Health Care Reform and Cost Control

In my last post I pointed out that the costs of extending insured coverage to almost all Americans is going to be borne by the portion of the population that pays taxes. I note that this is pretty much the same portion that can be relied upon to vote. I also noted that the President is concerned to incentivize that same population to quit smoking and exercise more, which is more concern over our weekly schedules that we are used to from the Federal Government. It's pretty clear that those incentives will not be applied to people who depend on the public plan, since you can't deny health care to people or charge them more when you aren't charging them anything. I am sure they won't apply to Presidents who smoke cigarettes either.

But perhaps the increased tax burden and the invasion of privacy will be worth it if it solves the one problem with the American health care system that is universally acknowledged. Heath care in the U.S. costs too much. We pay for too many tests and too many procedures that are expensive and not worth the expense. Assuming that's true, and I think it probably is, do the bills working their way through Congress do something about it? No.

The President said this, in the Snyderman interview:

I think that the most important thing for people to understand is that the system, as it is, is unsustainable. And if people understand that; if you look at the trend lines, where your premiums have doubled over the last nine years; your out-of-pocket costs have gone up 62 percent; the federal government is being bankrupt by Medicare and Medicaid - if you look at all these things, then you know that, just standing still, we are going to be overrun by health care costs.

So if the present system is unsustainable, then surely an object of reform would be to make it sustainable. But this piece from the Washington Post blows that idea clean out of the water.

Congress's chief budget analyst delivered a devastating assessment yesterday of the health-care proposals drafted by congressional Democrats, fueling an insurrection among fiscal conservatives in the House and pushing negotiators in the Senate to redouble efforts to draw up a new plan that more effectively restrains federal spending.

Under questioning by members of the Senate Budget Committee, Douglas Elmendorf, director of the nonpartisan Congressional Budget Office, said bills crafted by House leaders and the Senate health committee do not propose "the sort of fundamental changes" necessary to rein in the skyrocketing cost of government health programs, particularly Medicare. On the contrary, Elmendorf said, the measures would pile on an expensive new program to cover the uninsured.

Though President Obama and Democratic leaders have repeatedly pledged to alter the soaring trajectory -- or cost curve -- of federal health spending, the proposals so far would not meet that goal, Elmendorf said, noting, "The curve is being raised." His remarks suggested that rather than averting a looming fiscal crisis, the measures could make the nation's bleak budget outlook even worse.

The one thing we really need to do, make the system more cost effective, is one thing the current reform bills do not do. Instead, they make the problem worse by extending the inefficiencies to cover more people.

That will put further strain on a budget that is already in free fall. But of course it's worse than that. Here is how the Economist puts it:

Rather than finance this large expansion of coverage through savings found within the health system, as Mr. Obama had prudently requested, the Democratic Party's leadership plans to pay for it by imposing an ill-advised tax on business and a steep "surcharge" on the wealthy. Companies with payrolls bigger than $250,000 per year must provide health cover for employees or face a hefty fine. The bill also plans to raise over $500 billion by increasing taxes on those making over $350,000 a year by up to 5.4%.

I doubt very much whether the House plan will really be "revenue neutral." It will add to the deficit. But it will also put new burdens on the businesses that employ most of us and that generate the wealth that has to cover government expenditures. Ratcheting up the costs of government when those costs are skyrocketing, and taking more resources and investment funds out of the productive economy, well that sounds to me like an economic policy.

Congress is, at present, on a track to produce a health care system that is more costly to most taxpayers and more burdensome than the present one on the economy. I wrote very recently that the Democrats were in disarray over health care legislation. I may have been guilty of wishful thinking.

Comments

[Suzi Orman]

Nearly everyone uses their credit cards for things they don’t need to, and some merely used to. Even my stingy mother has a credit card that she uses solely to keep her credit score high and her credit report looking great, but she even uses it for purchases like a large flat screen television, clothes shopping and more. We just love the idea that we can buy something and simply pay over time. Credit card companies want you to do exactly that

[hsr0601]

In case the health care reform provides the general public with peace of mind, the rising mental stress or illness caused by financial instability may bend the curve surprisingly,
in combination with kicking out the 'keep eating habit' to forget the deep-seated instability and apprehension, I guess.
'Work or Break' health system with no brake or safety system might be one of the biggest hidden cause of mental stress, obesity or overweight threatening the overall economy, I cautiously suppose.

[William]

In a government managed system, which is what this will end up as, the only way costs will be managed will be through rationing care. If you are too old, or have an unhealthy or "dangerous" lifestyle you'll simply be refused treatment.

Even if you are "granted" the privilage of treatment, you'll experience delays in receiving.

While those that can afford insurance or to privately pay for their own care will likely still be able to obtain timely and quality care (at least for the first few years), for most of us there will be no choice.

[KB]

Suzi: Yes, credit is a temptation. But it is only possible when there is someone with the resources to extend it. When the whole nation is running a large deficit, and the Chinese stop lending, then deficit spending starts to eat our seed capital.

hsr: I am dubious that many people worry about healthcare coverage until they actually get sick. I am more inclined to doubt that overeating will be curbed in anyone by the Democrats healthcare programs.

William: some form of rationing is probably inevitable. Healthcare technology is expanding as fast or faster than the nation is growing old. We just can't afford all the technology that might save or extend someone's life or health. That's not a harsh judgment, it's just an inconvenient truth. My concern is that the Democrat's bill will try to extend the overly expensive treatment schedule we have now to more and more people. That will break the bank sooner rather than later.

[A.I.]

Cost? How about people just not wanting reform? You were right all along KB, here's the proof: http://www.theonion.com/content/video/study_most_children_strongly?utm_source=videoembed

[KB]

A.I.:

You really nailed me with this one. I have long been an admirer of The Onion, but here they have outdone themselves. When I was a little kid, I was vehemently opposed to healthcare. For political reasons, of course.