Lack of reform in health care bills means continued increases in medical costs are assured
The Congressional Budget Office now estimates the House bill would reduce the deficit by $138 billion over 10 years. They estimate the Senate bill would reduce the deficit by $130 billion over 10 years. The total cost over ten years is estimated at $890 billion for the House bill, and $600 billion for the Senate bill, with cost reductions and new taxes contributing a bit more.
This will be a surprise if you follow Charles Krauthammer, who says the bill will cost $1 trillion, or Sean Parnell (Sarah Palin’s replacement as the governor of Alaska) who estimates the cost at $2.5 trillion. Of course, neither the Congressional Budget Office nor right wing commentators actually know the impact, so the argument is over whose assumptions to believe. At least we’re no longer arguing about baby killing death panels.
The CBO estimates look at costs and income over a 10 year period. Politicians know this, so the bills contain revenue raising initiatives that start immediately, with cost increases that don’t start for a few years – such as delaying insuring the uninsured for up to three years. So the first few years are sharply positive, but once everything kicks in the impact is close to neutral or slightly negative. It is a bit of legislative sleight of hand that tries to hide the cost by delaying benefits – which is wrong on both levels (but apparently a common trick used by both Democrats and Republicans for some time).
The CBO calculations are also only counting the cost to the government. There should be further net cost reductions in the system, as the uninsured will be able to access health care more cheaply than going to emergency rooms, and insured Americans will no longer be directly subsidizing the uninsured through higher premiums. However, these gains are likely to be overshadowed by continued escalation in health costs, which neither bill addresses with any vigour and in fact may make worse.
As Jeffery S. Flier, dean of the Harvard Medical School, explains in a great article in the Wall Street Journal: “I find near unanimity of opinion that, whatever its shape, the final legislation that will emerge from Congress will markedly accelerate national health-care spending rather than restrain it.” This is a result of the insurance based system obfuscating the cost of health care, and this lack of transparency means there are no individual incentives to control or even check health care costs. Both the House and Senate bill do nothing to change those incentives.
Unfortunately, the very act of insuring the uninsured (however equitable it may be) will have as one consequence the reduction of the only group of people who actually have a keen stake in controlling their own medical expenses.
No matter what form the final bill takes, or even if it passes at all, one thing is clear: the US will continue to enjoy the world’s most expensive health care system for many years to come.
