The Trillion Dollar Question

by dday

In my (bungled) attempt to look at drug company advertising, I noted that the House Ways and Means Committee looked at, then discarded, the option of cutting out their deduction for advertising as a business expense to help pay for reform. One commenter rightly observed that this is a function of having to scrape for cash anywhere it can be found to pay for a policy that must remain deficit-neutral within a 10-year budget window, despite numerous up-front costs, and a completely artificial ceiling placed on how much can be spent in those ten years.

For a while now, the conversation about health care has been all about costs–in particular, the cost to the federal government. Somewhere along the line, somebody decided that health reform shouldn’t involve the government sending out more than $1 trillion over ten years, even if we can provide that much money through some combination of higher taxes and savings in the medical care system.

There is no magic reason why $1 trillion should be the theshold. My colleague Jonathan Chait recently suggested that it’s all because of way our bodies look. If we all had twelve fingers and toes rather than ten, he said, the magic number would be $1.2 trillion. I guess that would mean it’s god’s fault.

My own theory is that conservatives and centrists complaining about the price of reform don’t think guaranteeing affordable coverage is really so important. I include among them a certain Democrat from North Dakota who runs the Budget Committee and keeps talking about what we can’t afford to do. To be clear, Senator Kent Conrad is not god, although I wonder sometimes if he thinks he should be.

The problem is that capping the cost of the bill at $1 trillion over ten years (and by the way, in that time America will spend something around $24 trillion annually throughout those 10 years on health care) has led to fiscal scolds cutting the kinds of things out of the plan that would increase access, like lowering the subsidies that would make insurance affordable to everyone, or shrinking the benefits package so individuals would have worse coverage and higher out-of-pocket costs.

“We are very concerned that [lawmakers] have that fixed and arbitrary total dollar amount and this is it,” said Stephen Finan, senior director of policy for the American Cancer Society Cancer Action Network. “Either it’s not going to be enough to pay for adequate insurance or we just dumb down the level of benefits. We are concerned we could wind up with a package that is neither adequate nor affordable coverage.”

Lead fiscal scold Kent Conrad gets quoted in this article too, telling us that we all “have got to be realistic about what is possible” and “We can’t do everything we’d like to do and pay for it and bend the cost curve the right way.”

First off, this is actually untrue. A viable public option which didn’t firewall out those with employer coverage and has a provider network and rates similar to Medicare could bend that cost curve. As could giving Americans more choices in their coverage by breaking regional monopolies through an insurance exchange. The same with expanding access and eliminating the hidden fee of paying for costly ER visits for the uninsured. And empowering an independent board to make changes to Medicare rates and structures while partially insulated from the political process. And a host of other ideas where more reform, of the kind that people like Kent Conrad don’t want, can lower costs.

But this amounts to playing on the other side of the field. Americans trust Democrats on health care issues, for the most part, because they have traditionally emphasized more access to care and treatment. That’s not to say that the cost issue is meaningless – it’s actually in many cases complementary to the cause of access – but it’s a matter of emphasis. And the moral case for health care reform has been almost entirely extinguished.

This year, however, it’s not just been the opponents of the policy who have relied on the “mellifluous language of the standard economic theory of markets.” It’s been the advocates of reform. Ask yourself what the administration’s one-line goal is on health-care reform. Is it “equal treatment for everybody?” Is it “if every American is guaranteed a lawyer, why not a doctor?” Is it even “guaranteed health care for everyone?”

No. It’s “bend the curve.” And the problem with “bending the curve” is that it’s a broadly testable proposition. This is, in part, why the Congressional Budget Office’s skeptical assessments pose such a threat to health-care reform. If the White House’s primary objective was health care for every American, or guaranteed care that you could keep even if you lost your job, or choice of insurance plans for every American, you could spend a bit more on health care and say you were achieving your goal. But if you say that the point of health-care reform is to save money, and then the outfit charged with estimating such things says it won’t, that strikes at the heart of the project.

Now, we’re getting some better news from the CBO in the last 24 hours, as they have announced that the House bill will increase the number of people receiving employer coverage, and that a public insurance option can exist in tandem with private insurance. But the way the health care fight has played out, it has privileged these messages from the CBO. And to the media, they only matter when they matter anyway.

Somewhere along the line, Democrats in Congress and an Obama Administration obsessed with not following in the footsteps of the Clinton health care failure have forgotten to make the simple case that they support quality, affordable health care for every man, woman and child in the country. They’ve made a case about costs, but not a case about imperatives. There are plenty of economic arguments to make, but the moral arguments – about insurance companies denying coverage to those with a pre-existing condition, or dropping customers for the flimsiest of reasons when they ask to use their health insurance – but those have been pushed into the background. Health care is one of the more profound moral issues in public policy, and right at the moment that we’re nearing a major shift in policies, we’re talking cost curves and independent advisory boards. It’s all important, of course, but consigning tens of millions of Americans to the horrors of no medical coverage adds a certain oomph.

If this moral case were made, a true argument about the human consequences of delay, maybe that $1 trillion dollar number inches upward. And maybe some deficits are floated within the 10-year budget window. But we turned this debate into one primarily about costs. This played right into the hands of the fiscal scolds.

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