Commonwealth: If We Had Lowered Costs, Costs Would Be Lower

Ezra Klein has posted a graphic from the Commonwealth fund showing that if we just assume that prior health care plans had reduced costs by exactly as much as they claimed they were going to, costs would be lower. The post is titled . . .

If only we'd listened to Nixon, Carter or Clinton

Over the course of the health-care reform discussion, we've gotten pretty good at talking about the insufficient benefits of reform. It doesn't cut costs as much as we'd like, and it doesn't cover all of the uninsured, and it doesn't have a public option, and so on. But one of the hardest things to convey is the terrible cost of inaction, which is much higher, both in human and economic terms, than many realize. 

The big player on the cost side is that even small benefits compound over the years. Slowing the system's spending growth by 1.5 percentage points -- so the rate of spending inflation will be six percent, rather than 7.5 percent, in a year -- doesn't seem like a terribly impressive outcome. That still has the system growing faster than GDP, or inflation, or Europe's health-care systems. 

But over time, the benefits would be enormous. The Commonwealth Fund, in a very smart piece, tries to show this by tallying the savings if we'd instituted the Nixon, Carter and Clinton reforms and they'd worked to slow spending by the aforementioned 1.5 percentage points.

Okay, it's not exactly earth-shaking news that if you assume that things would have fallen, then you can produce a graph showing that they would have fallen.  This tells us absolutely nothing about what would have actually happened.  If the growth projections of various plans had been wrong--if they'd acted more like Medicare--I can get a very different graph (smoothed because I don't have proper time to find the data and type it in):

Health Care Growth.png

That's just a tiny increase in the rate of health care cost inflation--just 50 basis points a year.  

Boy, it sure looks like we dodged a bullet, doesn't it?  Every year you delay is more money saved!

But this is trivial:  we can assume whatever we want!  Health care proponents will point to other countries.  Opponents will point to the history of programs like Medicare.  Who's right?  Obviously, I have my opinions, but I can't prove the counterfactual.  Neither can anyone else.

All these sorts of graphs are is a pretty way to prove that if you were right, you'd be right!  Which is true, but  not interesting.