What if Health Care Reform Never Happens?

Let's say health care reform fails this year. Maybe Obama tries again, and he fails again. And future presidents try and fail to reform the system, but every year we just play out the same 1993 scenario, and the government is unable to pass health care reform forever. What would that future look like?



Here are two takes. On the one hand, we have this graph from the Congressional Budget Office, which projects that health care spending will take up one hundred percent of America's gross domestic product by the 2080s.

The idea that we'll be paying more on health care than we produce strikes me as impossible. But again, we're operating under the assumption that government-passed health care reform cannot happen politically, ever. So what happens, instead? James Kwak at Baseline Scenario unpacks that dystopia:

In a capitalist economy, the thing that is supposed to keep prices in check is the buyers. If someone offers me a product that costs more than it is worth to me, then I won't buy it. But we can't count on patients to play this role in health care, because there is no way to make patients internalize all of the costs of their care; they simply don't have the money. Furthermore, most people don't understand the health production function (the relationship between treatments and outcomes), so they don't have the ability to select treatments that provide benefits that are worth their costs. (And, in many cases, it's not obvious even to professionals that a treatment isn't worth the cost; it's only obvious when you look at the data in aggregate.) ... The only payer with any real negotiating power is Medicare. The private payers have little ability to control costs. Or, if they have the ability, they aren't exercising it.

In short, prices will only go up. As a result, the cost of health insurance goes up, and the market finally kicks in in the crudest possible form: people who can't afford it become uninsured. At some point, if we have enough uninsured people, the health care industry will hit a point where it cannot increase revenues anymore, because it has fewer and fewer paying customers.