Reforming Healthcare: Can We Afford To Do It? Can We Afford Not To?

Twenty-some years ago a young couple, John and Mary, bought a house cheap knowing it needed certain repairs. They both had good incomes. Their investments were growing by the hour, so it seemed like a good plan. Only, they kept finding excuses not to spend money on the things that needed doing. In good times they didn't want to take large sums out of the market. In bad times they wanted to leave the money there until they made up their losses. Then there were so many other "smaller" expenses that ate up their income, like the flat screen TV they had to buy when it looked like the old set just possibly might go on the blink right before John's big Super Bowl party, and Mary's iPhone that was such a bargain, being a laptop and a phone in one, though she still replaced her old laptop when it crashed.

Twenty years later the chickens have come home to roost, almost literally as crows are entering through the gaping holes in their roof. The rusted out hot water heater not only doesn't heat water, it flooded their basement. The leaky dishwasher they figured they could live with as long as it washed the dishes, rotted a hole through the floor, and the windows they'd always meant to replace allowed water to seep into the walls, nurturing a spreading mold. Not only are the costs and damage worse than twenty years ago, now Mary lost her job and John will probably lose his. Their investments have tanked, and their 401(k) isn't even worth breaking into. John and Mary have no choice but to take a loan, and now...that health problem John's been putting off going to the doctor about just sent him to the ER requiring life-saving surgery.

John and Mary's predicament is very much like the situation the US finds itself in right now. For over twenty years–-and that includes the Clinton years––we've been told the best way to keep our economy going is to spend our money on consumer goods rather than taxes. That's a fun notion anyone would want to believe, even those of us with niggling doubts about just how all that money spent at the mall would trickle into the public sector, and certainly no sensible politician would go up against another one touting that dream of a free lunch. Only now our infrastructure is crumbling, libraries are closing, Medicare and Social Security are in danger, our air traffic control equipment is outdated––you name it and it needs fixing––right in the middle of an economic crisis some economists term the worst since the great depression. With the federal deficit exceeding $1 trillion without even making a dent in these burgeoning needs, many Americans understandably wonder whether now is the best time to tackle healthcare reform with an extremely expensive public option.

First, let's get the facts straight here. I happened to be watching one of those moderated he said/she said debates about healthcare reform on the Lehrer News Hour when news broke that the CBO had estimated the cost of H.R. 3200, the America’s Affordable Health Choices Act of 2009 would cost just over $1 trillion over the next 10 years. Everyone was suddenly struck dumb as, while to you and me 1$ trillion sounds like a lot of money, for the government, spreading that cost over 10 years isn't that big a deal, and everyone discussing it knew that. Since then, the $1 trillion figure has been bandied about quite a bit, without adding the time frame. When I write these posts, I try to go to the source rather than quoting articles about articles about the source, so I went to the CBO site, and as of the point I decided I was spending way more time than this short post warranted, I hadn't read a figure that exceeded a few hundred billion. If anyone wants to, or has, read the whole thing and wants to point it out to me, I'd be much obliged.

The second estimate picked up by the let's start a tempest in a teacup media was something to the effect that, without cost containment measures, a public plan would be unsustainable. Here again, I went to the actual CBO letter. From what I can gather, and it is pretty arcane, that came from projections beyond the next ten years, the accuracy for which the CBO will not vouch (that's a little convoluted), because projections beyond 10 years are even harder than 10 year projections. However, I assume all the hoopla is based on this point,

"As long as overall spending for health care continued to expand as a share of the economy, people’s share of insurance costs would continue to rise faster than their income, or the government’s subsidy costs would continue to rise faster than the tax base, or both."

Again, if anyone can find anything more specific that the media was referring to, I'd like to read it.

So what we have so far, as I see it, is that healthcare reform is doable and it can be affordable, but not without cost containment, and I'm betting not without tax increases either. That's something many of us have known all along. Only we've been trying to impose cost containment on our healthcare for more than 30 years and it's never stuck. As to increased taxes, well, you all know what a lead balloon that one is.

Next, a short history of healthcare cost containment efforts and why they haven't worked. You can find the history of taxes on your own.