• MIT economist Amy Finkelstein discusses the obvious and hidden value of universal health-care coverage.

    MIT economist Amy Finkelstein discusses the obvious and hidden value of universal health-care coverage.

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‘All or nothing’

MIT experts on the future of health-care reform: Congress should still think big

Just over a week ago, passage of a landmark federal health-care bill seemed a dead certainty. But the flip of a single U.S. Senate seat has changed all that, leaving the Democratic Party highly uncertain about how — or whether — to proceed. Given the current flux in Washington, a panel of MIT health-care experts assembled yesterday to assess the situation, often hammering home the idea that political half-measures will yield little in tangible health-care results.

“You can’t break this bill apart and have it work,” said MIT economist Jonathan Gruber. “It’s all or nothing at this point. The Democrats, and essentially the president, have to decide if they’re willing to go for it all, or are willing to live with nothing.”

First, though, Gruber, a central architect of the Massachusetts health-care system that has served as the model for the congressional legislation, acknowledged his extreme chagrin over the political reversal that accompanied Massachusetts Republican Scott Brown’s victory last week in the special election to replace the late Sen. Edward M. Kennedy. “My kids are like, ‘Why are you so sad, daddy?’” said Gruber, speaking at The Stata Center. “I explained, ‘Imagine you worked on a term paper for a year, and you were about to hand it in, when someone turned off your computer and you lost all your work.’”

Brown’s victory has caused multiple fractures among Capitol Hill Democrats. Some legislators want to drop the health-care effort entirely; others say Congress should only pass popular portions of it, such as making it illegal to deny insurance based on pre-existing conditions; and still others want to reconcile the existing, separate health-care bills already passed by the House and Senate.

Gruber made it clear he favors the last position, telling the audience the health-care plan is like “a three-legged stool,” and “doesn’t work unless you have all three legs.” Those three pieces are reform of insurance markets (including banning those denials of coverage based on pre-existing conditions), the existence of an individual mandate requiring everyone to have insurance, and subsidies to make insurance affordable for low-income people.

For instance, simply allowing people with pre-existing conditions to sign up for insurance, Gruber argued, would be ineffective by itself. In that scenario, more people with pre-existing conditions would have coverage, rates would rise and lead healthy people to drop out of the insurance markets, and to compensate for those healthy people dropping out, insurance companies rates would raise rates further.

A hidden benefit of health insurance: Innovation

Yet even if a large-scale health-care bill passes, cutting health-care costs remains the “$2 trillion question,” said panelist Joseph Doyle, an economist at the MIT Sloan School of Management. Many observers have noted in the last year that regional disparities in health-care expenditures around the U.S. have nonetheless yielded similar patient-care results. But Doyle’s own research in Florida suggests otherwise. The city of Fort Lauderdale spends 30 percent more on heart patients than West Palm Beach, he stated, but has a mortality rate that is 30 percent lower. Instead, Doyle said, we would perhaps be better served by, among other things, incentives for hospitals to avoid care problems like re-hospitalization for the same illnesses: “Nobody likes to go back to the hospital.”

Still, as MIT economist Amy Finkelstein pointed out in her remarks, the value of universal health-care coverage goes beyond the medical services rendered. The introduction of Medicare in 1965, a subject she has studied in detail, produced “a dramatic decline in the share of the elderly with large out-of-the-pocket payments,” Finkelstein said, meaning that it left more senior citizens in better financial shape than they would have been without Medicare.

Moreover, Finkelstein argued, Medicare went hand-in-hand with an increase in technological innovation in the health-care sector (from procedures to devices to drugs), a scenario that could be repeated if a serious bill is passed by this Congress. “If you have insurance, the idea that whatever happens to people who are uninsured isn’t going to affect you is a very misleading notion,” Finkelstein explained. “When you increase the share of the population with insurance, you increase the market size for these technologies, and you almost surely increase the pace of development of these technologies in the future.”

But will any bill at all emerge from Congress? Political scientist Andrea Louise Campbell sounded a skeptical note. “The American political system is very status-quo-oriented,” she said, with a lot of “veto points,” such as the current Senate convention that the Democrats need 60 votes to pass the legislation.

Those 60 votes would not be necessary if Congress elected to use the reconciliation process, which would essentially mean that the House would pass the Senate bill, then have both branches of Congress modify it, which would require just 51 Senate votes in the end. Yet as Campbell noted, that would still be difficult: 47 Democratic House members represent districts that the Republican nominee, Sen. John McCain, carried in the 2008 presidential election, and may be unwilling to back any health-care bill at this point.

Alternately, Campbell suggested, those representatives might prefer to pass popular-sounding segments of the health-care bill, like lifting the pre-existing conditions blockage, even if the policy results seem dubious. “What might be feasible politically, might be disastrous economically,” Campbell said. “They might pick out certain features without the counterbalancing features that make the whole package work. That might end up accelerating the unraveling of the system.”

Topics: Economics, Faculty, Health care, Political science


I feel this article show how out of touch the Democrats are with the America people the main reason Scott Brown won was people do not want health care changes right now. If they democrats pass the bill by reconciliation they will lose control of both the house and senate in the next election. The American people feel this bill is too expensive and risky. The voters of Massachusetts voiced that by electing Scott Brown. One final side note nice BMW's and Mercedes parked outside Stata during the meeting, give me a break. Talk about out of touch.

Whether you are a Democrat, a Republican, or an Independent, we need to Used The Healthcare Reform Process, to Contained our SkyRocketing Healthcare Spending.

We must Used some of the Stimulus Funds, to Build Smart Infrastructure Services for: Smart Transportation Systems, Smart Grids, Broadband, and Healthcare IT. This Investment will Enabled New Jobs Creation and Economic Recovery.

Healthcare IT, we must Coordinate of EHR/EMR/PHR Interoperability Efforts with Organizations such as IHE, HL-7, HIMSS, e-Health Initiative, ISO, as well as have a Harmonized Inter-State Privacy, Confidentiality, and Security Laws, to Protect Individual's Electronic Heallth Records/Electronic Medical Records/Personal Health Records.

Proper Deployment of Health Information Technology (HIT) Solutions and Training will Increased Productivity (i, e, medical data mining/warehousing, risks treatment, service delivery), Efficiency (i, e, medical errors, redundant and inappropriate care), and have a Cost Savings of around 20-30% of our Annual National Healthcare Expenditures (2008, $2.3 Trillions).

The Engine of Economic Growth in this 21st Century is "Broadband." We can start by, Deploying a pure Packet-based, All Optical/IP, Multi-Service National Transport Ntwork Infrastructure, using Optical Ethernet throughout this National "Network of Networks." This will Connect All Optical Islands, Nationwide.

The Investment in this National "Network of Network", in addition to New Jobs Creation and Economic Recovery, can also Serve as a Businesss Driver for: Energy Systems, Transportation Systems, e-Commerce, e-Education, e-Healthcare, Social Networking, Entertainment, etc.

This Investment is like the Investments made in the past in, ERA, TVA, and the National Transportation Inter-State Highways, which Increased Productivity and our GDP.

Gadema Korboi Quoquoi

President & CEO


It seems like the panel took a well-reasoned and sensible position on the subject. Why should the election of one senator so dramatically change the result of the health care reform process? Let's not throw out everything that was worked on last year, let's get it passed and fix it later.

I disagree that the panel is "out of touch" with the "American people", whatever that means. The American people do not speak with one voice, and there were many reasons why Scott Brown won, not just health care (and Coakley did have support from over 45% of the voters, a substantial amount). When polled on separate issues, majorities of the public favor all the major provisions of the bill. (Even single payer, which was dropped, has had majority approval in many polls) The main area of dissatisfaction seems to be with the process, but that is no reason to throw out the whole thing. Clearly the panel is "in touch" with the facts, having done actual research on the effects of health care spending and insurance coverage.

It is time for the Congress and the President to show some leadership on this issue, and that means doing what is right, not what is popular. We all say we want leadership from our elected officials, but then we turn around and say they are "out of touch" when they do things we disagree with. Doing what the people want is not leadership, it is "follow"ship. If it costs an election or two, so be it. But I am confident that once a bill passes, voters will be happy with the benefits it brings, and no one will remember or care about the back room deals that had to be done to make it possible.

The Constitution does NOT give the Federal Government the right to meddle with our health care!!

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