HEALTH CARE NOVEMBER 5, 2009
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When conservatives scream about socialized medicine and death panels, you should tune them out. But lately conservatives have been making an argument you should hear. It's about whether we can believe Congress when it promises to raise taxes or cut spending--and, as such, whether we can believe that health care reform can actually be fiscally responsible.
As you may know, many promoters of health care reform say that the proposals in Congress will pay for themselves and, over the long run, actually reduce what we spend, as taxpayers and as a society. As proof, they point to (among other things) a series of changes in the way Medicare pays for services--changes that would, over time, pay the providers of medical care less and, accordingly, restrain the growth in overall Medicare spending. They also cite a reduction in the tax subsidy for the most generous health job-based insurance policies, or so-called "Cadillac plans." Experts believe this will induce employers and employees to seek out cheaper, more efficient insurance arrangements.
The Congressional Budget Office agrees that these measures would save the government money. (CBO doesn't predict the effect on health care spending overall, but it's a reasonable inference.) Still, the CBO delivered that judgment with a caveat: Cost control will only work if future lawmakers let those changes take effect. As CBO noted--and as conservatives have been arguing, in some cases very loudly--that's hardly a sure thing.
A big reason for doubt is the fate of a law called the "Sustainable Growth Rate." SGR is basically an effort to set a hard budget on physician payments in Medicare. After any year when Medicare reimbursements grew more quickly than the SGR, the government is supposed to cut those payments back. But thanks in no small part to physician lobbying, Congress has in recent years flinched at letting the cuts go into effect, instead passing yearly "postponements."
You can see where this argument is going. If politicians in Washington aren't willing to let the SGR take effect, why should we believe they'd be willing to let the planned Medicare reductions and insurance taxes take effect? It's a good question. But, it turns out, there are some good answers, as well.
For starters, the policies are structured differently. The SGR is a cut, plain and simple, that would affect physicians no matter how they changed their behavior. The planned Medicare reductions are part of a broader package, full of financial incentives that should, at least in theory, reward more efficient care. There would be bonuses, for example, that would reward the formation of integrated groups that deliver more coordinated chronic care. Similarly, both employers and employees would be able to avoid paying the Cadillac tax by shifting to plans that don't cost as much.
Severity and timing of the changes is another distinction. At least today, SGR is a joke because--if it went into effect--the reduction in physician payments would be a highly disruptive 20 percent. The adjustments in the new reform law would be less stark and, in the case of the insurance tax, less direct. The Cadillac tax falls on the insurer, not the individual. That ought to soften the political blow--not entirely, for sure, but perhaps enough to make a difference.
Keep in mind that, notwithstanding the SGR experience, lawmakers in Washington have--from time to time--stuck by decisions to impose higher taxes or hold the line on Medicare spending. It happened in 1990, when President George H.W. Bush and a Democratic Congress agreed to raise taxes; it happened in 1993, when President Bill Clinton and a Democratic Congress agreed to raise taxes again; and it happened in 1997, when Clinton and a Republican Congress agreed to cut Medicare and Medicaid spending, although it later backed off some of the cuts.
Decision-makers in Washington stood by those changes because, during those periods, there was political will to reduce budget deficits. The same seems to be true today. President Obama has insisted reform be fiscally neutral, forcing Capitol Hill to reduce significantly the benefits reform will offer. Just two weeks ago, an effort to wipe out the SGR forever collapsed because, without offsetting revenues or savings, Congress itself was unwilling to authorize the extra money.
That doesn't mean the will to maintain fiscal balance will prevail throughout the next decade, or beyond, as the planned Medicare changes and insurance tax take full effect. But health care reform, done right, should make it easier to maintain that discipline in the future--not only by putting cost-saving measures on the books, putting the onus of action on those who wish to cancel them, but also by getting everybody covered.
For reasons that have as much to do with politics as policy, it's simply easier to control the cost of medicine if most people have insurance. As proof, just look at Massachusetts, where--three years after extending coverage to include 97 percent of the population--the state is looking seriously at truly sweeping changes in the way medical care is organized.
To be clear, a lot of reform advocates--this writer included--would support expansions of coverage even if it didn't reduce the deficit, purely on moral principle. And the case that health reform, as currently written, will actually pay for itself is a lot stronger than the case that health reform will restrain future medical spending. When it comes to the actions of future politicians, there are never guarantees.
But that's not a reason to oppose health care reform. It's a reason to push even harder on cost control--now, while lawmakers are still writing legislation, and in the future, when they have opportunities to improve upon it. Instead of ignoring complaints about cost control, reform advocates should answer them.
Jonathan Cohn is a senior editor of The New Republic. This column is a collaboration between TNR and Kaiser Health News. KHN is an editorially independent news service and is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization, which is not affiliated with Kaiser Permanente.
5 comments
I'm amazed at your unwillingness to evaluate the facts. Zeke Emmanuel and Peter Orhzag both agree: major cause of rapid health care costs is early and broad adoption of new technologies (drugs, devises and procedures) and that these "payment" schemes (accountable care organizations, home health) will not work MedPac evaluated ACO's, with two conclusions: one, with ten or so trial runs-they cost more and two, you can't devise voluntary programs and involuntary programs won't work Health care reform won't pay for itself-you know, HR3200 had the SGR override, costing roughly $250 billion over ten years. SGR reform is integral to health care reform. It's gaming the numbers to place SGR reform in a different bill. With that $250 billion cost in place-health cost curve is not bent. This is what CBO has been saying since the summer. SGR overrrides may be due to physician lobbying-they are 900,000 strong-but HHR Secretary Sebelius says, reducing doctor reimbursements by even 10% (law suggests 21%) would have catastrophically negative effects on health care access for Medicare and Medicaid patients. Dems and Repubs equally want to avoid this disaster. I agree Cadillac plans are scams-they really operate to eliminate deductibles and co-payments for their customers-as well as providing the finest hospital benefits (private rooms). However, their overall number is small and I've found no evidence that they make a substantial contribution to the increase costs of hospital and doctor bills. Socialized medicine: Dem leaders say these reforms, and the public option, is the first step on the road to single payer. Should we ignore their words? Death panels: I agree, the bill doesn't provide for them. But, Obama's advisors, including Tom Daschle (tax problems), all agree, that our society must make tough decisions on how much care should be provided to many of our citizens. European models-whose annual health care cost increases are quite similiar to ours-do this continually: rationing, quality adujusted lives and delaying adoption of valuable drugs, devises and procedures. With more government control of health care spending-why is it wrong for Americans to wonder where the Dems intend to take us? 1994-Republicans were pilloried for wanted to "slow" the rate of growth of Medicare. This is exactly what Dems are doing now-but somehow its different. Is it different merely because those provisions are in a Dem bill instead of in a GOP bill? SGR is a joke because it's not founded upon science, economics or sound judgement. It's a blunt instrument, merely designed to pay providers less to keep Federal outlays down. MedPac also evaluated 10 programs specializing in obesity management-again-the result-costs increased. With, in many cases, multiple posts per day on the issues, it continues to amaze me that you refuse to listen to the intent of your leaders and refuse to read the results of studies dealing with controlling health care costs.
- lobosven
November 5, 2009 at 1:37pm
Excuse me if I don’t get a warm a fuzzy feeling about the Government’s ability to control costs. The authors are hedging their bets on every point. “ If……”, “Should, at least in theory…”, “have, from time to time….”, “later backed off….” , “The same seems true today”, “That doesn’t mean….” “should make it easier….”, “there are never guarantees.” Is it possible to be any more evasive? Every American should have access to quality health care without going bankrupt in the process. Check. I’m there. Several years ago my brother and his wife were financially wiped out in the process of saving the life of their new born baby. The emotional aspects of what they went through were horrible enough, as you can imagine. To lose their home and savings in the process, in the friggin’ USA, is, well, you fill in the word(s). But, the devil is in the details, and in this case, what is it and how do we pay for it? Whatever it is (1200 pages?), Democrats are trying to sell it using smoke, mirrors and gimmicks. Their entire game plan now seems to be get something, anything passed and worry about the true cost later. Republicans on the other hand play on people’s fears. Their game plan seems to be stall, let the Democrats take the heat with the electorate and we’ll take control again so we can make sure nothing ever gets done. Is it really any wonder why more than a few Americans are skeptical of the direction health care reform is taking, even if they agree that reform is necessary? Don’t get me wrong. I would gladly pay higher taxes to help ensure that nobody goes through what my brother went through. I have tried to put my money where my mouth is by donating heavily over the past many years to the local Children’s Hospital. I’m not a health care expert by any means so I don’t have any particular dog in this hunt for the best health care system. It just seems to me that this debate has gone way off track, and Cohn’s evasive commentary on costs reads like somebody trying to sell you a used car with cruise control.
- nacnud1
November 5, 2009 at 6:49pm
The GOP criticism here is reasonable (for a change!), but can apply to everything Congress does. The tendency for politicians to avoid making painful decisions is present and largely unavoidable in every democratic system, unless the populace as a whole chooses to act like grown-ups. And it is pretty rich for the GOP to make this argument, given that for the last generation they have been the party of fiscal irresponsibility, pushing tax cuts without a corresponding cut in spending (although they love to talk about spending cuts, they have not made them when in position to do so).
- JEFF FREY
November 7, 2009 at 2:46am
The idea that a larger role for Government in healthcare can reduce overall costs flies in the face of the only realistic data we have, which is that documenting the near bankruptcy of the government health programs already operating, Medicare and Medicaid. It's an extremely tough sell that the future will be fundamentally different. lobosven makes a good point about the use of weasle words by Cohn. I would add the hilarious "proof" of Massachusetts "looking seriously", as opposed to actually doing something about, the spiraling costs that have put their plan in jeopardy.
- Robert Powell
November 7, 2009 at 7:03am
The real ironies in all of this are that: 1. The Bills in both Houses of Congress represent not a federal takeover, but rather the expansion of private sector health care to the vast majority of people who currently are not covered by health insurance. 2. Conservatives are screaming about this reform, while, for the first time in memory, the health insurance industry is supporting essentially universal health insurance. The industry wants this because these bills would restructure the insurance marketplace so that insurers can compete on quality, service and outcomes instead of on cherry-picking the healthiest subscribers and denying people needed coverage or services. If you actually talk to CEOs of insurance companies, they would much rather compete on this basis because the vast majority of them care about making people healthy. It's why they got into health care to begin with. But they can't possibly remain viable as profitable entities if young people and healthy people are exempted from paying premiums and only sick people buy insurance. The reason Medicare and Medicaid exist is because private insurers have never been able to figure out how to make a profit covering the very poor or the elderly. The government had to step into this vacuum. 3. Insurance by definition is about pooling and sharing risk. It is actually a very efficient and effective market mechanism. If you want a private insurance market and you want private insurers to dominate it, and you want them to compete on the basis of helping people get the care they need (instead of by denying and delaying coverage and care), then you have to agree that there must be a viable market for private insurance. That requires that everyone participate. There's just no other way. The alternative is the current system where the people with real health care needs are treated as cost centers to be cut. (The other alternative is to give-up on the marketplace and to have the government provide this service. Clearly conservatives don't want that.) The current insurance market is socially and economically dysfunctional. 90% of what's in these health care bills is simply to fix that and then set the insurance industry free to compete as vigorously as they can in providing people to effective and efficient health care. This should be a Conservative's dream outcome and instead it is being attacked as a government takeover because the cause of destroying Obama's Presidency by blocking any accomplishments has become Republican Party's main focus. It's a shame, especially for the millions of Americans who desperately need and deserve these reforms to keep them healthy and to keep them from economic disaster.just because they get sick.
- jonsax
February 5, 2010 at 10:38am