It's On

With the CBO coming out with the scores the Democrats needed, there's very little that can stop this thing now. This is really, really good news for people who care and/or obsess over the details of this thing.

A lot of the conversation will shift to smarty-pants independent predictions of costs and savings. People will try and one-up the CBO, which is constrained by innumerable rules on how to score something. But it's important to remember that whoever's talking about costs and savings, it'll be an estimate until it's history. My hunch is that right now, health reform's costs and its potential savings are both underestimated.

First, costs. Working in rural health, I talk to a lot of desperate, sick people. I see a lot of uninsured people. I also see a lot more people with crumby insurance that only does you any good if you get diagnosed with cancer on a Wednesday. I also talk to enough people to understand that if there's a federal subsidy for something, they'll do anything to get a piece of it. More people will sign up for subsidized plans than predicted, and those plans will cost more than we thought. In short, people will be free to demand more services, and some of those services will be paid out of the treasury. To be sure, services cost money, taxpayer money. But it's money well-spent.

Second, savings. Under the rules of reform, everyone will have a stake in saving money. Insurance companies won't be able to turn away sick people who cost a lot, so they'll put pressure on doctors and hospitals to make that care (and everyone else's) cheaper so they can offer competitive pricing for their plans. Providers and hospitals will have to compete for your business, and for the reimbursements they negotiate with insurance companies. They may further integrate their information systems, and follow more evidence-based treatment protocols than today. They may colocate under one roof to save money on rent. People will have more information on who provides the best value for their dollar, and they will have to pay premiums and out-of-pocket expenses that encourage them to shop around for the best insurance plans and the best care.

All of that implies at least moderate competitive pressure on everyone to lower the costs of care while improving quality. Not a thing is socialist about this. In fact, it's exactly what capitalism is supposed to be good for. It just turns out that it doesn't happen on its own, at least with health care. If that's socialist, I'm a Chinese jet pilot.

The missing piece is revenue. It's been really bad. Everyone's revenue estimates from fortune 500 companies, to state government are understandably conservative. A CFO or state treasurer would be crazy to predict 5% sustained growth in these times, even in the longer term. But for bloggers free to speculate on the secondary impacts of such a policy change, the situation can look very different.

One of the most important elements of health reform to me is the shot in the arm it gives to small businesses. Helping small businesses to be more competitive in the labor market is good for workers and good for American innovation. For existing businesses, making it easier and cheaper to cover employees means there's money to be spent on other things, like more attractive pay or capital investments. For people thinking about leaving their job in middle management in order to be an entrepreneur, having a decent system to get benefits for themselves, their families, and any employees could make the difference between being a working stiff, and striking out on their own to grab a piece of the American Dream.

Then there is are the direct, indirect, and induced economic impacts of health care spending on economically depressed areas. First, direct impacts. Among other investments, the reform bill has funds to quadruple the Community Health Center program, bringing high-quality medicine to America's underserved areas. Those people spend money locally on local things, like groceries. Second, indirect and induced impacts. Imagine a steel town with an unemployed, but skilled workforce. A Community Health Center brings in good-paying jobs, a chance for career advancement, and, like good schools, something for the local Chamber of Commerce to boast about for prospective employers. It makes much of unemployed America look like a much better place to invest in.

Quality, affordable, accessible health care is as important to America's labor force as roads and bridges are to goods and capital. For those reasons, and many more, health reform points to increased revenues for local, state and federal government.

Every capitalist believes that it takes money to make money. Not everyone believes that it takes federal money to make money. I think that's wrong, and there's a long track record of public investments in private enterprise to prove it, from the railroads, to the GI Bill, to the Internet. None of that would have been possible without significant public investment.

Unless you're fine with America becoming a third world country, we can't cut our way out of debt or deficits. The rich do very well in the third world. Low taxes, they write the rules. They can buy security or health care with cash. For everyone else, it's terrible to cut services. Even for the rich, they'll just take their investments elsewhere when the roads get to gnarly, or people are too sick and expensive to employ here. I want to be rich too, I just think that paying more in taxes makes it much easier for me to spend my money here in America on quality American goods and services.

Cutting spending sounds good until you have to choose between defense or social security. Most government spending is in fact not waste. It's stuff people want, stuff their elected officials voted for. Nobody wants to choose between guns and butter. We want both. We need both. To get out of this hole, our economy must be more productive, our government spending more efficient, and yes, our taxes might need to be higher, maybe even to the level Clinton had them at when the Dow broke 10,000 and we were running a surplus.

It seems that every generation needs to be reminded that public investment leads to private prosperity. Let's hope that lesson gets driven home by these reforms.