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Making Savings Count

The problem of affordability is, put simply, a problem of money. The more dollars that health-care reform either generates or saves, the more money that can easily be funneled towards affordability. The problem is that a lot of the best sources of revenue have been taken off the table and a lot of the potential savings aren't being scored by the Congressional Budget Office.

But therein lies the opportunity.

Everyone from the White House to Max Baucus to Henry Waxman will explain, at great length, that the CBO is not sufficiently counting the savings in health-care reform. They'll point to CBO's record of underestimating savings in health system tweaks, and point to outside analyses showing substantially larger savings embedded in the bill's provisions. But if CBO won't score those savings, then for the purposes of health-care reform, they simply don't count.

Health policy experts David Cutler and Judy Feder, however, have an innovative proposal for making them count. In a paper for the Center for American Progress, they argue for the implementation of "failsafe" policies — crude, surefire interventions — that will kick in if the expected savings don't manifest. Limiting the growth of Medicare payments, for instance. Increasing the excise tax on insurers. Moving the public plan towards Medicare rates.

You can think of a dozen with little trouble. But if you kept them looming behind the curtain — the Oddjob to your Goldfinger — in the event that the expected modernization savings didn't manifest, it would make the anticipated savings visible to CBO, and free up money for affordability. Moreover, it would make those savings more likely to manifest, as insurers wouldn't want more of tax on their heads and hospitals wouldn't want lower rates, and so there would be more of an incentive to implement some of the softer, gentler reforms.

By Ezra Klein  |  September 8, 2009; 5:23 PM ET
Categories:  Health Reform  
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From the right comes "Begin with individual ownership of insurance policies. The tax deduction allowing employers to own your insurance should instead be given to the individual", which is an echo of your call for more political will and better thinking.

But the economic study [arguable weak in some areas] which makes the statement above also continues to suggest vouchers instead of other, arguably more costly to implement and administer, subsidies. Their wording is "Reallocate the majority of Medicaid spending into simple vouchers for low-income individuals to purchase their own insurance. An income-based sliding scale voucher program would eliminate much of the massive bureaucracy needed to implement today’s complex and burdensome Medicaid system. It would also produce considerable cost savings."

Both of the quotes come from the documents now available at

Posted by: rmgregory | September 8, 2009 5:15 PM | Report abuse

I think we should give every American a full body scan and extensive blood work twice a year so that we can detect every ailment early on and save lots of money. Oh wait, that would actually cost more money than the status quo.....oops. Oh well, they'll forget before the next election and I can blame Bush or something.

Posted by: fallsmeadjc | September 8, 2009 5:18 PM | Report abuse

THis is a good idea, and should be pursued. But the fundamental flaw is in trying to retain for-profit insurance as the means of financing most health care. It is a stupid idea. Maybe ok for catastrophic care, but not for everyday care.

Posted by: Mimikatz | September 8, 2009 5:53 PM | Report abuse

This isn't a matter of accounting gimmicks. There really is not enough cost containment in the plan to ensure affordable subsidies. Our uninsured problem has gotten so bad that even a Dutch or Swiss plan would probably not work for us. At a minimum we need a high-efficiency player in every health care market to ensure that there is low cost care before mandating coverage. Only the federal government has the clout to make that happen.

Posted by: bmull | September 8, 2009 7:24 PM | Report abuse

Ezra Klein is rich. Why don't these big newspapers hire poor or middle-class people to tell average Americans what really is affordable and what isn't?

Posted by: kingsbridge77 | September 8, 2009 7:53 PM | Report abuse

Because your AGI actually changes how math comes out....

Ezra and I would get different figures, e.g., for what 133% of the federal poverty line is, because our income differs.

Uh-huh. Better trolls please.

Posted by: davis_x_machina | September 8, 2009 8:54 PM | Report abuse

You are wrong, davis_x_machina. The FPL is a set level, adjusted every year that has absolutely nothing to do with anyone's adjusted gross income. The 100% fpl for a one person family in 2009 is $10,830. Boom. That's it. For a two person family it is $14,570. Boom. Here's a link to the 2009 tables but you can also google your own link if you don't trust the Federal Register.

Perhaps a little humilty is in order. Ahem.

Posted by: tomtraubertblue-01 | September 9, 2009 6:19 AM | Report abuse

EzK: "...the more money that can easily be funneled towards affordability."

...through subsidies which would be used to purchase still more health care.

"...crude, surefire interventions"

These are sure be crowd pleasers. In no time the government would doubtless be less popular with doctors and patients than HMOs ever were.

"Moving the public plan towards Medicare rates."

Of course, this would break the Dem.'s promise that the public plan would compete with private health insurers on a level playing field.

Posted by: tbass1 | September 10, 2009 12:44 AM | Report abuse

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