Bringing home the costs of doing nothing

Bowen Garrett, a senior research associate at the Urban Institute, writes about new research about the consequences of doing nothing on health reform.

The health reform proposals currently under heated debate, by the very nature of the problems they are tackling, are complex and contain many moving parts.  This complexity makes it difficult for people to envision what their health insurance and health care will look like under reform.  It is natural for those who have good coverage now to prefer their current situation, which they know, to an uncertain world under health care reform.  Being shielded from the full costs of the health care they receive, people who now have coverage from their employers can be comfortably numb to the sting of rapidly increasing health care costs that we all face.  The problem is, the status quo is not lying still.  It is moving—in a very bad direction.

Earlier this year, my colleagues and I at the Urban Institute put out a report about the economic implications for the nation if health reform legislation does not happen this year.  Based on economic trends and health care cost growth and other factors, we predicted that large numbers of people who have private health insurance coverage now would lose it over the next 10 years.  Middle-class families would be hit the hardest.  Health care costs paid by employers, and federal and state governments, would rise dramatically.  Individuals and families would be forced to pay more in taxes, face slower wage growth, and bear even higher out-of-pocket health care costs than they do now. 

Our findings for the nation as a whole were striking and sobering, but they become even more relevant to us when they get closer to home.  So today, with the Robert Wood Johnson Foundation, we’re releasing a report that estimates what would happen state-by-state, and in the District of Columbia, if health reform fails.   

Because it is difficult to predict how the economy will evolve over ten years, we show a worst case scenario (economy continues to slowly recover, and health care costs continue to rapidly increase), an intermediate scenario, and a best case scenario (economy recovers at a steady pace, health care costs grow more slowly).  Under each scenario, we asked specific questions about how many people will have employer-sponsored insurance in 2014 and 2019; how many people will obtain coverage under Medicaid or CHIP; how many will be uninsured; and what will happen to family spending for health insurance premiums and out-of-pocket costs.

Here’s what we found:  in all three scenarios—worst, best, and intermediate— if comprehensive health reform that reduces the rate of health care cost growth and provides affordable coverage options is not enacted, there will be serious economic strain on individuals, businesses, and governments in all 50 states and the District of Columbia.  For example, in the worst case, employer premium costs would more than double in 27 states.  Even in the best case, 46 states would see employer premium costs increase by more than 60 percent.  Uninsurance rates in every state would rise to varying degrees.  People lucky enough not to lose their employer coverage will pay much more for what they have, either through higher premium contributions or lower pay raises.

These are troubling findings.  They highlight how fragile the status quo really is.  The choice we face is not between health reform and the status quo, because the coverage many now enjoy will either vanish or become much more expensive.  We can choose to invest now in comprehensive health care reform or face a future of unconstrained health care cost burdens and insecurity.

 

Comments

[Donna Friedsam]

What baseline year did you use for state rules of Medicaid eligiblity and enrollment? Wisconsin, for example, adopted dramatic expansion of Medicaid/SCHIP through its BadgerCare Plus program in February 2008 and extended it to childless adults in July 2009. Are these coverage expansions accounted for in the modeling?

[Carmen]

I am against a Democrat plan, I pay for Insurance $20 monthy because I am retired, working was free, it covers, medical,dental,vision and Life, now that I have to have Medicare a plan run by the Goverment, I pay $ 97.99 for medical, that basically do not cover anything.
In the Spanish radio and TV, they are prominsing undocumented people that Free clinics will get larger grants and they will be covered, in TX Title 11 gives FREE TREATMENT AND CARE to undocumented people, I know I worked in Parkland part time my insurance is not from this hospital.
NO to a Democrat plan, I am fed up to pay for others, I work even with cancer.

[Janice Hand]

I can personally attest to the immediate need for health care reform. My husband has stage 4 colon cancer, and we supposedly have good insurance coverage. I guess that's correct because his chemo sessions are fully covered BUT ... our out-of-pocket costs for expensive prescription drugs like Lovenox and Xeloda cost a small fortune in the US. Lovenox along has a cash price of $6,000 a month, and he must use it for the rest of his life to prevent another pulmonary embolism. Our share of that cost would be $1,200 in US. So I checked into a Canadian price and was shocked at the difference -- now I buy from a respected Canadian pharmacy and my cost is $400/month. But I'm not just saving only on my cost, but his employer (self insured) is saving, too, at the same rate. So, by going Canadian, I save $9,600 a year on just 1 drug alone. As an American, I shouldn't have to go bankrupt while keeping my husband alive. AND, I shouldn't have to go to a foreign country to buy the same drug I would purchase here in the US. We need health care reform badly, and now!

[Kim Genovese]

As an American citizen I would like a swift and immediate law passed that all Senators, Congressman past and present as well as other executive branch members have a healthcare plan that is the government plan. This will bring to core a better working legislative body to work toward health reform. If they were all faced with no health insurance after their COBRA ran out, a different discussion would be on the table. This is what we need and we are all paying for them and their families to
have a premium health care insurance that we are not able to have ourselves if we are working or not working.

[Bowen Garrett]

On September 30, Donna Friedsam asked on the blog “What baseline year did you use for state rules of Medicaid eligiblity and enrollment? Wisconsin, for example, adopted dramatic expansion of Medicaid/SCHIP through its BadgerCare Plus program in February 2008 and extended it to childless adults in July 2009. Are these coverage expansions accounted for in the modeling?”

The state-level analysis is based on the most recent two years of the Current Population Survey that were available when we began the project mid-summer, which provided coverage data for 2006 and 2007. Accordingly, baseline Medicaid/CHIP eligibility is estimated based on rules in effect in 2006 and 2007 for Wisconsin. Expansions that take place after 2007 are therefore not reflected in the modeling. The implications of this in the case of Wisconsin, which had significant expansions in 2008 and 2009, are as follows. Because more people would qualify for Medicaid/CHIP, the results would tend to understate the growth in Medicaid/CHIP enrollment and costs that the state would experience under each scenario. On the other hand, the results would likely overstate the number of people that become uninsured and the rise in uncompensated care costs, employer spending, and individual/family spending within each scenario. Thank you for the opportunity to clarify these points.

[J Maguire]

You are very right, a health care plan is needed now! There are too many people in this country of varying ages without insurance. The current "industry", which in the very word is a crime, is overpriced and out of the range of many.
In the words of Eva Mor, author of (Making the Golden Years Golden), "What we need in a health system is uniformity in pricing for procedures and services and modalities of provision of testing and procedures for diagnosis and treatment. By providing coverage to the uninsured, which initially will cost the taxpayer, it eventually will save us hundreds of millions of dollars." http://www.ourblook.com/component/option,com_sectionex/Itemid,200076/id,8/view,category/#catid107
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