What Happens If Nothing Happens to Health Care?

What Happens If Nothing Happens to Health Care?

*By DAVID WESSEL

A month ago, President Barack Obama was on the verge of a victory that eluded all his predecessors, as Congress neared approval of legislation to expand health-insurance coverage to nearly all Americans. Today, this initiative is in critical condition, perhaps even dying.

The initial idea was logical: Cover nearly everyone and control the rise in health costs. The emerging House-Senate compromise was ugly and unpopular. The left said it did too little of the first, and did too much to protect health-care profits. The right said it didn't do enough of the second, and did too much to enlarge government's already formidable role.

Back in April, I argued that we would get the big health-care fix. When Bill and Hillary Clinton failed 15 years ago, every interest's first choice was its own favorite plan; everyone's second choice was the status quo. But, I wrote, the status quo had become so uncomfortable that it was no longer everyone's second choice so a compromise would emerge. I was wrong.

Conversation among Washington wonks, corporate chieftains and health-care executives isn't any longer about how "health reform" will work in practice. It's about what happens if nothing happens.

Barring a political miracle, we're going to learn the cost of doing nothing—nothing significant to restrain health-care cost increases, nothing to prod the health-care system to produce more benefit for each dollar it takes, nothing to expand health-insurance coverage.

This, too, will be ugly and unpopular.

"Failure to enact health reform will result in increasing numbers of people without health insurance because fewer employers will offer it and many employees will not be able to pay the cost of plans that are available," predicts Stephen Zuckerman, a health economist at Washington's Urban Institute think tank.

"For people not offered employer coverage, many will not be able to get coverage due to pre-existing conditions that insurers won't cover or because premiums simply won't be affordable. Even people with coverage will find costs becoming a greater financial burden," he said.

And all of us—employers, workers and taxpayers—will spend ever more on health care.

The numbers are so large they're hard to grasp. The U.S. health-care tab in 2009 was $2.5 trillion, equal to 17.3% of the nation's gross domestic product, the sum of all its output, much bigger than 2008's 16.2% because the recession depressed GDP. The economy will grow again, of course, but health-care costs will rise even faster. In a new forecast, the federal Centers for Medicare and Medicaid Services predict that without some big change, health care will amount to 19.3% of GDP by 2019.

Last spring, the Urban Institute ran the do-nothing outcome through its computers, and offered three scenarios. In the best case, the number of uninsured rises to 57 million, or 20.1% of the population, from 49.1 million, or 18.4%, in 2009, most of them middle-income adults. More employers drop coverage as it grows more costly. The fraction of Americans on the government's Medicaid and Children's Health Insurance Program, now at 16.5%, would rise sharply to between 16.5% and 18.3%—and that's without the much-derided "public option."

All this will swell an already large budget deficit. The "fiscal course that we're on, out in 2020 and 2030 and 2040, is unsustainable and it needs to be addressed," White House budget director Peter Orszag said this week. "If we don't address rising health-care costs, there's nothing else that we're going to be able to do that will alter that basic fact," he said.

This year, Medicare and Medicaid will cost nearly $725 billion, about 50% more than Congress appropriates for all domestic agencies from the National Park Service to K-12 school aid. In 2014, the cost is projected at $950 billion. Gulp!

If nothing changes, employers who still offer health insurance will pay more for it, and will pay lower wages as a result.

In the Urban Institute's best case, employer premiums per worker will rise 64% over the next decade. In the worst case? They more than double. Gulp!

Helen Darling has been buying or thinking about health care her whole career, first as a Xerox Corp. executive, now as head of the National Business Group on Health, a coalition pushing for change.

She says she was "absolutely inspired" by Mr. Obama's initial vow to finally act to slow health-care cost growth, and disappointed at how little of that survived Congress. In that sense, she says, legislation wouldn't have accomplished much to slow costs, and thus its death won't matter much.

But she draws a more ominous conclusion. "The most depressing thing about it," Ms. Darling says, "is that it shows the failure of the political system. Have we lost the capacity to do certain things? Can we govern? That's the most frightening thing. I'm very depressed that we can't solve even parts of these problems."

Me, too.

Write to David Wessel at capital@wsj.com

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