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Posted at 10:32 AM ET, 01/17/2011

Column: Looking back at health-care reform from 2030

By Ezra Klein

Good morning, class. Today's topic, as you know, is "The Evolution of the American Health-Care System" between 2010 and 2030. Before we begin, either turn off your iGlasses or make sure they're not set to holographically project whatever you're daydreaming. I did not like last week's glimpse into Alexa's subconscious.

As you're aware, 2010 was a turning point for the American health-care system: The Patient Protection and Affordable Care Act was signed into law. It was a clunky piece of legislation - the product not merely of a year of congressional negotiating and dealmaking but also of decades of defeats and diminished expectations for supporters of universal health care. After almost a century of failed attempts to extend coverage to every American, supporters gave up on perfection. Many of them even gave up on what they considered good. They just wanted to get it done. To do so, they embraced legislation similar to what Republicans had supported in 1993 and 2005.

Of course, that didn't mean Republicans liked it. After winning back the House in the 2010 midterm elections, they voted to repeal the law. As you might imagine, this effort didn't get far in the Democrat-controlled Senate. Shortly after, the Supreme Court refused entreaties to excise the individual mandate - the requirement that every person have health insurance - from the legislation. The law was here to stay.

In retrospect, for all the sound and fury it caused, the legislation was modest. It covered most, but not all, of the uninsured. It cut the deficit a bit. To give you an idea of its size and ambition - or lack thereof - when it was fully in place, the legislation accounted for about 4 percent of the country's health-care spending. But like a lot of things in American politics during that period, it was blown out of proportion. As we know now, the law was the first word in health-care reform, not the last.

The next big policy change came five years later, when the failure of a modest deficit-reduction bill caused the bond market to send interest rates on Treasury debt soaring. Congress got serious about deficit reduction, and fast. Three months later, the Balanced Budgets and Sustainable Growth Act of 2015 was signed into law. Among other things, it ended the deduction for employer-based health insurance and replaced it with a refundable tax credit for everyone, no matter where their coverage came from.

To appreciate the irony of this, you have to know that this was the core of Republican John McCain's health-care proposal in the 2008 presidential campaign. But Democrats objected to it because it would push people out of the employer-based market and into the individual market, which was a mess.

President Obama's health-care law, however, had replaced the individual market with exchanges in which insurers were tightly regulated - so, for instance, they couldn't turn you away for a preexisting condition, or quietly cap your benefits, or sell you a plan that wasn't really comprehensive - and consumers were pooled together, so they had bargaining power, rather than having to negotiate all on their own. In other words, it took ObamaCare to achieve McCainCare.

As the employer-based market eroded, a central barrier fell between the health-care system we had and the health-care system we could afford. Now that individuals were seeing the entire cost of their coverage, rather than letting the company HR department do the paperwork for them, they found plans that controlled costs more effectively a whole lot more attractive. This, in turn, gave insurers more leverage against hospitals and, thus, gave hospitals more incentive to work with insurers to cut costs.

It also created space in the country for a more sober discussion of health care. For many years, every serious conversation about cost control was derailed by the dreaded specter of "rationing." Of course, America was rationing the whole time - just doing it by income, so people who didn't have much money didn't get much health care. When there were hard choices to be made, the country tended to curl into a fetal position.

In 2009, critics of the health-care overhaul assailed a provision to have Medicare pay for sessions in which seniors could talk with their doctors about various end-of-life options - including options wherein no expense would be spared to save their lives. End-of-life counseling was spun as establishing "death panels." When the Obama administration put some money toward research into which treatments work and which don't, Congress attached language saying that Medicare and Medicaid couldn't use the results to decide what they would and wouldn't cover. Imagine that: They weren't allowed to use evidence.

But in 2019, at the urging of President Bobby Jindal, Congress passed the Health Care Equality Act, the third major phase of health-care reform. It fulfilled long-held conservative hopes when it moved Medicaid and Medicare onto the exchanges and allowed seniors and low-income Americans to choose between the government behemoths and private insurance. But it also opened both programs to all Americans - making them akin to the public option that Democrats had been unable to pass in 2010. And as part of the deal, both were given more freedom to use a flood of comparative data in deciding what treatments to cover or refuse, which allowed them to finally stop paying for volume and begin paying for quality.

Nowadays, America's health-care system isn't perfect, but it works much better. And it's no longer threatening to bankrupt the nation. It took several rounds of reform, each one building on the last. It was overdue, and it was slow and frustrating. But at least it got - Dammit, Alexa!

By Ezra Klein  | January 17, 2011; 10:32 AM ET
 
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Comments

Lay off the bong, Ezra. The GOP isn't going to turn into a constructive party on big public policy issues any time in the next decade.

Posted by: redwards95 | January 17, 2011 10:43 AM | Report abuse

The big danger for health care reform are the price increases that we are seeing all over the country. My policy at work went up 65% this year, and predictably it is being blamed on the new healthcare law. Even if that is not true, there is growing outrage amongst the middle class over these increases. It will be very easy for the Republicans to blame this all on the new law. It is getting to the point that I suspect smaller businesses will be forced to drop coverage for their workers.

Posted by: AuthorEditor | January 17, 2011 10:48 AM | Report abuse

It's a very appealing vision, indeed. Even with the little elbow about President Jindal thrown in. I'm hoping it's Dean in 2016, myself, of course.

-- Aziz Poonawalla, Dean2016.com

Posted by: azizhp | January 17, 2011 10:55 AM | Report abuse

I would have said President George P. Bush, but that's jut nitpicking!

Posted by: johnmarshall5446 | January 17, 2011 10:56 AM | Report abuse

Ezra, 20 years from now you will be sitting in line waiting to get your hip replaced. It will be way to painful to stand............................. for a year.

Posted by: wxyz6200 | January 17, 2011 11:06 AM | Report abuse

There is NO way the GOP will still exist by 2015. It will split into the Baptist party and the Tea party.

Posted by: EducatingTheFools | January 17, 2011 11:11 AM | Report abuse

The USA has veered of course from the successful country that the founders created to a collapsing ponzi scheme of biblical proportion.
The productive capacity that created the wealth has been destroyed, and now we sit and wait for the end.
The end is nigh as QE2 is financing entropy rather than "recovery"

Posted by: dswanson2609 | January 17, 2011 11:25 AM | Report abuse

the danger is in price and rate increases. by 2030, the insurance companies will be the credit card industry, except more powerful. they'll start aggregate info from social networks about you too so they can give you a rate taht's proportional to ur lifestyle.
.
we think the insurance companies are powerful now. we'll lets wait until 2030 when they're fully matured, have reached market capacity with only 2 or three behemoth insurance companies. then talk to me about prices. it'll be a lot cheaper to pay the fine than to buy insurance.

Posted by: lupercal1 | January 17, 2011 12:00 PM | Report abuse

besides the piece was largely unserious. see i support ins reform now but if this is the future, leave the ins company be

Posted by: lupercal1 | January 17, 2011 12:04 PM | Report abuse

President Jinal? HA! (a la Chris Matthews) Seriously, what happens when we mix the pools of Medicare with those of the working-age population? Wouldn't that lead to lower Medicare taxes but higher insurance rates for everyone?

Posted by: rcd2 | January 17, 2011 12:31 PM | Report abuse

"allowed seniors and low-income Americans to choose between the government behemoths and private insurance."

Wouldn't this make these plans really, really expensive? I understand it's on the exchanges, but the plans would still be dominated by the old and sick, right?

Posted by: Chris_ | January 17, 2011 1:22 PM | Report abuse

The affordable care can actually be used to provide affordable care if we stop insulating the consumer from real prices. Will Wilkinson has a very nice blog in the Economist on this:
http://www.economist.com/blogs/democracyinamerica/2011/01/hayek_v_obamacare

Posted by: staticvars | January 17, 2011 1:38 PM | Report abuse

ezra,

cute little exercise here but you're giving a lot of credit to the average American to make these decisions when they have little or no healthcare IQ. These lines struck me as very difficult to reach at this point in time:


Now that individuals were seeing the entire cost of their coverage, rather than letting the company HR department do the paperwork for them, they found plans that controlled costs more effectively a whole lot more attractive.


Do you think individual consumers will understand in general the choices in front of them? What knowledge do you expect them to have at this figurative point in time that they don't have today? What tools are in place to help them make that distinction?

Posted by: visionbrkr | January 17, 2011 1:46 PM | Report abuse

So Ezra, you have gone William Saffaire, that Nixon Speech Writer, who wrote that article in NYT talking about an alternative History assuming Hitler had won. He was basically arguing his 'crass' case for invading Iraq then...

Compared to that you are trying to make a good case.

And that is the reason, it will not happen. No, in this country we are on the course to 'deconstruct' ourselves and we are on the 'destruction path'. So no hope anything even remotely good what you have written would happen.

Posted by: umesh409 | January 17, 2011 2:35 PM | Report abuse

visionbrkr -

Why this tunnel vision about Americans? Granted, we are stupid (look the obsession we have with Palin...); but we will lean all these things which you are talking about - that Americans will learn about these Health Care Insurance Plans. They did for Automobile Insurance Plans and they do everyday for many other complex products & services.

Consumer driven insurance plans - that will be great and new tools will emerge.

Posted by: umesh409 | January 17, 2011 3:00 PM | Report abuse

If the major provisions of Obamacare are not repealed and replaced with a Paul Ryan type of solution, this future class lecture will be delivered in Chinese, because they will own us.

Posted by: cummije5 | January 17, 2011 4:27 PM | Report abuse

wxyz2600 said "Ezra, 20 years from now you will be sitting in line waiting to get your hip replaced."

Really? He's 26 now, has a reasonably healthful diet, and appears fit. Why in the world would he need a hip replacement when he's 46-years-old? He should have 20 years beyond your prediction, easily.

If this is the level of health discourse in the US today, we need evidence-based medicine, stat!

Besides, in 2051 when Ezra needs that hip, he'll undoubtedly use his jet pack to fly over to Cyberdyne Systems where he'll get the latest in cybernetic lower-trunk replacements.

Posted by: tylerstone | January 17, 2011 4:58 PM | Report abuse

Just looked at my healthcare premiums for 2011. For a family of four, my employer pays $800 per month and we pay about $250 per month. That's approaching our mortgage in total cost. Part of me wonders if we just did away with insurance companies altogether if we'd be better off.

Posted by: willows1 | January 17, 2011 6:17 PM | Report abuse

Interesting, but too wishful.

We're not going to do squat on reforming health care (present legislation included) until the lion's share of the surviving employers drop it as a benefit out of simple self preservation. At that point, the OMG! factor will propel us right into single payer in a massive, sloppy, panicked stampede.

Maybe it will be the culmination of several of those OMG! moments. One is coming up. When hundreds of thousands of independent mom & pop shop owners currently without insurance suddenly find themselves mandated into finding another $24,000 a year to spend on insurance ... watch out. But of course, they'll blame government which will tell in the 2014 midterms.

Posted by: pmcgann | January 17, 2011 6:46 PM | Report abuse

willows1, my husband and I are the sole employees of a small business and to get so so coverage for our family of four it costs $2500 per month. My nineteen-year-old son is a type 1 diabetic.

Posted by: mmpd | January 18, 2011 12:40 AM | Report abuse

umesh,

health insurance is 1000x more complex than auto insurance. its like Mr. Jost of one of the many new agencies with PPACA stated that in time people will buy health insurance just like buying a plane ticket on travelocity. If people really believe their coverage is as simple as buying a ticket on a plane then they're really not paying attention or have never tried to use their plan (be it medicare or private insurance for those of us under age 65).

If anyone uses their coverage they realize how extensive an understanding is needed and there are many pitfalls along the way (and this goes for Medicare just as much as it does private insurance so single payer isn't a true answer.)

Consumer drive plans are great and I have one myself and it saves me a ton of money but it doesn't make it easier to understand and if anything its more complex to understand.

Posted by: visionbrkr | January 18, 2011 9:20 AM | Report abuse

willows,

part of me wonders if you have a clue as to what you're talking about.

Maybe you'd rather we move to a model like this.

http://www.guardian.co.uk/commentisfree/2011/jan/17/nhs-reforms-cameron


Many in the UK readily admit that to offset cost shortfalls they stall procedures that are considered elective. Now with their new reforms many people won't get them at all. Sure let's move faster to the mess that they're in.

Posted by: visionbrkr | January 18, 2011 9:50 AM | Report abuse

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