JONATHAN CHAIT MARCH 9, 2010
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Harvard economist David Cutler today goes through the ten possible ways to control medical costs, and grades President Obama's plan. Bottom line:
So reform gets full credit on six of the 10 ideas, partial credit on three others, and no credit on one. The area of no credit (a public option) is because Republicans opposed the idea. One area receives only partial credit because of Democratic opposition (malpractice reform) and two other areas reflect general hesitancy to increase taxes (taxing Cadillac plans and taxing drivers of obesity).
Why is reform viewed so negatively? In part, it may reflect the perfect being the enemy of the good. If the only passing grade is 10 out of 10, then reform clearly fails. But given where the Republican Party is on a public option, no reform will get a passing grade. If both parties were willing to raise taxes and Republicans negotiated malpractice reform for their overall support, we could probably get a nine out of 10.
Cutler also makes an argument that's been mostly lost in this debate: the administration's multiple programs to nudge medicine toward more efficient practices don't get "scored" as saving money by the Congressional Budget Office because they're new, but that doesn't mean they won't work:
Reform is also viewed negatively because official scorekeepers do not believe anything on this list other than reducing prices will save much money. The Congressional Budget Office has consistently estimated that policies built around changing incentives and thus encouraging more efficient care will not have any effect on cost trends. My own calculations, mirrored by other observers and a host of business and provider groups, suggest that the reforms will save nearly $600 billion over the next decade and even more in the subsequent one.
2 comments
Cutler is exactly right. Out here in the real world, we are experiencing lots of pressure toward integration of medical practices, in part to achieve efficiencies (plus to gain more leverage in negotiating with insurers and to make it feasible to buy the equipment and employ the personnel necessary to provide more ancillary services that are allowed within a group practice) in order to at least partially offset reductions in income resulting from coming reductions in reimbursement rates. I would discourage the sledge hammer approach of large, across the board reductions in reimbursement rates; reductions need to be done with a scalpel not a machette. But to again confirm Cutler's point, there are enormous inefficiencies in the current srtructure for the delivery of health care services, and having read summaries of the various demonstration projects to be funded with this legislation, I would say that the potential for achieving large scale improvement in practice efficiencies is enormous.
- raylward
March 9, 2010 at 11:37am
Cutler is right as far as he goes. Where he doesn't go is a realistic analysis of the weighting factors on the 10 points as to which REALLY save how much money, assuming universal coverage. The answer from various experts AND from what 20-30 other countries have worked out in their "independent state experiments " is: A combination of Single Payer and a Medicare Part E(verybody) approach. All the rest is (sometimes important) tweaking. It's the health care equivalent of that old chestnut of a journalist's question: "Aside from THAT, Mrs. Lincoln, how did you enjoy the play?"
- gdbittner
March 9, 2010 at 12:14pm