Healthcare Reform: It's Complicated

| Fri Jan. 29, 2010 8:29 PM EST

We all love Jon Stewart, and a big part of the reason is that he's funny and he knows his stuff. So I was pretty disappointed to hear him flogging nonsense like this during his interview with Doris Kearns Goodwin last night:

I still don't understand why, with things like healthcare reform, they don't say "Here's the four things that are broken." If you have a preexisting condition, we're going to fix that. They don't let us negotiate drug prices. We'll fix that. We'll expand Medicare til you're 55. We'll do that. And we'll do tort reform. That's it. Four simple things. Done.

I assume that Stewart wasn't just being rhetorical, that he really doesn't understand why Obama hasn't taken this approach. And if someone as smart as him doesn't get it, we're doomed. For the record then:

  • Preexisting conditions. If you require insurance companies to take on all comers, even those with preexisting conditions, what happens is that people will stay uninsured until they get sick or need an expensive operation. Then they'll buy insurance, get taken care of, and drop back out. This is pretty obviously a recipe for driving insurance companies out of business.1 So to make this work you need a mandate to make sure everyone is insured all the time, not just when they get sick. And if you have a mandate then you need subsidies for poor families so they can afford to obey the law. And if you have subsidies then you need some kind of funding mechanism. And once you do all this, you have about 80% of the current legislation.
     
  • Drug prices. I'll give him this one. You could allow Medicare to negotiate drug prices without doing anything else. Republicans would vote unanimously against it, of course, since it would hurt pharmaceutical industry profits, but we could do it.2
     
  • Expanding Medicare. Medicare is already going broke. If you expand it to age 55, it'll go broke even faster. So if you're going to do this, you need to add in (a) a new funding stream, which means taxes, and (b) a basket of cost control measures, which means putting limits on treatment that people aren't going to like. Needless to say, taxes are unpopular and cost control is extremely complex.
     
  • Tort reform. As Barack Obama said today, medical malpractice costs are a nit. "The CBO or other experts say to me, at best, this could reduce health care costs relative to where they're growing by a couple of percentage points, or save $5 billion a year, that's what we can score it at, and it will not bend the cost curve long term or reduce premiums significantly." To be exact, CBO estimates savings to the government of $54 billion over ten years and a reduction in total U.S. healthcare spending of 0.5% per year. And that's a high-end estimate. Other estimates are lower.

    But it's even worse than that. If you did real tort reform — that is, making the system genuinely fairer for everyone — you'd end up reducing junk lawsuits but increasing payouts to the many people who are victims of malpractice but never sue. This would probably be a good thing, but on net it's not likely to save any money. In fact, it might even end up raising costs. More here and here.

And of course, nothing in Stewart's bullet points would solve the biggest problems of all: covering the 30 million uninsured and getting the skyrocketing growth of medical costs under control. If you don't do that, it's hardly worth bothering with.

Unfortunately, the world is a complicated place. As Obama repeatedly told the Republican caucus today about their healthcare plan, the question is, "is this something that will actually work, or is it boilerplate?" Talking points just aren't enough. It has to actually work in the real world.

1Which would, of course, be fine with me. But I'm pretty sure that's not what Stewart had in mind.

2That is, we could have done it before Scott Brown won the Massachusetts Senate race. To do it now would require at least one Republican vote to break a filibuster, and that's vanishingly unlikely.

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