Healthcare Reform: The Real Problem
Ezra Klein details why it’s so hard to get a comprehensive reform of our healthcare system passed.
There are three primary difficulties in finding the money for health-care reform. The first is that costs inside the system grow more quickly than incomes outside of the system. Imagine if your mortgage grew by 10 percent a year and your income grew by 3 percent a year. You might be able to handle that for a while, but eventually it would overwhelm you. That’s the problem for the House bill, too. The surtax on the rich raises enough money to balance out the first 10 years, but after that, health-care spending accelerates beyond it. According to the Joint Committee on Taxation, the cost of the coverage expansion is increasing by 9 percent a year at the end of the first 10 years, while the revenues are only increasing by 5 percent a year. Thus, deficit explodes outside of the first 10 years.
Luckily, there is one thing that grows as fast as health-care spending: health-care spending. If you raise money inside the system, then the revenues keep pace with the costs. Which gets us to the second problem: Liberals (particularly unions) have taken the major pot of money — the employer tax exclusion — off of the table. If you can’t touch that, then you can’t do very much: You don’t want to take all that money from Medicare, and you can only get so much from an excise tax.
The third problem is that the health-care reforms being considered simply don’t save that much money. Just as the system is unaffordable now, it is unaffordable six years after reform. So the final possible solution would be a more radical transformation of the system that actually saved money. The Wyden-Bennett Healthy Americans Act fits the bill. But few senators (or representatives) support it, as the plan is too ambitious, and entails too much disruption of existing insurance arrangements, for their tastes. Single-payer is rejected for similar reasons.
The problem, in the end, is simple enough: The easy revenue options — a small tax on the rich, or cuts in waste and abuse — don’t raise enough money. The hard revenue options don’t have any support. And the solutions that would save you money are ruled too radical.
Dave Schuler could have written that two years ago. Indeed, he probably did. That’s not an insinuation either that Ezra is cribbing from Dave or slow on the uptake; just that there’s pretty widespread agreement as to what the obstacles are among those who’ve been paying much attention.
Ezra’s conclusion, though, is tautological:
The problem is not insufficient money, or the relative growth in costs, or the savings. The problem is insufficient political will.
Well, yes. That’s pretty much the obstacle to getting any policy option enacted in a democracy. In this case, a goodly number of us think the proposed cure is worse than the disease. Or will make the disease worse.
In hashing this out with Dave over the past several months, mostly on OTB radio, he’s convinced me that 1) there is a legitimate crisis in our healthcare delivery system and 2) that the medical licensing cartel is a major component of the cost issue. There are some relatively non-controversial and non-painful ways to address this problem that aren’t even on the table. But aside from massively opening up our medical schools to qualified applicants and allowing nurses and PAs to do jobs they’re fully qualified but not allowed to do without physician supervision, most of the other changes necessary are sufficiently unpopular that they’re not going to happen until we’re closer to crisis.