• Overestimating the benefits of incremental reform

    I’ve taken a lot of heat from people on both sides of the aisle this week for saying that I support reform, but that the effects of the current proposals won’t have the massive effects on cost-containment that some believe.  I’ve been consistent in my beliefs, however.  If you want to build on what we have, and increase access without touching quality, costs can’t just magically drop.

    More evidence from Ezra Klein:

    The graph above tracks premium growth in three markets: the employer market, the Federal Employee Health Benefits Programs, and the California Public Employees’ Retirement System . The latter two are essentially models for the exchanges. They’re regulated markets in which various insurers compete for a relatively large pool of customers who are able to choose among their offerings. And they have not, in general, held costs down much better than the employer-based market at large.

    I know the public option isn’t included in this, but I’ve gone into that in detail before.  This data adds some concerning evidence that the exchanges, especially if they are hampered in the way people are proposing limiting the public option, may not reduce costs as much as we hope either.

    Let me reiterate, this isn’t a reason to kill reform.  It still does everything I said before.  It’s just going to cost a lot of money, perhaps more than some expect, and we will need much more comprehensive changes to contain costs before too long.

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