The Senate Democratic Health Care Bill is a “Milestone” on the Road to Cost Containment—If It Is It's a Pretty Small One

The Obama administration is reportedly pleased with a recent Ron Brownstein article in the Atlantic.

In it Brownstein praises the Reid Senate health care bill for the steps it takes toward containing costs. He quotes MIT economist Jonathan Gruber who says, “My summary is it's really hard to figure out how to bend the cost curve, but I can't think of a thing to try that they didn't try. They really make the best effort anyone has ever made. Everything is in here.... I can't think of anything I'd do that they are not doing in the bill. You couldn't have done better than they are doing."

You can see why the White House liked the column.

But reality is a little harder on them.

While the Reid bill does begin down a road toward better value, that road is a very brief and incomplete one. A few of the things it does to "bend the curve" or not:

• The Reid bill does establish a Medicare board with the power to focus payments more on value than quantity. But then the Reid bill pointedly excludes the commission from even touching hospital costs until 2019. According to the CBO, the way it is structured it would have little if any impact on physician costs. After 2019, the commission would only have the power to deal with Medicare costs that grew faster than overall health care costs—not growth greater than the economy generally.
• The Reid bill does include a public option health plan that proponents argue would provide existing health insurers with more competition. But the CBO says its premiums will likely be even higher than those in the private market.
  
• The bill would penalize hospitals that infected their patients—but only by 1%.
• A provision to encourage more cooperation among doctors would not apply to chronic diseases!
• The bill does tax high cost "Cadillac" health plans. However, it provides no incentives for the vast majority of consumers with premiums below the $8,500/$23,000 threshold to encourage them be more discreet purchasers of their health insurance.
• The Reid bill does spend money on more comparative effectiveness research. But it provides no significant incentives for either providers or consumers to take advantage of it.

It looks like we are in the “yes it does", "no it doesn’t" phase of the political health care end game.

That the Reid bill hardly starts down the value for what we pay road is underscored by a November 23 statement from the National Coalition on Health Care—a group of 85 diverse stakeholders. They aren't buying the spin that Reid has achieved a cost containment "milestone:"

“As we move closer to a final bill, Congress must act to strengthen the systemic cost control and quality improvement provisions of the pending legislation. Without immediate and system-wide reform more and more American families and businesses will face uncertain financial futures due to escalating health care costs. America needs real, affordable, fiscally responsible health system reform.”

Perhaps the best hope for real systemic change could come from a robust Medicare commission that takes the recrafting of the health care system out of the hands of the Congress. In my mind, the cost containment/value answer lies in the integrated delivery of health care—systems such as Mayo, Marshfield, Cleveland, and Kaiser Permanente.

Getting the system to move in that direction will likely take a series of iterative steps based upon pilot projects and trial and error that give providers good reason to want to be part of these kinds of systems or figure out ways to provide comparable care. But it will have to be a slow, deliberative, and iterative process as we learn what we don’t know today. In the early 1990s the market tried to quickly move the system in that direction when we introduced capitation and about blew it all up.

The longer-term trial and error process that it will likely take to finally move the system toward one of value is not something that is going to be driven in the political arena. The best chance is for a robust independent and expert Medicare commission with the ability to make the hard decisions year after year.

Whatever the best way to do that the incentives are not in the Reid bill--or the House bill for that matter--to get us on that road.

Under the Reid approach, a cost commission that can’t even touch hospitals or doctors is not the result of an effort I would have described as one in which, “You couldn't have done better than they are doing.”

Comments like that do provide for some political cover for one “budget buster” of a bill though.