The Treatment

Run Away! Run Away!

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Over at his blog, Obama Budget Director Peter Orszag says the apparent backtracking by health industry groups is much ado about nothing:

A media report
this morning makes a mountain out of a molehill--suggesting that the
commitment earlier this week by health care providers and insurers to
reduce cost growth was overstated. Here is what the groups stated in
a letter they
signed: "we will do our part to achieve your Administration’s goal of
decreasing by 1.5 percentage points the annual health care spending
growth rate--saving $2 trillion or more."  The groups have since
clarified that they may need to "ramp up" to the 1.5 percentage point
reduction in the growth rate, which is understandable.

Allowing some time for a ramp-up does not change the fundamental point, which I highlighted in an op-ed
in the Wall Street Journal this morning: the groups have committed to
significant reductions in the growth rate, thereby recognizing that
substantial efficiencies can be captured in the health system. Some
ramp-up time also does not materially affect the long-term impact from
reducing the growth rate, on either national health expenditures or the
Federal budget. The sooner we enact fundamental health reform, the
sooner we can begin the process of improving quality and reducing cost
in the health system.

As a substantive matter, Orszag is right: It takes time to produce savings. On the other hand, I also think there's more going on here politically than Orszag lets on, although it may not be precisely what it seems.

That's a tease, I know. I'll have more in a little while, when I'm done with some reporting.

In the meantime, today's news couldn't help but make me think of a favorite Monty Python moment, at the end of this scene: 

 

 

 

 --Jonathan Cohn

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