Thursday, October 29, 2009

The unintended (but not unexpected)consequences of the Baucus Bill

In a lengthy,somewhat complicated and IMO very reasonable analysis John Goodman plows through various scenarios that seem likely if/when the provisions of the Baucus bill take effect.Economics is largely about incentives and the bill is packed with incentives and penalties that companies and individuals will factor into their various decisions. In his commentary (see here) he takes the reader through a number of outcomes all of which have major consequences far beyond the feel-good purported aim of getting all ( well many) those folks out there some health insurance.

He discusses why there likely will be job loses, more contractor work,rising medical costs ( increased premiums,more out of pocket costs,unfunded state obligations), ultimately lower take home wages and harm to the middle class in a number of ways.Increased demand for care, no change in supply so wait times move higher and quality decreases even more . See here, for a NYT's commentary regarding the incentives and complications that will likely result from the Baucus bill's provisions.

Labeling and spin is important in political issues. The label "health care reform" implicitly promises the reader a change for the better. The current health care bill will change many things but little in Goodman's analysis or in the analysis offered in the NYT would be for the better. I have used the term health care deconstruction-reconstruction rather than reform.Reform is a word to spin whatever congress can cram into thousands of pages into a feel-good image.

Dr. Goodman's (PhD economics, Columbia) analysis seems to me on target about what is likely to happen after the bill's provisions go into effect. I would like to see an economist speculate on what strategies and tactics businesses in and outside of the health care complex will employ to minimize their loses and prepare as best they can for the several years down the road when the health care bill kicks in. One new growth industry is likely to be "consultants" who can advise business on how to live within the new health care environment.

No comments: