…because I’m an economist and a mom–that’s why!

Three Good (and Not So Hard) Reads on Health Reform

October 31st, 2009 . by economistmom

My boss, Bob Bixby, wrote up his initial thoughts on the House health reform bill in his usual “prime time” last night–around 3 am.  (And I am finally posting on this after a midnight-to-1-am workout with my 18-year-old daughter at “Anytime Fitness.”  Bob and I have always had compatible work schedules.)  We put it up on the Concord Coalition blog this afternoon, after adding a reference to this just-out CBO letter that clarifies (and it really does) different measures of the effects of health care reform proposals on the federal budget.  And Donald Marron put CBO’s points even more plainly (clearly) on his excellent blog today…uh, now yesterday I mean.

My “take-aways” from these three good reads:

  • How the bills change the federal government’s “budgetary commitment” to health care doesn’t necessarily have any relationship to the bills’ effects on the deficit. It’s like how Concord advocates for “fiscal responsibility” and smaller deficits, yet that could be consistent with either high government spending or “big government” (with necessarily higher taxes) or lower government spending or “small government” (and lower taxes).  Donald points out that the House bill expands government’s budgetary commitment by $598 billion over ten years–seven times as much as the Senate bill does (at just $85 billion over ten years).  Yet both bills are deficit neutral–or not hugely far from deficit neutral, depending on how you count the costs of extending the Medicare sustainable growth rate (SGR) “doc fix”–which is not included in either of the bills.
  • The around $600 billion expansion of government commitments to health care (over ten years) might sound like a lot–perhaps like a government “takeover” of health care?  Butwhen you consider that total national health expenditures (public plus private) are about $2 1/2 trillion this year alone and are projected to rise to about $4 1/2 trillion (in one year) by the end of the ten-year budget window, then a $600 billion government expansion over ten years averages just $60 billion/year, which compared with average annual national health expenditures of $3 1/2 trillion is just 1.7 percent.  And even relative to the baseline budgetary commitment of the federal government to health care (about $10 trillion for Medicare and Medicaid over ten years, plus $3.5 trillion for the tax exclusion for employer-provided health care = $13.5 trillion), that $600 billion expansion is just a 4.4 percent increase in the federal government’s commitment.  Not exactly a “government takeover” of our country’s health care system.
  • How are we doing with that “bending the health cost curve” goal?  That depends a lot on which “health cost curve” you’re talking about. If it’s the federal government’s budgetary commitment to health care, then the House bill doesn’t appear too favorable (a big hurdle is the revenue offset that isn’t tied to the growth in health costs), but the Senate bill appears more so.  Both make huge assumptions about our ability to make hard choices in the future that we’re not willing to make today.  If it’s the national health expenditures curve we’re trying to bend, we know even less about how successful that’ll be, because even with the expansion of federal involvement prescribed in the House and Senate bills, the federal government would still hold only a “minority share” in total national health expenditures.

2 Responses to “Three Good (and Not So Hard) Reads on Health Reform”

  1. comment number 1 by: P.G. Garber

    Medicare underpays doctors and hospitals. As a result, many doctors opt out of Medicare, and hospitals cut back on staffing.

    The so-called public option will have the same effects as Medicare, the consequences of which will be fewer doctors and poorer hospital care. The stated purpose of the public option is to save money. No other purpose exists.

    So, the continuing attempts to reduce deficits will have a negative impact on our health care. Of course, taxes could be raised, but this would have a more negative effect on our economy than do federal deficits, so far as I can tell.

    If we are to have improved health care, we are left with a choice: Higher deficits or higher taxes. Unless I see historical data showing that higher deficits have hurt our economy, I’ll opt for higher deficits.

  2. comment number 2 by: Blue Dog Staffer

    Re National Health Expenditures, see table 5: