At Baseline Scenario, James Kwak flagged an insightful comment by StatsGuy that might be of interest. The entire comment is worth reading. To summarize, StatsGuy is convinced that healthcare reform in its current configuration will swell costs while massively increasing profits for private insurance firms, an anxiety expressed by many advocates of the public option in recent weeks as well as opponents like Keith Hennessey.

Hennessey has argued in a similar vein that health reform might accelerate cost growth and thus have a negative impact on wages. This won’t necessarily trouble employers. David Leonhardt has noted that employers are not the ideal consumers of health insurance plans:

The cost of insurance comes mostly out of employees’ paychecks. If insurance costs more, employees are generally paid less. If insurance costs less, employees are paid more. The cost of insurance does not have a big effect on employers’ overall compensation costs.

Now back to StatsGuy, who highlights other consequences of fragmented responsibility:

Will the federal subsidies for health care only apply to basic care or care that has high return-on-investment (but not hideously expensive end-of-life care, or expensive diagnostic services or treatments that are not clinically proven to offer benefits)?
Will we NOT cover cancer treatment for smokers, or diabetes people who are clinically obese (due to primarily non-genetic causes)?
Will we NOT cover the cost of orthopedic surgery for high-risk athletes like climbers or football players (just like most states force hikers to pay the cost of helicopter evacuations)?
Will we pass rules that govt. funded or subsidized care plans (including Medicare and Medicaid) will NOT cover expensive procedures when there is a lower cost procedure that is almost as good?

Note that the measures StatsGuy is implicitly embracing are all restrictions that current Medicare beneficiaries and, interestingly, many Republican lawmakers bitterly oppose.

I don’t think that there are any good answers at this point. My basic view continues to be that the government role in healthcare should be limiting to an income protection or social insurance role: medical emergencies shouldn’t lead to bankruptcy or poverty. But achieving that goal in a revenue-neutral or close to revenue-neutral fashion will, unfortunately, require a serious reorganization of the healthcare marketplace. And almost no one wants to do that. Which is depressing. (Sorry about the sentence fragments, guys.)