Tuesday, May 12, 2009

The $2 Trillion Offer to Reduce Health Care Costs—Now They've Done It!

First it was great to see the press coverage of the $2 trillion offer come back down to reality as the day wore on yesterday. From gushing over the “unprecedented” commitment to reform by these key stakeholder groups the news reports and editorials finally, by days end, reflected the fact that nothing is really promised or enforceable yet.

Now we hear that these groups have to deliver specifics on just how they will deliver the trillions in the next few weeks.

For this to be a big deal it has to be “scorable.” By the Congressional budget rules that means there has to be the reasonable expectation the savings will be there. The referee, the Congressional Budget Office (CBO), has proven to be skeptical of anything that isn’t backed up with hard data. (Good for them!).

Don’t also assume that the American Medical Association (AMA) really represents doctors—I don’t think anyone or anything really represents doctors. If the AMA makes a commitment that actually means sacrifice among the docs you will see just what I mean—especially if the national association folks do a deal with the insurers "on behalf" of all the docs back home requiring real sacrifice. To some degree, you can say the same for the thousands of hospitals out there.

So if we get more vague promises and nothing scorable then how will the Obama administration respond? If we do get something cutting edge how will the constituents respond? Will the constituents even let the stakeholders get that far?

I continue to get reporters asking me if—or arguing—it is really different this time compared to 1993 and 1994.

Sure, there are lots of things that are different compared to 15 or 16 years ago—the critical nature of the problem at the top of the list.

But I was there in the Indian Treaty Room with the Clinton task force. I was in Ira Magaziner’s office. Let me tell you, in May of 1993 every one of these stakeholders couldn’t wait to be part of the process and on the right side of Mrs. Clinton. The term, “being at the table” was as commonly used then as it was yesterday in all of the glowing reports.

Then the details came out and it got ugly. "Harry and Louise" was never intentional—it was a reaction that came months later when it became clear the insurers were on the outs and had a “bulls eye” on their backs.

But back to this year.

If these stakeholders don't deliver $2 trillion in something Orszag can take to the bank will the Democratic response be a "public health plan?" Watch the fireworks.

Someone dug themselves one heck of a hole yesterday.

Is it the stakeholders that now have to do in a few weeks what no one has done in decades of pondering this dilemma—make a tangible, measurable, and enforceable offer that cuts real money? If you think coming up with $2 trillion was a big deal actually figuring out the mechanism to carry it off will be a dramatically bigger challenge.

Was it the Obama administration that just raised expectations exponentially trusting these guys can actually deliver something measurable? Or, is the Obama administration just setting them up?

Or, is the expectation it will be the CBO that will break under all the added pressure and suddenly get easy in evaluating these vague promises?

To have health care reform we will need to find more than a trillion dollars to pay for it. So far, the Obama administration has identified about $300 billion in scorable savings.

And don’t forget the need to find over a trillion dollars and the $2 trillion offer is apples and oranges. The $1 trillion+ is what we need to offset a new program in the federal budget. The $2 trillion relates to the entire health care economy that will total something approaching $40 trillion in the next ten years.

Really, nothing has changed during the last couple of days. This morning, Chuck Grassley referred to the $2 trillion offer as "Fairy dust just waiting to turn to gold."

That $2 trillion offer has yet to move the health care reform meter past $300 billion.

But boy are there some people on the spot!

Recent related posts:

"Trust But Verify"--Health Care Stakeholders to Pledge $2 Trillion in Reductions

An Open Letter to the Men and Women Over at the CBO--Hang In There!
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