Tuesday, February 24, 2009

For the Obama Administration Health Care Reform Will Require Really Tough Cost Containment—Coming and Going

The President has made a powerful argument—America cannot get its economic house under control without comprehensive health care reform. The cost of existing entitlementspublic and private—and any new ones are just too big a ball and chain on our short and long-term economic health.

The President has also argued that there could be no better time to fix this mess than now—when it is so critical to get our economic house in order once and for all.

The President is right on both counts.

As any of us who have studied this issue know, the number of those uninsured in America are not really the problem—they are a symptom of health care costs run amuck as individuals, employers, and government just can’t afford to insure everyone. Adding more people to this unaffordable mess without fixing it first is not an answer—it’s a prescription for even more fiscal irresponsibility.

So if cost is the real problem then cost containment is the whole ballgame.

As the Congressional Budget Office (CBO) pointed out in its December tour de force on costs and options, the cost containment “lite” proposals out there will not get the job done. Things like more health information technology, wellness efforts, comparative research, and pay-for-performance are all fine and important but individually, or all taken together, result in hardly a rounding error on the huge health care bill America faces.

Real cost containment means paying providers (doctors, hospitals, insurers, drug companies, nursing homes, device manufacturers, and all the rest) less than they would have gotten. It also means paying less out for beneficiaries than they would have received. That probably means more premium sharing, copays, adopting effective consumer-driven principles, and it probably has to include means testing as a progressive way to get wealthier people to pay more and ease the burden.

It might even mean redoing our decades old and now obsolete tax system that rewards too much easy money for health care.

Real cost containment will also absolutely mean more mandatory cost/benefit decisions on what will be covered—the kind of “big brother” intrusion into coverage decisions lots of people hate. But what good is comparative research if, as has been the case for years, it is more often ignored than used?

If you want to contain costs do you know what you have to do? You have to contain costs.

If the Obama administration and the Congress cannot produce these real and politically problematic savings then the same CBO that put everyone on notice about where the real money is in our bloated health care system is going to score the health plan effort as not in fact bringing our long-term entitlement costs under control.

That is where the Obama strategy meets itself coming and going.

If you say health care reform is needed now to bring our out of control health care costs under control and make a big difference in rebalancing our economy then you have to produce a bill that actually does that—that actually controls these costs by succeeding with those politically problematic cost containment challenges.

There will now be lots more “irrational exuberance” over the chances for health care reform in the wake of the President’s speech in the coming days just as there was in the days following the election.

I would rather we had a much more sobering discussion on just what it will take to craft a health care bill that does make the difference we so sorely need to bring our deficits, and our overall economy, back to an acceptable place.

That would be a discussion that included the incredibly politically problematic challenges we will need to face in order to get the health care special interests on the right side of this issue.

When I finally see that discussion taking place, I will be optimistic.

Otherwise our new President is just going to meet himself coming and going.
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