So whaddaya think about Sunday's vote?

Many thoughts but here are three key ones:

1) What a wasted opportunity to get it right. Little learning from existing experiments like MA’s was drawn upon, and there are no real market mechanisms used to contain costs. Top-down cost containment will just lead to cost-shifting.
2) What a wasted opportunity by Republicans in the early 2000s. Why didn’t they do more than pilot programs to address skyrocketing premiums?
3) What a mess this will be going forward. It is going to be super-expensive for the taxpayer, and it will again shift a lot of the burden to people with private insurance.

Two analyses, at antipodes of the ideological spectrum, are worth highlighting. First is Kimberley A. Strassel’s opinion piece in yesterday’s Wall Street Journal, which laments the sausage-making process:

Never before has the average American been treated to such a live-action view of the sordid politics necessary to push a deeply flawed bill to completion. It was dirty deals, open threats, broken promises and disregard for democracy that pulled ObamaCare to this point, and yesterday the same machinations pushed it across the finish line.

The line about “disregard for democracy” at first blush struck me as over the top, but in fact the Slaughter Solution was seriously considered – and that was truly more than disregard. It was contempt, no matter how much supporters of the health care fix twisted themselves in knots to support it.

It’s probably worth recalling the last major federal legislative fix — welfare reform. That effort involved relatively little sausage making. The final House version passed 256-120, the final Senate version passed 74-24. The Conference Agreement passed 328-99 (5 not voting) and 78-21 (1 not voting). In both cases almost 1/3 of the votes in the House and Senate came from Democrats.

The second analysis on the health care fix worth referencing is a sort of Hear No Evil-See No Evil article from David Leonhardt of the New York Times. Not terribly surprising from David, who is a smart guy but who oddly has been wrong more often than not on the President’s default switch on issues. Way back in August 2008, he wrote, for example,

With Obama, there is vast disagreement about just how liberal he is, especially on the economy.

Well, maybe at the NYT, but I think we all knew where he’d come out on issues—and the stimulus and the health care legislation kind of settle that, no? In yesterday’s NYT, David once again covers his eyes and ears.

Another major piece of financing would cut Medicare subsidies for private insurers, ultimately affecting their executives and shareholders.

“Another piece”? Reimbursement cuts to Medicare account for half a billion dollar piece of the so-called savings. David is an applied mathematician by formation, and I often appreciate his work, but on this one he is not adding 2 + 2. Fact: Profits at insurance companies will not be affected. Fact: Insurance companies will raise premiums on private plans to make up for any losses they may incur on the public/Medicare side. That is a sort of “sneak tax” on me and all those who buy private insurance. It won’t come through a tax filing but I will pay more because the insurers will make up the shortfall on the Medicare side by shifting the costs onto all middle class citizens. The government is promising to provide financial help to citizens who earn 400% of the federal poverty rate or lower, but if private market plans get much more expensive because of cost-shifting, that help will not be, well, very helpful. You get the drill.

There is a lot we can do at the state level to address the uninsured. Massachusetts has taken one approach, and Pioneer is doing the hard work of drawing lessons from our 2006 reform. We’ve never taken a position for or against the Massachusetts experiment because it’s simply too early to see all the beauty marks, warts and freckles come through. To date, we’ve published the following reports:

– on the Massachusetts exchange
– on access
– on financing, and
– on administrative efficiency

This is the kind of analysis on state experiments that the feds did in the 1990s — then on the number of states that had undertaken welfare reform in the late 80s and 90s. That empirical work led to a strong welfare reform that gained broad backing in Congress and among the American people.

Instead, what we saw last Sunday was that 17 states got increases in federal funding and all the gory details of sausage-making came to light. It was not a pretty sight. Looking over the horizon, expect the majority of people who have private insurance now to pick up the shortfall in funding provided by the federal government for Medicare. Premiums up as far as the eye can see. Not a good outcome, folks.