastic auto parts. I employ approximately 300 low skilled, non union, workers. Insurance premiums are $8600 for an individual and $ 13,600 for a family. I pay health care benefits but cap my payment at $400 per month with my employees paying the balance. This means that a single employee pays $3800 per year and an employee with a family pay $8800 for their insurance. My present expense is $1,440,000. I am not profitable due to the recession in the auto industry, so there are no profits from which to pay increased premiums. If I want to be in compliance under the new federal law, my health care costs would increase to approximately $6622 for a single employee and $10, 472 for a family. With an 80 percent family coverage this would increase my cost to $2,910,600 but I am still at risk if an employee opts into the exchange to the tune of 270x 2000= $ 540,000. So my potential cost is $3,450,600. So my options are these: Follow the mandate and provide insurance and lose 2 million dollars ($3,450,600-$1,440,000 = $2,010,600) and face bankruptcy or cancel my insurance and pay the fine and make close to a million in profit ($1,440,000- $540,000 = $900,000). Normally, I would NOT be able to cancel my insurance because my employees want insurance, need it, and demand it. Thanks to the new law however with the government subsidies to the exchanges, the subsidized premium in the exchanges should save my employees with families $2000 per year over their present expenses and singles would pay only $500 more per year. As a whole my employees would save $450,000 by my canceling their insurance.

I make a million dollars. My employees save ½ million. And Uncle Sam pays
$2,556,000 by cutting grandma’s Medicare and MY grandma’s already passed on.

What’s not to love?

Posted by: jmc210 | March 24, 2010 8:28 PM | Report abuse

jmc210,

nice explanation of "employee dumping". Yes there's been a name for it all along.


AzProgressive,

and WHEN rates go up as they will absolutely do I'm sure you on the left will scream that insurers are already STEALING from you to make up for lost future profits. See it works both ways.


I can't wait until 2011 when not a single insurer pays off on the MLR requirement and costs are still rising and you all clue in to who the real culprit of cost is.

Ezra,

you're right the cost controls are modest. Too modest. When you hand someone 32 millions new customers whether it be insurers, pharma, doctors you SHOULD get something for your money. Just like everyone screamed at the bailouts for the banks when all this hits and the costs don't go down like people hope or even bend the curve like people hope they'll all be asking WHY we didnt' do more immediately to reduce costs. We'll say we had to get access to people first and the American people won't get it. It'll look like another sellout even if its not.

Posted by: visionbrkr | March 24, 2010 9:56 PM | Report abuse

The commentators keep reminding us that Theodore Roosevelt was the first president who tried to bring universal health care to the American people. That's not quite true. He never really expressed the idea while he was in office. In 1912 Roosevelt had been out of office for four years when he attempted to reclaim the presidency from William Howard Taft, the man he had picked to succeed him. Once in office, Taft began to dismantle most of the progressive reforms that Teddy had put into place. When he sought the nomination once again, his campaign slogan was "a square deal for every man and every woman in the United States." Part of the "Square Deal" was health care for all. He arrived at the convention that summer with all the delegates he needed (and then some) to seize the mantle of standard bearer. It was not to be. His party would betray the people by giving the nomination to Taft in spite of his victory. They had had enough of Theodore Roosevelt and his progressive reforms. 1912 was the year that the progressive wing of the Republican party died. He was the last great Republican president - the very last.

A generation later TR's distant cousin Franklin attempted to pick up the torch of universal health care. In his 1944 State of the Union address, he told the American people that his major goal for the post war world was national health insurance. Unfortunately for you and I, FDR did not live to see the war's end. A film of that speech can be viewed in Michael Moore's film, Capitalism: A Love Story. It's is now out on DVD and is essential viewing.

The new health care bill is not perfect - far from it - but as the old Chinese saying goes, "The journey of a thousand miles begins with the first step." There will be improvements made on it down the years - there absolutely needs to be - but this is a fairly good first step. We're on our way! The Conservatives will whine, but that's what they do best. They'll whine just as they whined when Lyndon Johnson signed into law the Voting Rights Act of 1965, or the Civil Rights Act of 1964. Just as they whined when Harry Truman desegregated the army in 1947, or when Franklin D. Roosevelt brought Social Security into being in 1935. They'll whine just like they did when Woodrow Wilson tried to form the League of Nations in 1919 - or when Abraham Lincoln ended the institution of slavery in 1863! They whine a lot. Did you ever notice that?

http://www.tomdegan.blogspot.com

Tom Degan

Posted by: tomdeganfrontiernetnet | March 25, 2010 5:04 AM | Report abuse

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