This is a comment that I have been meaning to make about all of these cost predictions for all of the healthcare options, even single payer. They are all bunk. That said, there is bunk and there is bunk.

Last year for instance, budget deficit predictions for this year were off by about $1.5 trillion. Now even after the meltdown, predictions remained off by about half this amount, putting the deficit at near $1 trillion when it turned out to be nearer $2 trillion. And of course none of this takes into account the hundreds of billions, possibly trillions, in unrealized losses from the Fed’s various interventions, or Fannie and Freddie, which at some point will likely get transferred to the Treasury. Yet here we are only talking about changes over the space of 1 year, not 10 as in most of the healthcare plans.

But as I said, not all bunk is equal. When the meltdown hit, it instantly became clear that the deficit was going to explode and be very high. How high depended on what the government did, or did not, do.

Much the same can be said about healthcare costs. Some plans, like those of the Republicans, such as they are, make no fiscal sense at all, savings accounts, tax breaks, etc.. We can see that they will be very expensive and ineffective. They can be costed out nevertheless in a general way by taking the current rate of growth in healthcare costs, extrapolating it over 10 years, and adding in any increases in those covered, which may not be that many. The number we come up with will not be accurate but it will indicate the trend, and indicate a preliminary ballpark figure.

Much the same can be done for ideas with coops and exchanges. An honest assessment of the first would put it in much the same ballpark area as the Republican plans. It wouldn’t extend coverage to that many more Americans and would not contain healthcare costs either. Exchanges with a mandate, with or without a public option would increase costs substantially. Now a lot of these costs are to be offset by savings and greater efficiencies. But it is unclear how real these will be, or, as with an emphasis on decreasing repeat hospitalizations, mask decreases in care. You see if you are unable or unwilling to reform the way healthcare is paid for, how likely are your reforms likely to be in what that healthcare is and how it is delivered?

It is difficult to say how many of the 50 million Americans without health insurance could be coerced into a program with exchanges and without a public option. Now private plans might be forced to offer a bare bones option that would in theory cover those currently uninsured. Still it will likely make more economic sense for the uninsured to risk paying a penalty, a potential cost, than to pay a real cost with no or few expected benefits. The percentage of drivers without auto insurance, for instance, before the meltdown was around 14% and, because of the bad economic times, that rate is climbing. Yet despite Americans’ dependence on cars, the likelihood of being involved in a traffic stop or an accident, and the costs and penalties that arise, many Americans drive uninsured. Even in normal economic times, these 50 million might not have the disposable income to afford minimal, i.e. bad insurance coverage, and these are not normal times. Now a sliding scale of subsidies (along with the penalty) might be offered to entice them into participating, but this would increase the overall cost of the program. Given the hard and uncertain times, I would think that the subsidies would have to be substantial.

How would a public option change this calculus? The truth is it probably would have little effect. Even at this point, late in the process, there is no agreement on what such an option would contain or even if there will be one. The triad of private insurers, BigPharma, and the medical industry oppose a public option. They see it as a first step toward a single payer universal system. Single payer would exclude the private insurers (or make them into tightly controlled extensions of the government) and put considerable constraints on BigPharma and the medical industry. But if there is to be a public option, they favor a bare bones one. Most consumers will not find it attractive and opt for better private coverage if they can afford it, and it can serve as a useful dumping ground for those the insurance companies would make little or no profit off of, i.e. the administrative costs and what little coverage was given would equal or exceed the premiums. So from the currently uninsured’s point of view, an exchanges program with a bare bones public option is really not that much different from an exchanges program without one.

A robust public alternative is not in the cards for much the same reason that single payer universal coverage is not on the table. Private insurance could not compete with it. Dollar for dollar its running expenses would be far lower. It would not have to divert resources to pay off shareholders. The customer base of the private insurers would desert them for the public plan. As more people joined, the system overall would simplify, adminstrative costs would decrease and ability to restrain the costs of drugs and care would grow. This other than single payer is the great nightmare of the healthcare triad. The only way to challenge such a public plan would be to hobble it or restrict access to it. But restricting access would undermine the whole concept of the exchange and would privilege some healthcare consumers, those in the public plan, over others. That leaves hobbling the public option which takes us back to the bare bones alternative discussed above. Now there would be differences between a robust public option in an exchange program and single payer. Most notably the robust public option would still be a mandate, not a right. But as more people joined it, it would be hard not to convert from the one to the other, and so the current system’s worst nightmare would be realized. However, given the political power of the healthcare triad and the lack of any solid or substantial support for the “robust public” alternative in Congress or the White House, barring any major and sudden change, I do not see a robust public plan in our future.

The most likely outcome is more or less a continuation of the current system. Overall costs will not be contained. What costs reductions do occur will largely be a result of decreased care, not greater efficiencies. The uninsured will be faced with a Hobson’s choice of paying what little discretionary income they have for little or no coverage or care, essentially a backdoor tax on them, or gamble they can stay healthy and avoid paying any penalties. The insured will go on much as they have for as long as they and/or their employers can afford the sprialing costs of coverage.