Sunday, February 28, 2010

The Cost of Doing Nothing on Health Care

But what if?

Suppose Congress and President Obama fail to overhaul the system now, or just tinker around the edges, or start over, as the Republicans propose %u2014 despite the Democrats%u2019 latest and possibly last big push that began last week at a marathon televised forum in Washington.

Then %u201Cmy health care%u201D stays the same, right?

Far from it, health policy analysts and economists of nearly every ideological persuasion agree. The unrelenting rise in medical costs is likely to wreak havoc within the system and beyond it, and pretty much everyone will be affected, directly or indirectly.

%u201CPeople think if we do nothing, we will have what we have now,%u201D said Karen Davis, the president of the Commonwealth Fund, a nonprofit health care research group in New York. %u201CIn fact, what we will have is a substantial deterioration in what we have.%u201D

Nearly every mainstream analysis calls for medical costs to continue to climb over the next decade, outpacing the growth in the overall economy and certainly increasing faster than the average paycheck. Those higher costs will translate into higher premiums, which will mean fewer individuals and businesses will be able to afford insurance coverage. More of everyone%u2019s dollar will go to health care, and government programs like Medicare and Medicaid will struggle to find the money to operate.

Policy makers, in the end, may be forced to address the issue.

%u201CIt will break all of our banks if we do nothing,%u201D said Peter V. Lee, who oversees national health policy for the Pacific Business Group on Health, which represents employers that offer coverage to workers. %u201CIt is a course that is literally bankrupting the federal government and businesses and individuals across the country.%u201D

Even those families that enjoy generous insurance now are likely to see the cost of those benefits escalate. The typical price of family coverage now runs about $13,000 a year, but premiums are expected to nearly double, to $24,000, by 2020, according to the Commonwealth Fund. That equals nearly a quarter of the median family income today.

While some employers will continue to contribute the lion%u2019s share of those premiums, there will be less money for employees in the form of raises or bonuses.

%u201CIt%u2019s also cramping our economic growth,%u201D said Frank McArdle, a consultant with Hewitt Associates, which advises large employers and reported on the need for change for the Business Roundtable, an association of C.E.O.%u2019s at major companies. Spending so much on health care is %u201Creally a waste of people%u2019s money,%u201D Mr. McArdle said.

The higher premiums will also persuade more businesses, especially smaller ones, to decide not to offer insurance. More people who buy coverage on their own or are asked to pay a large share of premiums will find the price too high. It doesn%u2019t take too many 39-percent increases, like the recent one proposed in California that has garnered so much attention, to put insurance out of reach.

%u201CWe have an affordability problem that is moving up through the middle class now,%u201D said Paul B. Ginsburg, the president of the Center for Studying Health System Change, a nonprofit Washington research group.

While estimates vary, the number of people without insurance is expected to increase by more than a million a year, said Ron Pollack, the executive director of Families USA, a Washington consumer advocacy group that favors the Democrats%u2019 approach. The Urban Institute, for example, predicts that the number of uninsured individuals will increase from about 49 million today to between 57 million and 66 million by 2019. The Democrats%u2019 plan is expected to cover as many as 30 million individuals who now are uninsured.

There will be a cost in lives, too. Mr. Pollack%u2019s organization estimates that as many as 275,000 people will die prematurely over the next 10 years because they do not have insurance. Even people with insurance will find their coverage providing much less protection from financial catastrophe than it does now. Individuals will pay significantly more in deductibles and co-payments, for example. %u201CMore and more families will experience huge debts and bankruptcies,%u201D Mr. Pollack said.

Federal and state governments will also feel the squeeze. Medicare, the federal program for the elderly, is already the subject of much hand-wringing as its spending balloons. Medicaid, a joint program of the federal government and the states, is already struggling as states try to balance budgets hit hard by the economic downturn. Many states may be forced to cut benefits sharply as well as reduce financing for community health centers and state hospitals that serve the poor.

%u201CI think we%u2019ll just see the decline of public services,%u201D said John Holahan, the director of the Health Policy Center at the Urban Institute.

Exactly how politicians, or anyone else, will react to the increasing pressures on the system is anyone%u2019s guess. If the system actually collapses, could there be a movement to adopt a government-run system, something like Medicare for all, where the whole health care system would be much more heavily regulated?

Or maybe employers would take up the effort to figure out a better way of providing coverage.

The states may also step up their role. Some may try to follow the lead of Massachusetts, which overhauled its own insurance market for individuals and small businesses, while others may try a series of regulatory fixes. A state senator in New Hampshire, for example, recently introduced legislation that regulates hospital prices in a fashion similar to an approach favored in Maryland.

What seems unlikely, say policy analysts, is that Congress would try to pass anything nearly as ambitious as the bills that went through the House and Senate last year.

%u201CIf we fail this time, you%u2019re not going to get this Congress to take this up on a big scale,%u201D said Len Nichols, a health policy analyst at George Mason University who says he thinks the Democrats should go ahead and pass legislation.

But few policy analysts think Congress can afford to do absolutely nothing. Lawmakers are instead likely to try a series of smaller fixes, said Stuart Butler, a health policy analyst at the Heritage Foundation, a research group that favors market solutions over a larger government role.

After President Bill Clinton failed to get Congress to pass his health care bill in 1994, Republicans, who then had substantial victories in the House and Senate, worked with him to pass legislation like the health care privacy bill, a children%u2019s health insurance program and the Balanced Budget Act, which contained significant changes to the Medicare program. Under President George W. Bush, the Republicans went on to pass a drug benefit under Medicare. %u201CIn the space of less than 10 years, you have several major bills,%u201D Mr. Butler said.

If nothing passes now, Mr. Butler says he thinks Congress will tackle narrower areas, like insurance regulation, to make it easier for people with pre-existing medical conditions to find coverage, or maybe it will try another expansion of Medicaid or the children%u2019s program.

But President Obama clearly prefers passage of a broader bill. In wrapping up Thursday%u2019s session with lawmakers, he and other Democrats warned that an incremental approach was likely to provide too little relief to the people already feeling the effects of a broken system. %u201CIt turns out that baby steps don%u2019t get you to the place that people need to go,%u201D he said.

And even some people without a partisan point to make argue that the series of bills passed in the last 15 years have not made enough of a dent in slowing down medical costs. %u201CWe%u2019ve had a lot of incremental reforms already,%u201D said Mr. McArdle, the Hewitt consultant.

And many argue that putting off the inevitable has an additional cost. The Commonwealth Fund estimates that the nation would be spending hundreds of billions of dollars less than it does today if any of the health care legislation proposed by previous administrations had been enacted, assuming that they reduced costs by about 1.5 percentage points. If President Nixon%u2019s plan had passed, the United States might be spending a trillion dollars a year less than it does now, and President Clinton%u2019s plan would have reduced spending by some $500 billion a year.

%u201CIt makes a huge difference over a long period of time,%u201D said Ms. Davis of the Commonwealth Fund.

NY Times today on Costs of Doing nothing on Healthcare...

To Your Best Health,

The Personal Medicine Team

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