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Cost control opportunities galore

David Leonhardt has a great column today on all the cost-cutting opportunities still in the Senate bill. Liberals have a tendency to focus on the money that can be saved by a strong public plan, and it's true that that's a potential avenue for savings, but it's not the only one. Extending the new Medicare Commission to apply to hospitals in the first 10 years (they are, strangely, exempted, a quirk that many speculate was part of the deal with the hospital industry) would be a step forward. So too would be retargeting the Medicare Commission to a lower rate of spending growth (Leonhardt points out that it's been moved to track the rest of the health-care system, which is considerably less ambitious), increasing the penalties for hospital-related infections.

Indeed, the bill is chock-full of cost control opportunities of every shape and size, opportunities that the administration would happily support (they have always been far more committed to cost control than the average member of Congress). The conservative Democrats -- or, for that matter, the many Republicans -- who oppose this bill because they believe it insufficiently committed to deficit reduction have the opportunity to leverage their vote to do more to reduce the deficit than any single senator has in a generation, and possibly in the history of the republic.

But that is where things get tricky: There is a difference between someone who wants to reduce the national debt and someone who wants to use the debt as an excuse for casting a particular vote. It can be hard to identify such people in advance. But it will not be hard to identify them once debate on the health-care bill opens.

By Ezra Klein  |  November 25, 2009; 2:35 PM ET
Categories:  Health Economics , Health Reform  
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Comments

How do you reconcile your claim that the administration is committed to cost control with this:

"Women should continue getting regular mammograms starting at age 40, Health and Human Services Secretary Kathleen Sebelius said Wednesday"

Here was the first opportunity for them to prove a commitment to cost control and they punted. It's one thing to say you're committed to cost control and another to actually do it.

Posted by: ab13 | November 25, 2009 3:00 PM | Report abuse

Here's a cost control idea:

One of the public plan's greatest potential strengths is paying only Medicare rates, but the gang of four easily may not support even a weak public plan, and one or two defections may be too many.

What if, however, there was just a law that all private health insurers could only pay Medicare rates. The delivery system would have no choice but to accept these lower prices. It would be a tremendous break on health care costs. Something similar to this is done in some European countries that have universal health insurance through private insurance companies.

It would be hard to see something like this being added now, but perhaps as an add on in a few years after the initial health care overhaul is passed.

Posted by: RichardHSerlin | November 25, 2009 3:02 PM | Report abuse

Very disappointed that this post did not use the word "chockablock". The rise in popularity of that word has been my favorite side effect of the emerging blogosphere.

Posted by: cmcintyre3600 | November 25, 2009 3:07 PM | Report abuse

"Liberals have a tendency to focus on the money that can be saved by a strong public plan, and it's true that that's a potential avenue for savings"

Except that there are few health care policy experts that believe a "strong public plan" will have a meaningful impact on costs, particularly as Medicare has a very similar growth rate.

"Extending the new Medicare Commission to apply to hospitals in the first 10 years (they are, strangely, exempted, a quirk that many speculate was part of the deal with the hospital industry) would be a step forward. So too would be retargeting the Medicare Commission to a lower rate of spending growth (Leonhardt points out that it's been moved to track the rest of the health-care system, which is considerably less ambitious), "

This is where the whole thing is really disingenuous. I'm frankly shocked by some of the limitations in the Senate bill for IMAC. Hospitals exempt? Physicians likely exempt as well? A mandate limited to controlling cost growth to the same level as non-Medicare spend? What exactly, were you, Obama et al and others touting was so great about IMAC then? That it merely exists? Besides setting it up, what exactly would they be reforming? Medical equipment and nursing homes? My criticism of the IMAC policy already assumed the "opportunities for more cost control" were part of the base plan-- and I was in the camp of "good policy, but the politics are still a huge predictable problem, so let's stop the applause"-- but that wasn't even correct. IMAC had already been completely neutered before the tough politics on getting any recommendation to stick had even begun.

This is a sick joke.

And you have the audacity to use the title "Cost control opportunities galore" for this post?

Posted by: wisewon | November 25, 2009 3:09 PM | Report abuse

Seriously Ezra-- I know you want Obama to succeed with health care reform-- I do too-- but you don't work for the guy. You're a journalist. A little more balance, please.

Posted by: wisewon | November 25, 2009 3:11 PM | Report abuse

Re: RichardHSerlin

This is, essentially, the German healthcare system, and, I think, that of a large number of other European countries. The lack of government price setting is the principle explanation of the difference in health care costs between here and there.

Posted by: RyanD1 | November 25, 2009 3:37 PM | Report abuse

There is a lot to like in this bill so let's get it done. Here is how:

Get Senators Baucus and Grassley back in the room together to work through a slight variation of this bill and make the bill bipartisan so it gets 70-75 votes.

First, encourage competition with triggered, not-for-profit cooperatives to compete where there is not enough private insurance competition.

Second, end the insurance companies special exemption to the anti-trust laws.

Third, throw out Charlie Rangel's tax and finance it with the Kerry tax on Cadillac health plans.

Forth, add on Medical malpractice litigation reform to further drive down health costs.

Leave the remainder of the bill basically like it is. Of course, probably 10 liberal Democrats in the Senate and 15-20 conservative Republicans are going to vote against even that bill, but that type of a bill will be very good for the nation, and it will give Obama the type of consensus victory that will be good for him.

Let's get the parties back together and finish this job.

Posted by: lancediverson | November 25, 2009 3:41 PM | Report abuse

ab13 wrote:

> How do you reconcile your claim that the
> administration is committed to cost control with
> this:

> "Women should continue getting regular
> mammograms starting at age 40, Health and Human
> Services Secretary Kathleen Sebelius said
> Wednesday"

They obviously gave in to unscientific fearmongering and decided they didn't want a Death Panels II distraction (government rationing!) to harm their chances of passing the health care bill. It was clearly a political decision, they just decided it was not worth the fight at this point.

Posted by: poGhoh3K | November 25, 2009 4:10 PM | Report abuse

"Get Senators Baucus and Grassley back in the room together to work through a slight variation of this bill and make the bill bipartisan so it gets 70-75 votes."

What planet are you on? Repiglicans have no interest in any compromise and have stated this repeatedly. See John Kyl and McConnell for many quotes saying that no repiglicans will vote for health care.

"First, encourage competition with triggered, not-for-profit cooperatives to compete where there is not enough private insurance competition."

Several studies including the CBO state that co-ops will do nothing to drive down costs. They are too small to have the bargaining power to affect the market.

"add on Medical malpractice litigation reform to further drive down health costs."

This red herring again. Tort reform didn't do jack in Texas. It is a nonissue in health care right now.

Repiglicans have made themselves irrelevant by not participating in HCR. There is no evidence that they are acting in good faith.

Posted by: srw3 | November 25, 2009 5:24 PM | Report abuse

Pundits, politicians and ordinary peasants who are obsessed about health care costs should set an example for the rest of us. They should insist:

1) their health care benefits be taxed as regular income

2) any employer or government provided health insurance offer minimal, less costly, coverage with high co-payments to discourage them from needlessly seeking health care

After about twenty years, Congress could decide whether this should be extended to those of us not obsessed with health care costs, who care more about universal, affordable, high quality health care.

Posted by: Aprogressiveindependent | November 25, 2009 5:35 PM | Report abuse

@poGhoh3K: "They obviously gave in to unscientific fearmongering and decided they didn't want a Death Panels II distraction (government rationing!) to harm their chances of passing the health care bill. It was clearly a political decision, they just decided it was not worth the fight at this point."

So they kicked the cost control can down the road, again. But trust us, in the future, we really will find the will to do cost control. Just not right now. But we will do it. Someday. We promise.

By giving what you thought was a good answer to my question all you've done is make my point for me.

Posted by: ab13 | November 25, 2009 5:53 PM | Report abuse

There is a difference between someone who wants to reduce the national debt and someone who wants to use the debt as an excuse for casting a particular vote.
*************

the debt was an urgent national priority during the campaign, and that was before we new the debt was going to set records in the first two years of the new administration.

now the debt is simply an "excuse"

Posted by: dummypants | November 25, 2009 7:42 PM | Report abuse

I'm not an expert on rehab facilities and nursing homes. But I do know enough to share the CMS actuary's doubts as to whether sustained productivity gains can be mandated in an industry that hasn't a productivity gain in 25 years. The big money in these facilities is made by the docs, who bill separately are exempt from IMAC's purview. The nursing care is already stretched and the admission rules are already very restrictive. There is also a lot of cost shifting from Medicare to Medicaid, so the impact of Medicare cuts will be magnified. I agree with Ezra that we've should at least try, but this is by no means the low-hanging fruit of cost control.

Posted by: bmull | November 25, 2009 7:48 PM | Report abuse

Ezra: "Liberals have a tendency to focus on the money that can be saved by a strong public plan"

That's not quite right. Liberals aren't focused on cost control, they are focused on covering the uninsured. Any health care reform that mandates you get your health care from private insurance providers, providers that have to be mandated not to continue morally horrific practices like recision, is going to be fairly hard to swallow on a moral basis. Banning recision doesn't make dealing with private insurers appealing, just less repugnant. Read more on how insurance companies are repugnant at this sometimes terrific blog.

http://voices.washingtonpost.com/ezra-klein/2009/06/the_truth_about_the_insurance.html

I know you think it's a mere 1-2% that will ever be in the public option but most liberals think your analysis is off base and the public option in the exchange will open up more quickly and the kernel of something like Medicare for working age people, a beloved backstop that helps you live well. Even at the same price, private for-profit insurance ain't that.

Posted by: jamusco | November 25, 2009 7:50 PM | Report abuse

I really wonder if somehow enough states could get together and create their own health care system that would be better than this crappy bill? Why doesn't the entire Northeast for example form one giant health coop? Instead, we're being saddled with ever crappier options because of four senators.

Posted by: AuthorEditor | November 25, 2009 8:08 PM | Report abuse

AuthorEditor: Massachusetts has done just that. The problem, however, is that there are huge economies of scale at play. Insurance works the best when you have a wide risk pool.

Posted by: etdean1 | November 25, 2009 10:21 PM | Report abuse

Taxation of benefits - packaged as a "cost control" - just takes away people's benefits or makes them pay more for what they have. That does control costs, alright, but only by taking away health care benefits and or forcing premium sharing, higher deductibles, etc.

Good plans with wide networks, low deductibles, low co-pays and minimal premiums are a good thing. And so are dental and vision benefits. We should all have them.

Taxing benefits at 23k for family and 8.5k for single will really hurt the middle class. This isn't reform - it's cutbacks painted as

I worked very very hard to elect Obama and dems. And I'm working very hard for health care reform - at least, the House version. But taxing benefits? Ugh - it's terrible.

The republicans will kill the dems over taxation of benefits... they're already saying it's a reversal of Obama's pledge, it raises middle class costs, etc. And unfortunately, they're correct in this case.

This is the rare argument where the repubs don't actually have to distort or lie about a policy that's in one of the bills to make dems look bad.

Taxing benefits is bad policy and spectacularly bad politics.

Posted by: PeteSikora | November 26, 2009 9:54 PM | Report abuse

PeteSikora,

I'm sorry but EVERYONE but unions disagree with you. Low copays and deductibles INCENTIVIZE people to run to the doctor for every little sniffle or cold, same with low copays for the ER. Its just wrong and the only thing WRONG with taxing the benefits at the levels they were at is that they RAISED them because of union pressure because they're short-sighted as usual.


And about 4-5 months ago I proposed the below option on this sites comments section. glad to see it mentioned. this is the BEST way to control costs in the private sector. Capitation SHOULD follow shortly after the enactment of a strong PO trigger.

http://www.politico.com/news/stories/1109/29915.html

Posted by: visionbrkr | November 27, 2009 9:18 AM | Report abuse

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