Why the Curve Bends Really Slowly

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JONATHAN COHN OCTOBER 26, 2010

Why the Curve Bends Really Slowly

With the election just a week away, Scandinavia may seem a world away, or at least an ocean away. (Which, uh, it is.) But lately blog discussion has turned to Finland and some of its more successful social welfare programs. Among them is the health care system, which, like most European systems, delivers good results at a far lower price than the U.S. system does. So why are can't we do that here? The problem, Matt Yglesias notes, is that the Fins spend a lot less in part because they pay their doctors a lot less:

Who here thinks that running on a platform of drastic cuts in medical professionals’ salaries combined with restricted provider choice and large-scale government rationing is going to be a big winner? There’s more than “corporate interests” at issue here. Among other things, as long as doctors are about a million times more trusted by the population than are politicians, it’s going to be extremely difficult for politicians to ever enact measures that reduce doctors’ incomes. But it’s extremely difficult to imagine how a more efficient health care system could avoid reducing doctors’ incomes.

Uwe Reinhardt, the Princeton economist, always reminds people that every dollar of wasted spending in health care is also a dollar of somebody's income. Take it away and that person is going to be unhappy. And while not every health care interest group has the credibility of the medical profession, everyone has money to finance advertising, organizing, and contributions--not to mention well-connected lobbyists who know how to deliver messages in Washington.

This doesn't make cost control hopeless. It just makes cost control really, really slow. In most cases, you have to settle for reducing future earnings--that is, allowing incomes for these groups to grow more slowly than they otherwise would. And that's precisely what the Affordable Care Act does. 

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posted in: jonathan cohn, scandinavia

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