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Are Conservatives Really Worried About Cost Controls?

In many ways, I think Tyler Cowen's critique of health reform is the right one: It is certainly plausible that the final bill will include a pricey expansion of coverage paired with a speculative and uncertain set of cost controls. But it is baffling to watch him blame this on the Obama administration. As he himself says, the White House is firmly behind the most promising proposals on cost: The efforts to tie Medicare's reimbursement rates to the cost-effectiveness of different treatments and initiatives to give MedPAC the power to aggressively reform Medicare. But those policies are not certain to exist in the final bill.

What stands in the White House's way is Congress. And, more often than not, it's the Republicans in Congress. Liberals, after all, will sacrifice almost anything to radically expand coverage. This leaves cost-conscious conservative facing a bit of a dilemma. They can attack the most vulnerable parts of the policy -- the cost controls -- in the hopes of bringing the whole thing down. The downside to that, of course, is that liberals simply jettison cost-controls to protect the coverage expansion. For a fiscal conservative, this should be considered the worst of all worlds.

Conversely, they could resign themselves to the coverage expansion and offer their support in return for stringent cost controls. Given that Peter Orszag and his colleagues are transparently desperate for more aggressive constraints on Medicare's spending, it seems pretty likely that the White House would deal. But thus far, I've seen no evidence of that strategy. Indeed, I've mainly seen complaints against the public plan, which would make health care cheaper, and the taxes meant to pay for the coverage expansion, which ensures that health reform won't add to the deficit.

Cowen, of course, is one of the nation's most respected conservative economists. He has agency here. And given that his op-ed expresses support for the bulk of the White House's cost containment strategy, it's surprising to me that he chooses the quixotic strategy of convincing Barack Obama to abandon health reform, rather than convincing the Republicans in Congress to improve it.

By Ezra Klein  |  June 15, 2009; 8:08 AM ET
Categories:  Health Reform  
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Convincing Republicans to "improve" health care reform seems almost equally quixotic to me.

Posted by: bcamarda2 | June 15, 2009 8:56 AM | Report abuse

Thanks for the link. I definitely expect to end up blaming Congress, and as you note I support Obama on comparative effectiveness. There is one part of a sentence in the piece I would have reworded, but it was "in the can" before Obama expressed very direct support for cutting costs (that was Friday, I believe). I also would encourage Republicans to accept a package deal with coverage extension, cost cutting, and liability reform, provided the cost cutting is real and not promised for some indefinite future. I'll blame Obama if he doesn't hold tough on costs and of course we'll see how that proceeds.

Posted by: tcowen | June 15, 2009 9:11 AM | Report abuse

I'm not sure it's fair to say that conservatives are united behind any single view for health care reform. Instead, I think there is a healthy diversity of opinion on the issue. If there is one dominant strand in conservative thought right now, it is that consumers should bear more responsiblity for health care spending than is currently the case. If this were a consumer-driven process rather than a government-driven process, then it is irrelevant whether the government is rationing / cutting costs, because the organic process of consumer selection will be picking and choosing which procedures make sense, rather than bureaucratic fiat.

Posted by: Dellis2 | June 15, 2009 9:38 AM | Report abuse

If you want to cut cost make a three or four living will question mandatory when signing up for health insurance. "If I'm determined to be in an inreversable comatose state I [do] [do not] want extreme measures to be used to keep me alive" or "If do to a medical emergency I suffer irreversable brain damage that will significantly impair my mental capcacity I [do] [do not] want extreme measure to be used to keep me alive"

Of course you would need to make it illegal to charge someone different premiums based on how they answer the question.

Posted by: JonWa | June 15, 2009 9:39 AM | Report abuse

Dellis, you're right that making healthcare more consumer driven is a frequent conservative argument, but Ezra and others have pointed out many times and many ways in which that doesn't work.

First, we don't have evidence based medicine now, so there's very little to rely upon when making a decision about "which procedures make sense." Furthermore, even if there were studies for consumers to review, most consumers have neither the time nor the training to fairly evaluate which procedures make sense for them. Third, people are scared of dying/being hurt and are likely to just rely on their doctor's opinion of what they should do. If the doctor's incentives are to do as many tests as possible and do every last extreme measure to keep the patient alive, then that's probably what he'll recommend.

Put more simply, healthcare is not like buying a TV.

Posted by: MosBen | June 15, 2009 10:04 AM | Report abuse

"it's surprising to me that he chooses the quixotic strategy of convincing Barack Obama to abandon health reform, rather than convincing the Republicans in Congress to improve it."
Republicans know that they will get no credit out of any health care improvements, plus claiming we have the greatest system in the universe is a key tenet of the GOP Ten Commandments (which, in the Republican fashion for hating math and science, don't add up to ten commandments) that goes back to Reagan making records where he screeches that Medicare is a Soviet plot. To be even slightly helpful in reforming healthcare is like digging up Reagan's body and kicking it in the face.

Posted by: flounder2 | June 15, 2009 10:26 AM | Report abuse


You are far too good with numbers not to understand the most simple numbers of Republicans in the House and Senate. They do not matter. I don't know why you spend one minute blaming them. Republicans have no power in the White House, in the House, and once Al Franken is seated, Democrats will have 60 votes in the Senate. Republicans do not matter anymore and you are passing blame to where it does not exist. All of the action is with the Democrats. I dislike hearing about Republican opposition when their opposition doesn't matter to this important debate.

Posted by: lancediverson | June 15, 2009 10:43 AM | Report abuse

Republicans want to continue to follow the same cost-containment strategy they've followed for the past 20 years: rationing.

For 20 years, they've defended the fact that many people who get incredibly ill suddenly find loopholes in their coverage and aren't able to get the care they've paid for. They've defended the fact that we're penny-wise and pound foolish, demanding co-pays for preventive care and overpaying for the conditions that could have been prevented. They've defended a system that has steadily priced out more and more people, leaving them uninsured and potentially ruined if they get ill. Insurance has become almost unavailable to entrepreneurs in small businesses.

The Republican approach to healthcare is to assume rationing is inevitable, and to let the market do it. Their entire political goal is to make sure people who vote for them don't get rationed. Or if they do, that they blame someone else.

Democrats, on the other hand, don't even have rationing on the table. They'd rather get better information to doctors on which treatments are most effective, they look at different models of paying doctors to create incentives for more efficient care delivery, they invest more in prevention, they look to create administrative efficiencies, they're looking at profit margins in the for-profit areas of healthcare, they're going after areas where they feel the government "overpays" providers, they're looking to eliminate paper and use information better...this is all so they can free up money to ELIMINATE the rationing in our current system--rationing of the insured and uninsured alike.

It's simply incredible that this debate has become so distorted. We ration care right now. Based on how healthy you are, and how lucky you are in terms of what's covered and where you work.

What we don't do is put any pressure on anyone BUT the consumer to control these costs. And, uh, that strategy hasn't worked.

Posted by: theorajones1 | June 15, 2009 10:47 AM | Report abuse

MosBen is not right. Health Care may not be like buying TV. But the whole point of the ‘conservative philosophy’ is each adult is responsible for her well being; this includes Health Care too. If this needs simplification of Health Care Options, so be the case. In a way that is what Ezra is doing and is advocating – simplification of the whole process so that a consumer comes at the center.

It is a ‘snake oil’ sold to us by these politicians that it is State or Employer who will continue to pay for our medical needs without any limit. This is against the laws of ‘gravity’ in economics – promising free lunch. That never succeeds and the only result is bankrupt state because her people showed inability to get off the state doles.

Failure of Obama Policy is failure to bring the ‘consumer’ at the center. Through ‘insurance plan exchange’ it is addressed to some extent. But from cost perspective, Obama is doing nothing to make ‘us’ responsible for our costs.

There are Billions of people in the world (for example India) who take responsibility of their own heath and old age. Why only Americans of all, the birth place of ‘self-help and independence’ philosophy should depend on State for their health needs? It is shame.

Keeping consumers away from ‘payment’ is beneficial to largest constituencies in Health Care Market – Physicians, Hospitals, Pharma Companies and Device Makers. Our Congress is beholden to them whereas President Obama is all for the ‘glory’ of providing insurance to those 46 million without insurance. Read Samuelson in WaPo for what is wrong with that.

This whole charade of Health Care Reform by President Obama is a joke and will be his nemesis in ‘undoing’ his regime. As is the wont of American Presidents, he will not listen to sane advices and will simply bulldozer Trillion Dollar commitments without concomitant serious cost control measures. Congress may fail to include Cost Control measures in bills. But why will not Obama ‘veto’ those measures? Why not President ‘unequivocally’ say that he will not accept any shenanigans of Congress in this matter and will need clear cut financing of heath commitments within first 4 years instead of spread over a decade. He will not and calamity is upon us in the name of Obama / Liberal Glory.

Posted by: umesh409 | June 15, 2009 10:55 AM | Report abuse

I don't disagree with a lot of things that Professor Cowen said, but I do take issue the way he's framing the policy issue as "we should expand health insurance b/c we'll have money to do so". There are efficiency reasons to move toward universality that Professor Cowen conveniently ignores in his posts on the subject.

Posted by: mrblond | June 15, 2009 10:57 AM | Report abuse

Unmesh409: Implicit in the conservative principle that adults should be responsible for themselves, including health coverage, is a belief that such expectations are practical, or at least possible. I guess I may be missing something, but in your first paragraph you almost seem to be making a conservative argument for healthcare reform. "In a way that is what Ezra is doing and is advocating – simplification of the whole process so that a consumer comes at the center." To me this reads as an argument that the healthcare sector is currently too complex for an average consumer to understand, so it should be reformed to give consumers more control: information should be made widely available about procedures, comparative effectiveness, etc. so people can decide what they want. Some may choose to go with a private insurance plan because it provides what they deem necessary. Others may choose a public plan, but everyone is given the option, which is certainly not the case now both due to economic and informational constraints.

Also, in your last paragraph, why is undoing in quotes? Are you implying that he will not, in fact, be undone?

Posted by: MosBen | June 15, 2009 11:40 AM | Report abuse

Yes, MosBen, you are right – I think more readily available information with simplification of the process will help a consumer to make the call. There are vested interests in keeping this process complex and Obama approach does not do enough justice to take head on these interests. Besides the whole American ethos is about ‘rejecting’ Big Brother role of the Government, Dems or GOP alike; nobody wants that unless it is temporary for specific reasons (bank or auto bailouts for example).

I am agnostic with insurance plans, private or public as well as not against the insurance plans in general. My beef is with the habit of American politicians to ‘ruse’ us in continuation of ‘addiction’ in depending on State for health care solution. Worse, all these commitments by these politicians are on very thin ice and Obama is no different here. Just watch the desperation with which he and his administration is coming out with ‘purported savings’ so he gets his Trillion Dollar check to increase the government commitment. Who is stopping Obama and Congress to ‘realize’ these savings first before they venture into how to distribute this hypothetical pot? But they won’t. As Ezra said, they will do the worst of both worlds – will talk about the savings first, but in absence of consensus on that will still go ahead with the expenditure! Point is Obama is abdicating his responsibility in stopping this eventuality upfront (not GOP as like Ezra wants to argue). Hence I see such a failure to be firm with Congress will ‘undo’ his whole Presidency, his mandate and his legacy; the way Iraq war did to Bush.

If we see carefully, it is clear that President Obama is quite careless about ‘financing increased health coverage’ and ‘containing federal deficit’. Both these things are going to cost him enormously unless his corrects his path with sincerity and honesty.

Posted by: umesh409 | June 15, 2009 12:20 PM | Report abuse

Shorter Ezra: "conservatives" should support a vast increase in a government program with cost controls.

Posted by: ostap666 | June 15, 2009 12:29 PM | Report abuse

There are two types of consumer decisions. The first, elective, should be entirely driven by consumer choice. For the second, I think mosdef picks the wrong point in time to question when a consumer should be making a choice. The point in time should not be when a consumer gets sick. Obviously at this point a consumer will spend whatever it takes to get better, particularly when he/she is not footing the bill. Instead, the point in time should be a healthy consumer considering the chances that he/she might get sick, and what he/she is willing to spend to get better. I would suspect that many consumers would not spend 30% of their lifetime income on feeling slightly better their last few months of old age.

Posted by: Dellis2 | June 15, 2009 1:42 PM | Report abuse

I was just flabbergasted at umesh's comment, "There are Billions of people in the world (for example India) who take responsibility of their own heath and old age. "

How ignorant can one person be!!! Have you seen how well that has worked for them? Even worse than for us!

All these clueless ones pontificating about "taking responsibility" and then running to the government to bail them out. We saw it with the banks, with Wall St., with the investors in GM. How can someone "take responsibility" for his health care when insurance costs more than the payments on his house? How can a person "take responsibility for their health care" when the Masters of the Universe have tanked our economy?

Get real, people. There is a whole reality out there outside your fantasy land, outside the"reality" that you have created. Why not experience it?

Posted by: dkmjr | June 15, 2009 7:43 PM | Report abuse

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