Wednesday, May 20, 2009

We Are On Our Way To Confusing Entitlement Expansion With Health Care Reform

I generally find Washington Post business columnist Steven Pearlstein levelheaded. But his column today has me shaking my head.

Effectively, he is saying forget what it costs--health care reform needs to be done.

His biggest problem is that he doesn't know the difference between entitlement expansion and health care reform.

But the way things are looking neither does the U.S. Congress.

From Pearlstein's column:

There is, for example, general agreement that it will cost $100 billion to $150 billion a year to provide the subsidies necessary to allow all Americans to afford a basic health plan. But the Congressional Budget Office, the official scorekeeper on these matters, has been reluctant to certify the major cost savings that might come from various proposals to restructure the health delivery system, or reform the health insurance market to make it more competitive, or change the way doctors and hospitals are compensated so they have the incentive to use only the most cost-effective treatments.

It is, of course, the CBO's job to be skeptical, particularly after a number of past experiments in this area have yielded disappointing results. But it is also true that because nothing of this scale and complexity has been tried before, projecting the fiscal impact is next to impossible. This budgetary standoff will leave Congress with no choice but to try to finance its health-reform efforts by raising taxes or limiting payments to doctors and hospitals, possibly jeopardizing the entire project.

We can certainly applaud policymakers for their reluctance to enact another expensive and popular entitlement program without finding the money to pay for it. But it is folly for them to put themselves in a political and procedural straitjacket. In all of history, no revolution was ever made by budget analysts. Health reform requires leaders with the foresight and confidence to take a leap into the unknown.

Indeed, health care reform will require a bit of a revolution. Entitlement expansion only requires we pour more money on this mess we call a health care system.

He isn't the only one I've heard recently say that finally getting health care reform is more important than how we will pay for it.

I think it's time to remind ourselves that there is a difference between health care reform and entitlement expansion.

Health care is the problem it is for America's fiscal solvency because its costs are out of control.

As the President has very correctly pointed out we need to accomplish health care reform to get our costs under control, and in turn fix our economy and long-term fiscal health, and to convert the waste everyone agrees is there into the cash we need to cover everybody.

The big mistake here is that Pearlstein is calling for the expansion of the health care entitlement and confusing that with health care reform. He's saying we'll just hope for the best that costs can somehow be controlled even, as he says here, "particularly after a number of past experiments in this area have yielded disappointing results."

There is entitlement expansion--you just raise taxes, lop a little off the top of provider reimbursement, or pare back benefits--to come up with what you need to pay for it. That looks to me like what the Congress is getting ready to do.

Health care reform--the thing we really need to do--creates new, powerful, and measurable incentives that actually begin to convert the waste to the money we need to cover everyone and control our costs.

Entitlement expansion is just loading more people onto the Titanic.

Health care reform is the refashioning of the system into something that is sustainable.

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