Lower costs in healthcare make covering more people financially and fiscally possible. Covering more people without expanding the supply of healthcare will increase costs which will inevitably undermine the political will to extend coverage. The Obama Administration continues down its healthcare reform cul de sac and the Financial Times points out the obvious:
As for cost control under anything like the present structure, the question is: how? Explicit rationing is political poison, and doctors and hospitals are already resisting subtler efforts to economise. To sense the scale of the problem, note that if the $2,000bn in cost reductions were somehow achieved, it would reduce growth in US health spending from about 7 per cent a year to about 5.5 per cent. Spending on health, currently in the neighbourhood of 16 per cent of US gross domestic product, would still grow as a share of the economy. Getting a grip on this requires a radical plan that the administration has yet to disclose and which the healthcare industry, despite this week’s watershed event, is certain to oppose.
Megan McArdle goes a step farther:
Perhaps predictibly, someone showed up in the comments to my post on Medicare and Social Security to argue that liberal analysts have very serious plans to cut Medicare’s costs, which is why we need universal coverage, so that we can implement those very serious plans.
I hear this argument quite often, and it’s gibberish in a prom dress. Any cost savings you want to wring out of Medicare can be wrung out of Medicare right now: the program is large and powerful enough, and costly enough, that they are worth doing without adding a single new person to the mix. Conversely, if there is some political or institutional barrier which is preventing you from controlling Medicare cost inflation, than that barrier probably is not going away merely because the program covers more people. Indeed, to the extent that seniors themselves are the people blocking change (as they often are), adding more users makes it harder, not easier, to get things done.
I’m in favor of more people being covered by health insurance. The way to do this is to reduce costs and not by the paltry 15% that a single-payer system would accomplish.
The only way to get where we really need to go is a major reorganization of our healthcare system which nobody including the present administration has the political courage to tackle.
That does not necessarily follow, even though on face-value it should because it’s basic economics. As you already know, the Canadian and myriad European health care systems cover everyone in their areas – and generally do so with significantly less per capita costs and not particularly different outcomes. Why do you think it will be the case in the United States?
Ultimately, you need to get greater efficiency in your system, as well as pushing down hard on things like doctors’ salaries and the like. That presumably can be done without drastic negative consequences (again, similar outcomes in Canada in spite of lower doctor pay, although they don’t have as many specialists as we do here – but more general practitioners per capita).
I’m wondering if you are just going to have to bite the bullet and prepare for a major fight with the insurers and doctors over a health care system. If you look at the history of Canadian single-payer, they had quite a fight with the various doctors’ associations over implementation of it – and that was before Canadian private insurance had really “congealed” into established, politically powerful mega-corporations in the way it has now in the United States.
There are some, but I think she’s over-simplifying this. Doctors can still (and do) walk away from Medicare if it cuts fees, heavily limiting its market power to drive down costs.
This is a nitpick, but that McArdle post repeats a common conservative fallacy about Canadian health care – that it doesn’t allow private care. That’s nonsense; pretty much all the “supply” of health care is done by private doctors and hospitals. What it does do, though, is ban duplication of coverage of health care for the Medicare-covered services by private insurers, so as to prevent “queueing” (basically, rich people opting out of the system and jumping ahead due to money).
You’ve said before on this blog that it is extremely difficult to expand the supply of doctors and care in order to drive down the average cost of it. How do you plan on driving the costs down without something like single-payer to exert downward pressure on salaries and the like?
In France the number of doctors increases with the population. Here it doesn’t. If we decide to cover 20% more people without increasing the number of healthcare providers or imposing price control, it will increase costs. As you say, it’s basic economics.
Additionally, we have a long largely unmanaged border with a country that has a per capita GDP a quarter of ours. Sick people in Mexico will be highly motivated to come here to seek treatment unless they’re specifically excluded from coverage. If we exclude anybody, we won’t have universal coverage. When you discount recent immigrants and those who have the income to support insurance but for reasons of their own elect not to have it (typically the young and healthy), it accounts for a substantial proportion of those without insurance. I don’t think any other reasonable conclusion can be drawn from the state by state statistics on those without insurance. As I’ve written before the problem of the uninsured isn’t a national problem. It’s a local one.
They already are excluded from most of the forms of coverage (or at least the people in question are; any US-born children largely aren’t), such as Medicare, Medicaid, and SCHIP. I seriously doubt that that will change with the advent of a universal system (obviously, when we say “universal”, we don’t mean literally universal – just universal in the sense that it covers citizens and legal residents).
Moreover, I’d like to actually see some numbers of this problem. You’ve brought it up before, but how much effect does cross-migration have on medical costs, exactly?
Some numbers would be nice. Keith Hennessey had a good post on this, but the largest contingent was actually people who qualified for various programs but didn’t bother to use them, either out of ignorance or refusal.
Moreover, the uninsured are hardly the only problem. I’ve raised the issue of the under-insured, of which precise numbers are hard to come by. We do have figures like that bankruptcy study from a couple years back, in which it was found that in over three-quarters of the cases of medical-related bankruptices, the filers had had insurance at the time of contracting the illness.