Health Care Reform Now, Health Care Reform Tomorrow, Health Care Reform Forever

Let’s take a trip down memory lane. Back in the 1960s I was skeptical about Medicare. Its stated objective was to prevent the further impoverishing of the elderly poor, a worthy goal. I thought it was overly broad, the estimates of its costs were wildly optimistic, and there was a more direct way of accomplishing the objective: a system of federal clinics modeled on the VA system. Fast forward a few years and physicians who had opposed Medicare until the sweeteners added to the bill got large enough were earning more than ever before, got used to their new-found economic status, and began raising prices to maintain their standards of living, as Uwe Reinhardt among others has documented. By that time I had lived and worked in Germany for a while, seen how things operated in France, and had come to support a single-payer system for the United States to control costs.

When the Clinton Administration’s proposal for health care reform failed due to a combination of political mismanagement and steadfast opposition from the entire health care sector and it subsequently became obvious that the Congress was strongly disinclined to control the cost of health care, that reinforced for me the primacy of cost control. The math is extremely simple. There is no way we can afford anything that is increasing in cost three times as fast as incomes are. Just draw it out on a graph and you’ll see what I mean.

When President Obama turned his attention, prematurely in my opinion, from the economy to health care, I was lukewarm to the Affordable Care Act on the grounds that I doubted it would accomplish its goals and I was skeptical of the president’s claims that it would control costs.

Here’s Megan McArdle’s status report for the Affordable Care Act from her Washington Post column:

The rate of Americans without health-care insurance is now within a percentage point of where it was in the first quarter of 2008, a year before Obama took office. Yet in 2008, the unemployment rate was more than a full percentage point higher than it is now. Given how many people use employer-provided health insurance, the uninsured rate ought to be markedly lower than it was back then.

Overall, the effect of Obamacare seems to be marginal, or perhaps nonexistent.

You can chalk that up to Republican interference, since the uninsured rate has risen substantially in the Trump era. But Democrats weren’t really making that argument, perhaps because they realized that a system so vulnerable to Republican interference isn’t really a very good system.

But even before January 2017, Obamacare was failing to deliver on many of its key promises. At its best point, in November 2016, the reduction in the number of the uninsured was less than the architects of Obamacare had expected. And the claims that Obamacare would “bend the cost curve” had proved, let us say, excessively optimistic.

Adjusted for inflation, consumer out-of-pocket expenditures on health care have been roughly flat since 2007. Obamacare didn’t make them go up, but it didn’t really reduce them, either. The rate of growth in health-services spending has risen substantially since 2013, when Obamacare’s main provisions took effect. And since someone has to pay for all that new spending, premiums have also risen at about the same pace as before Obamacare. So much for saving the average American family $2,500 a year.

No wonder the Democratic presidential candidates are reluctant to speak about the ACA. They’ve turned their attention to another bright, shiny object.

The “Medicare For All” bill presently before the House depends on two things for cost control: savings in administrative costs from pushing health care administrative costs from wherever they are now to the roughly 2% that is Medicare’s present administrative overhead and reducing reimbursement rates to the Medicare reimbursement rates. I’m skeptical that the Congress will have the political will to do that but let’s assume they do. That will mean that hospitals that are presently teetering on the brink of bankruptcy, mostly rural hospitals, will fold, leaving people who live in those counties, a very large proportion of U. S. counties, without hospital care within a reasonable distance. That’s if it’s successful.

I also look forward to the Congress’s directing the CBO to estimate the costs of the Democratic presidential candidates’ promise that M4A will cover all comers including illegal migrants. That should make for entertaining reading.