The Treatment

Listen to These Eggheads

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A group of economists has issued a letter endorsing both the principles of cost control in the Senate Finance bill and the idea of health care reform more generally. But this is not just any old group of economists. This is an unusually impressive group, including a pair of Nobel laureates and some figures who don't typically weigh in on current policy debates: Kenneth Arrow, Victor Fuchs, Daniel McFadden, Joseph Newhouse. The signatories also cover a pretty broad swath of ideological territory, from the likes of Peter Diamond and Uwe Reinhardt on the left to Katherine Baicker and Mark McClellan on the right. (Baicker and McClellan served in in the Bush administration.)

One apparent purpose of the letter is to focus attention on a pair of controversial proposals within the Senate Finance bill: Imposing a tax on expensive health benefits and strengthening a commission that advises Medicare payment policies. Neither idea is in the House bill; both run afoul of powerful political constituencies. They won't make it all the way through the legislative process without political reinforcement, the kind this letter may provide

But the letter also has a broader significance.

Critics of reform routinely dismiss the possibility that the measures moving through Congress could meaningfully change the way medical care is delivered or restrain the growth in health care spending. And the critics' thinking has gradually become conventional wisdom, in no small part because of an unfortunate, if inevitable, asymmetry to the debate.

Most of the cost-cutting ideas on the table have never been tried, at least in this context and on this scale. And so we can't be 100 percent sure they will work. Intellectually honest experts will acknowledge this--and do, when asked. This plays into the hands of reform opponents, who can point to such concessions as proof that controlling cost is a fantasy.

But there are many reasons to think some, if not all, of the reforms under consideration will push down costs--and even more reasons to think that, at the very least, the reforms under consideration will put us in the best possible position to push down costs in the future. In other words, enacting reform vastly increases the likelihood that we'll do something about the cost of health care, later if not sooner. And that's worth doing, given that we know the alternative is doing nothing about the cost of health care.

MIT's Jonathan Gruber, who also signed the letter, made this case this in a recent interview with Ezra Klein:

We know we will be closer to bending the curve with this bill than without it. But we can't promise this bill alone will bend the curve. This bill moves us towards that. First is the Cadillac tax. Then comes more research on comparative effectiveness. We need to be able to stop paying for things that don't work. This bill doesn't do that, but it sets us up to have the information to do that. Then there's MedPAC on steroids. You need someone with the political ability to set rates to controls costs. Finally, this bill has pilot programs for a lot of things that we think will control costs, but that haven't been proven. Things like accountable care organizations, bundling and all the rest. We're at the stage where we know in theory what to do. But we don't quite know how to set it up, so we're collecting that evidence.

I think this is as much as you can do politically. It's as much as you can do without sinking the whole bill, which is what happened to every other health-care reform.

That's a nuanced argument, to be sure. But that's precisely why you should believe it. And listen to it.

 

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