The Cost of a Health Reform Fail

Robert Wood Johnson Foundation and the Urban Institute today gave us a peek at what lies ahead for the U.S. if we don’t complete the job on health care reform. What does the future hold if we continue to face costs that rise at three times the rate of inflation, and the subsequently depressed wages and increased number of employers dropping coverage or shifting the costs to individuals and families? From 1999-2009, the number of uninsured rose 10 million -- even with an increase in public coverage through SCHIP, Medicaid and Medicare. What will that number be in 2019? What will that do to state budgets? To the federal budget? How will we manage to pay the cost of failure?

To see what trajectory we’re on, you only need to look at where we’ve been. Health care costs have risen an average of 9% for private insurance each year since 1970 (for Medicare, it’s 8%). More and more employers are dropping coverage altogether, or substantially decreasing their contributions. The number for the uninsured, for uncompensated care, for those on public programs will continue to go up -- as will medical debt-related bankruptcies. The trendlines are long-term and irrefutable. So Urban Institute plugged the numbers into their Health Insurance Policy Simulation Model and projected a number of scenarios for each state and the District of Columbia. They presented two scenarios: one where the recession is prolonged, health care costs continue accelerating, and income growth is about the same; and another where we rebound to almost full employment, income growth is brisk, and health care costs don’t accelerate the way they have the past several years.

But even the best-case scenario numbers ain’t that rosy.

It’s the fulfillment of all the anti-reform slogans you’ve ever heard. If you think reform will take away your choices, imagine an America where 57.0-65.7 million have no choices because they're uninsured. If you think reform means losing what you have in terms of coverage, imagine being one of the 20 million Americans who will lose their employer-sponsored insurance by 2019. The why is obvious -- employer costs for health care would more than double in 27 states in the worst-case scenario. That enrollment in government-funded Medicaid and CHIP programs for lower-income Americans will also increase. If hospitals are complaining about a hypothetical public option based on Medicare rates (the versions of the public option in the bills now would not use Medicare rates), then imagine how happy they’ll be with increases in uncompensated care rise from 72-128%.

You may be OK with an increase in the uninsured, and working families and businesses continuing to see more of their budget eaten up by health care costs. But, as the report concludes, “[Uncompensated care] together with the increased spending for Medicaid and CHIP, this would inevitably mean higher taxes even without reform.” Even if we miraculously avoid a tax increase at the federal level through clever accounting or spending cuts, the state tax piper for Medicaid and CHIP must be paid.

So you can continue telling me that we can’t afford health reform. But for me to take you seriously, you’re going to have to show me how we can afford a health reform epic fail.

(Photo credit: http://www.flickr.com/photos/southpaw2305/ / CC BY 2.0)