What’s Next for Health Care?

By James Kwak

I should leave the country more often: I go away and suddenly we have (near-)universal health care coverage! (Well, we’ll have to wait a few years for all of the health care reform provisions to kick in, but you know what I mean.) Not only that, but Ezra Klein reminds me that we even got rid of the pointless subsidy to the banking industry in the student loan program (where the government guaranteed the loans but let private lenders earn profits making the loans, even though the guarantee obviated the need for underwriting).

So what happens now? Nate Silver points out that passing health care reform has helped the Democrats, though not as much as I would have expected. I’m no expert on electoral politics and public opinion, so my guesses are just that — guesses. Anyway, I think that just as many people see politics as a type of sport, many people like winners; winning on health care would be good for Obama and the Democrats just as losing on it would be bad, regardless of their actual position on the issue. According to Silver, this is a little bit true. Still, I think it could become more true by November (relative to the unknowable counterfactual where health care reform failed), because it largely takes away one major potential criticism of the Democrats: they couldn’t get anything done. In Colombia, where I was, they were calling it the largest domestic program of any kind since Medicare, over forty years ago.

In the longer term, will this turn out to be as popular as Medicare? I doubt it, because the reform was so modest in many respects. (Klein has written many times about how this is not only a centrist bill, in many ways it’s actually conservative — reliance on market mechanisms, no public option, etc. Here’s his latest version.) I worry that, in the transition period, health care costs will continue to grow faster than inflation, companies will cut back on their plans, and people will blame the loss of their coverage on “Obamacare”; when people have their claims denied by their existing insurance plans, they’ll blame it on “Obamacare”; and, in general, the debate over the past year has so poisoned public attitudes that about 40 percent of Americans will assume that anything bad that happens to them (like getting sick in the first place) must be Obama’s fault. I also worry that, even as the bill “bends the curve” on long-term costs, people will see the fact that costs continue to rise faster than inflation as proof that the reform didn’t work — just like some people point to 10% unemployment as “proof” that the stimulus didn’t work.

But I think that near-universal coverage, and a ban on medical underwriting, are un-repealable enough that they will make it through the transition period until we reach the point where Americans assume that they can get decent health insurance at a price that, if not reasonable by international standards, is not completely unaffordable. And that would be a huge step forward.

13 thoughts on “What’s Next for Health Care?

  1. Democrats win easily on this one. Even up to today George Will has predicted the end of the world after the bill passed. When the illiterates don’t see Godzilla on the city’s horizon, what will they do??? Well, it doesn’t matter because Obama lost their vote a long time ago. Obama needs to catch the people in the middle who read the newspaper at least 3 times a week. If he stands on principles he’ll come out smelling like a rose in 2 years. If he pussyfoots on TBTF and bank and finance reform he’ll have probs. He needs to take a very DEFINITIVE stance on the bank regulation issue.

  2. Mmmmm. For a lot of people it’s going to be “Money they don’t have, for insurance they can’t use.” The results from Mass. are ugly, with 21% of residents still not able to afford care. There’s going to be a zone of high marginal “tax” rates where the subsidies end for households with incomes around $40k-$60k/yr.

    Effective cost controls have not been included in the plan. The policy problems of the bill are the same problems you’ve been writing about in other areas of the financial services industry.

    So I think it will be all to do again, in a decade or so.


  3. Well, the insurance companies don’t believe they have to cover children with pre-existing conditions until 2014.

    So, that’s one talking point down. I’m sure many more will prove to be illusory as well; the chanting in unison from D operatives and access bloggers was as loud as I’ve ever heard it before the bill’s passage.

    James, we don’t have “(near-)universal health care coverage”! We have “(near-)universal health insurance coverage” because of the mandate, but the claim that people will actually get more care depends on the quality of the coverage, and since that depends on cost controls (non-existent) and regulations (the administration shows every sign of cognitive regulatory capture here, too), we really have no idea whether the care will be universal or not. If past performance is any guide to future results, it won’t “nearly so.” Exactly as in the banksters after the financial crisis, the same players are in place, with the same incentives, and with no structural reform.

    Making failure to buy junk insurance a Federal crime — what would go wrong?

  4. Raven,
    I respectfully disagree.

    They’ll stick with this plan and try to fine tune. And although I don’t doubt your numbers, I don’t think that those people in Mass. will go without. Mass. was ALREADY covered by their state system, that’s why they voted Senator Brown in. If they’re getting more federal dollars now I would think they can adjust their state system and take care of 95% of them. It’s redneck states with Republican state level leadership that’s apt to get gypped while they try to knot and entangle it up in the court system.

  5. Exactly. They have made profit, law.

    Obama and the Dems have sold the minions into corporate slavery, and they praise him for it.

    It’s a new world, and it’s brave, but certainly not ‘home of’…

  6. Oh, yes, they’ll amend rather than repeal. But the hard part of this always was the financial regulation; without the demands of the insurance and pharmaceutical industries it would have been simple to extend Medicare until it covered the whole population. So costs will rise until there’s finally no way to sustain the system, and then we’ll have the same fight over again.

    I think also you may underestimate how much people are going to end up hating the mandate and the insurance companies by the time this system really gets going.

  7. It seems to me the only way to bring down healthcare costs in the United States (given that there is no public option or single payer) is to — regulate — the for-profit health insurance corporations … and this will be as difficult as regulating the financial sector.

  8. @The Raven

    You are absolutely hitting the nails on the head here.

    It is astonishing to me that contributors to this blog who are so clearly aware of the problems of regulatory capture, and coziness of legislators with industry when it comes to finance have a blind spot about the same phenomena with respect to the health care industry.

    The proposed regulations in the Dodd financial bill are positively leonine compared to the provisions of the health care law that are supposed to bring down health care costs. The health care bill didn’t reform the industry: it gave the existing system a huge shot of growth hormone.

    The health care bill may turn out to be good politics for the Democrats in 2010 and maybe even 2012, but it’s terrible health policy and will wreak havoc on the economy over time.

    I wonder what James will say after a decade when health care consumes 25+% of our GDP and workers have had yet another decade with no wage growth because all of their productivity gains got siphoned off by the health care industry. What will he say about those people who had to move to a house in a less safe neighborhood with lousy schools, or made their kids drop out of college so they could meet their health care premium obligations? What will he say about the spiraling numbers of people harmed or killed by the unnecessary tests and treatments fueled by all of the new money injected into an already bloated over-aggressive system?

    @Ted K

    It is, I think, fantasy to think that this law will be refined over time. We had two problems to solve at once: control costs and get everybody access to reasonable health care. The granting access is the easy part because the industry gets millions of new paying customers. That’s the part that this law does. But we did nothing real on control of costs–and that will be fought tooth-and-nail by the industry if anybody dares try it.

  9. I disagree that it will product results for the Democrats in Nov. What percentage of people vote in the off year? What percentage of those people could not afford health insurance? What percentage of moderate income younger workers who choose not to subsidy us old f..ts will now be forced to cough up a premium when they break even every month on rent, food, and recreation. No cost controls will take effect before the right wing takes over Congress and repeals the whole thing.

  10. Despite their over-the-top protestations, the Republicans will not ultimately seek to repeal the law, because, in spite of their criticism (in many ways justified), it does contain at least a part of the reforms that should be made. It has, however, many failings, and really, at close scrutiny does little to really hurt the HC insurance industry. What it does do is provide a place for improvements to begin to be made, and should, in the long run, improve this country’s health and health care. If it is not substantially improved, however, it will really fail to control the portion of GDP devoted to health care, and, for this reason will itself be an unteneble solution. Once that is discovered (this will take maybe about 5 or 6 years at least), it will pave the way for a much better, much different approach. This will not be fully resolved during my lifetime (I’m 64), but will likely be resolved sometime before my grandchildren retire, if the world still exists then.

  11. I think the Democrats did the right thing. To expand access to health care in an effort to achieve near universal coverage. But I was shocked that in order to reform healthcare the Democrats had “pay-off” the for-profit corporations by giving them $940 billion over a decade. How much will these corporations take as profit … 20% … 30%?

    In order to bring down costs these corporations will need to be regulated and perhaps eventually mandated to become non-profits. Just my non-expert opinion. :)

  12. Yup. Lots of “illiterates” below, Ted K. And I’m sure more will stop in before the day is through.

    LOL. Too much.

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