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Max Baucus

The cost of doing nothing

Just a reminder, as the health care reform battle lurches towards the finish line, that doing nothing is not a viable option.

A week after a Texas agency reported health care reform legislation would cost the state’s Medicaid program an extra $20 billion over the next 10 years, a non-partisan foundation says inaction will exact a greater price.

In a study [issued Tuesday], the Robert Wood Johnson Foundation projects that by 2019, Texas’ ranks of uninsured, public program spending and individual and employee health care expenses will balloon if reform isn’t passed.

“People worry about losing what they have now, but they need to remember that what they have now is likely to change,” said Bowen Garrett, a senior researcher with the Urban Institute’s health policy center, which conducted the study for the foundation. “Many who have employee-sponsored insurance will lose it as health care costs go up, and those fortunate enough to keep their plans will pay higher out-of-pocket costs or earn smaller wages as employers decide whether to cut on wages or benefits.”

The study, which estimates how coverage and cost trends would change from now to 2019 if health care isn’t reformed, found out-of-pocket expenses could increase by more than 35 percent in every state. It found middle-class working families would be hardest hit.

The full report is here. The Contrarian sums it all up.

I pointed out last week the flaw in this argument. Yes, expanding health coverage for millions of Texans will cost the state a lot of money — but it will also save a lot of money for county governments, which are paying much of the $7 billion a year in uncompensated care for Texas’ uninsured. (A lot of the cost for uncompensated care arises from people who lack health insurance showing up at emergency rooms in public hospitals — the single most expensive place to receive treatment.)

So health reform isn’t really new spending. It’s a cost shift: state government spends more, counties spend less.


If those projections are correct, maintaining our current health care system would cost Texans (especially local governments) a total of roughly $100 billion worth of uncompensated care for the uninsured in the next decade.

For the moment, let’s leave out the moral issue of providing Texans with health insurance and adequate health care.

Looking strictly at the economics: doing nothing would cost us roughly $100 billion.

So even if Perry is correct — that the Baucus plan would cost the state $60 billion by 2019 — doing nothing would be more expensive.

Seems like a pretty simple choice to make. Unless of course you’re one of those politicians who claims to be concerned about costs while doing nothing to address them.

Can we call this a bipartisan agreement?

From last week.

As Democrats in Congress push harder for a government-run health insurance plan that would compete with private insurers in some reform bills, Sen. John Cornyn said it remains a “deal-breaker” with Republicans.

From this week, via Kos.

Senate Majority Leader Harry Reid (D-Nev.) on Tuesday ordered Finance Chairman Max Baucus (D-Mont.) to drop a proposal to tax health benefits and stop chasing Republican votes on a massive health care reform bill.

Reid, whose leadership is considered crucial if President Barack Obama is to deliver on his promise of enacting health care reform this year, offered the directive to Baucus through an intermediary after consulting with Senate Democratic leaders during Tuesday morning’s regularly scheduled leadership meeting. Baucus was meeting with Finance ranking member Chuck Grassley (R-Iowa) Tuesday afternoon to relay the information.

According to Democratic sources, Reid told Baucus that taxing health benefits and failing to include a strong government-run insurance option of some sort in his bill would cost 10 to 15 Democratic votes; Reid told Baucus it wasn’t worth securing the support of Grassley and at best a few additional Republicans.

OK then. The Democrats can pass a better bill, and the Republicans can sit on the sidelines instead of “negotiating” a “compromise” that they’d all then vote against anyway. Works for me. Ezra notes the political calculus of it:

The story doesn’t say this, but the likely concessions would also have another effect: They would make the bill less appealing to the public. Taxing employer health benefits, which I support, is a wildly unpopular idea. So too is eliminating the public insurance option, which commands large majorities in polling (much larger majorities, actually, than health-care reform as a whole). A bipartisan bill, in other words, will probably attract three to four Republicans, and in return, sacrifice a half-dozen Democrats, demoralize the liberal base and create a plan that’s harder to sell to the public. It’s hard to imagine the cost-benefit calculus that could bring those sides of the ledger into balance.

He also thinks that this story was put out by a Democratic Senate staffer who opposes the idea of telling Baucus to ignore the Republicans, probably from one of the usual suspects. I have a feeling that it won’t play out the way that person hoped it would. I sure hope so, anyway.