After Health Reform

Health reform isn’t complete but it just jumped its highest hurdle. With Ben Nelson’s endorsement, Senate Democrats finally have the 60 votes needed to pass a bill. As we all know from our Schoolhouse Rock lessons there are a few steps yet to go before anything can be signed into law. But that’s now far more likely than it ever has been.

At the risk of jinxing anything, I’m going to look beyond the date of Obama’s signature on a health reform bill, to a time when we’re out of the woods … and into the weeds. What comes next for Congress, health policy, and the politics of health reform?

In the new year Congress will turn away from health reform to address other issues like financial regulation, jobs, the budget deficit, CO2 emissions, etc. But make no mistake, the passage and enactment of health reform will mark its beginning, not its end. Threats to and limitations of its potential achievements are evident now and will feature in political debate for years to come.

Limitation 1, Coverage. First, coverage will not be universal. According to the latest CBO estimates, 6% of the U.S. population is expected to lack coverage even after reform provisions are fully implemented. In large part this is by design since unauthorized immigrants would not be eligible for federal subsidies. It is also expected that some fraction of individuals eligible for Medicaid will not enroll.

The remainder of the uninsured will be legal U.S. residents who are mandated to obtain coverage from private plans, either through their employer or in the individual market (e.g. insurance exchanges). That is, some individuals and some employers will not abide by the mandates.

Though the coverage expansion it promises is historic and substantial, this reform does not achieve universal coverage.

Limitation 2, Cost. Reductions in health care costs will not be reduced substantially without a fight. To be sure, health reform legislation includes mechanisms that could reduce costs relative to trend (“bend the cost curve”), but they’re a combination of variations on old ideas that haven’t worked in the past and new ideas that haven’t yet been tested. That is, there is no master plan we can count on that will guarantee cost control. This is by design and a result of political realities.

Mostly, though not exclusively, health reform has been about insurance reform. Costs will not be reduced through insurance reform alone. That’s a clear lesson from the Massachusetts experience. The only way to control health care costs is to pay lower prices (which includes substituting cheaper procedures for more expensive ones) and/or purchase fewer services. But doing so takes money out of the pockets of doctors and reduces revenue from hospitals. Those groups aren’t going to give away money without a tremendous fight, one I called Health Reform Debate 2.0.

This new debate over costs will play out over many years, perhaps a decade or more. But it is inevitable and necessary. Medicare’s hospital spending already exceeds the program’s revenue dedicated to it. By 2017, the Medicare trust fund for hospital services will be depleted.

Something has to change in how we pay for health care. The new reforms include some promising ideas in this regard. Yet it is uncertain that they will work or work sufficiently, or that they will not be undermined or circumvented by clever and politically active providers.

The Political Threat. Perhaps the largest threat to health reform is political. Though some provisions begin sooner, full implementation will not be achieved until 2014. Between now and then there will be two congressional election cycles, two congressional sessions, and one presidential election. Given the controversial nature of some elements of reform, the slim margin by which it will pass (assuming it does), and the political importance of its success for Democrats, it is clear that changes will be proposed. Some may be deadly.

It is possible to kill health reform without repealing it, which would be politically difficult. Death by underfunding or otherwise undermining its intentions is politically possible and even likely if Republicans regain control. In large part, the success of health reform or at least successful implementation of it depends on winning and re-winning debates over its provisions.

Those debates will be fierce. Even if they do not lead to changes in law they will play a role in campaigns and elections. Perhaps the biggest political threat of health reform is not to its implementation but to the party and the politicians with which it is associated. For the next five years or more they will have to defend the merits of reform before they’ve entirely come to fruition. In a climate of high budget deficits and fiscal belt tightening it is hard to defend what will be characterized by the opposition as a costly program the benefits of which are not fully realized.

Today 60 senators are poised to move the health reform process one giant leap forward, which makes final passage far more likely. If that should occur it will mark the end of the beginning, not the beginning of the end, of debate over health care costs and coverage. If health reform should fail, however, it will be a long time before anything like it is debated or considered again.

Let’s hope for more debate. Few issues are as worthy of it.

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