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Modest, far-reaching cost control

Harvard economist (and former Obama campaign adviser) David Cutler runs through the 10 most promising cost control ideas of the past few decades and notes that six of them are fully included in the bill, three of them are at least partially present, and only one of them -- the public option -- is totally absent. "No one knows precisely how much medical spending increases will moderate," Cutler concludes. "But one cannot doubt the commitment to try. What is on the table is the most significant action on medical spending ever proposed in the United States."

One addendum to Cutler's op-ed: Cutting health-care costs is hard. And it needs to be distinguished from simply capping spending. When liberals say that single-payer will save a bazillion dollars, or conservatives point to Paul Ryan's plan and say that will save a bazillion dollars, they're talking about capping spending. Liberals do it on the provider side, saying that government will only pay so much for medical services people need, and the system will just have to adjust. Conservatives do it on the consumer side, saying that government will only give individuals so much for the coverage they need, and if that proves insufficient, then tough. But voters haven't evinced much appetite for either proposal.

So smart people have spent the past few decades trying to figure out softer ways to cut costs without cutting things that people need. One popular idea is to change payment systems so that they don't reward doctors for volume. That's in the bill. Another is to build more competitive insurance markets so that insurers have a more direct incentive to keep costs down in comparison to one another. That's in the bill. Another is to try to bring individuals closer to the true cost of the insurance coverage, which is currently hidden by employers. That's in the bill. And so on.

The problem, of course, is that no one knows how well this stuff will work. So the legislation is careful in implementation. It takes time to build up enough evidence so that doctors can confidently say what is unnecessary, and for whom. It takes time to figure out how to create new payment systems such that doctors don't find their practices in sudden chaos. It takes time to phase in taxes such that they nudge people rather than shove them, and it takes time to develop a new IT infrastructure and get doctors to use it effectively, and so on. We think a lot of this will work, but maybe it won't. So the bill is careful to move slowly. It tries a lot of different things on a fairly small scale in the hopes that some of them will pan out (hence the legislation's length).

That, of course, makes it harder to explain and less impressive when CBO looks at the savings it can predict with high levels of confidence. But until we decide to be radical with cost control, this is what moving forward looks like. As Cutler says, this is the most ambitious cost control bill Congress has ever passed. And that's a commentary both on the ambition of this bill and on the system's resistance to legislation that's yet more ambitious.

By Ezra Klein  |  March 9, 2010; 1:41 PM ET
 
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Comments

"When liberals say that single-payer will save a bazillion dollars, or conservatives point to Paul Ryan's plan and say that will save a bazillion dollars, they're talking about capping spending... But voters haven't evinced much appetite for either proposal."

Hmm, Medicare is a single-payer scheme and Medicare is immensely popular with voters. I don't think the claim that voters haven't evinced much appetite for single-payer holds much water.

Posted by: tsgauh | March 9, 2010 2:05 PM | Report abuse

The idea that comprehensive health care reform is going to save money has always struck me as a lie so big that Goebbels would enjoy it.

Friends, I dont care what Ezra Klein's friends at CBO say about this bill, Congress will revisit health care legislation every year forever, and will always expand coverage, increase subsidies, lower any excise taxes, on and on and this will all cost exponentially more than whatever the final scoring of this bill says it will. To not believe this is to have arrived yesterday from Mars.

Posted by: zeppelin003 | March 9, 2010 2:07 PM | Report abuse

"When liberals say that single-payer will save a bazillion dollars, or conservatives point to Paul Ryan's plan and say that will save a bazillion dollars, they're talking about capping spending... But voters haven't evinced much appetite for either proposal."

How long is Ezra going to continue pumping credibility into Ryan's Medicare privatization scheme? And in this case, going so far as to equate it with a single-payer system?

Let's suppose the shoe were on the other foot: would an intelligent, fair-minded libertarian ever give such credibility to an NHS-style proposal for health care?

Posted by: therapsid1 | March 9, 2010 2:20 PM | Report abuse

Having worked in the fields of rural, community and public health for much of the past three decades, I do not believe any significant savings can be found while the insurance companies are left at the trough.

Though my 1st political campaign was as a volunteer for Barry Goldwater, I worked for Obama because he spoke positively about single payer. What a disappointment!

Posted by: Pokeyboy | March 9, 2010 2:28 PM | Report abuse

People who support single-payer and point to Medicare as a positive example have never witnessed the lobbying around annual reimbursment rate-setting. Medicare also isn't single-payer because most beneficiaries choose to purchase prescription drug coverage and MediGap coverage.

Posted by: tlibert | March 9, 2010 2:32 PM | Report abuse

"When liberals say that single-payer will save a bazillion dollars, or conservatives point to Paul Ryan's plan and say that will save a bazillion dollars, they're talking about capping spending. Liberals do it on the provider side, saying that government will only pay so much for medical services people need, and the system will just have to adjust. "


The implied equivalence between single payer and Ryan's imaginary scheme in nonsense. Single payer proponents are drawing off the real world cost experience of multiple rich world countries which have them, and have dramatically lower costs than the US. What real world success can Ryan point to?

The savings from single payer are little more nuanced that "capping costs" - Ontario sets prices for procedures and does ultimately limit the amount a physician can bill the province, but there is no hard ceiling on the overall system whereby hospitals shut down in mid December because they're out of money for the year or something. Canadians expect the provinces to fund health care adequately, period.

Posted by: Scientician | March 9, 2010 2:33 PM | Report abuse

“Conservatives do it on the consumer side” — And it works! And we can cover everyone with a much lower price tag.

EXPERTS DEBATE SWISS HEALTHCARE MODEL AT HARVARD BUSINESS SCHOOL FORUM

http://www.hbs.edu/news/releases/swisshealthcare2010.html

Posted by: SisterRosetta | March 9, 2010 2:36 PM | Report abuse

SisterRosetta,

- Switzerland has a personal mandate
- Insurers are not allowed to profit from the basic health plans the government requires them to offer
- the government subsidizes coverage for anyone paying more than 8% of personal income for a basic plan
- the government sets fee schedules

It's really a lot like Obamacare and nothing at all like what US right wingers now support: the wild west.

Oh, and Switzerland also has the second most expensive health system on the planet. At least it is universal, but it's hardly the model of cost reduction.

Posted by: Scientician | March 9, 2010 2:42 PM | Report abuse

How is it that every other modern democracy is able to provide universal coverage at a lower cost than the US for profit, private insurance model? It is because no other country uses a private for profit insurance model. Maybe that is where the change should start. Exchanges and better regs are a timid step in this direction, but until med loss ratios are upwards of 95%, insurers are just skimming profit while providing almost no value to the system.

Posted by: srw3 | March 9, 2010 2:55 PM | Report abuse

Here's a different take on Cutler's commentary: http://www.john-goodman-blog.com/a-strange-way-to-look-at-health-economics/

Posted by: FatTriplet3 | March 9, 2010 3:10 PM | Report abuse

Abolishing comprehensive coverage is the only real way to deal responsibly with costs.


And a permanent decoupling of health insurance from employment is the second part for fixing the dysfunction in the system.

Catastrophic is the most cost effective way for getting healthy people protected before a costly medical crisis occurs.

But Democrats REFUSE because if healthy people were truly protected from catastrophic costs, they would lose momentum for the single-payer system they covet.


srw3: FYI, Insurance companies make less than $5 out of every hundred healthcare dollars. Malpractice insurance for doctors has a higher profit margin the healthcare insurance for consumers. Why is that? Because lawsuits have significantly fatter margins of profit associated with them than anything else.

Shh...don't tell anyone.

Posted by: FastEddieO007 | March 9, 2010 3:15 PM | Report abuse

"Another is to try to bring individuals closer to the true cost of the insurance coverage, which is currently hidden by employers. That's in the bill."


BULL.


Subsides while necessary will futher cushion people from the true cost of care.


Hey srw3 why not go all the way to 110%. Why stop at a measley 95% MLR. If you're going to make yourself look silly please go all the way.

Posted by: visionbrkr | March 9, 2010 3:15 PM | Report abuse

tsgaugh: The thing about Medicare (and the public option, for that matter) is that it is provided exclusively to those who would have trouble getting health care at all without it. So cost controls are better than nothing, and people don't mind.

But with single payer, you'd be taking people who already have health insurance and imposing cost controls. They might benefit on net, but that's a harder argument to make.

Posted by: usergoogol | March 9, 2010 3:16 PM | Report abuse

If only Republicans had implemented all these great ideas they have for health care back when they held the governing trifecta.

Instead, they expanded Medicare, and upon winning Bush's re-election, went immediately into their top domestic priority: Killing social security.

Somehow, health care reform never came up between January 3rd, 1995 and 2007. Almost like health reform was never a priority for Republicans and they have no ideas for improving it.

Posted by: Scientician | March 9, 2010 3:33 PM | Report abuse

Therapsid,

I consider myself to be an intelligent fair-minded libertarian and have said for years that an NHS style single payer can control costs. I hate the idea and so do most American's but I will stipulate, for the sake of debate that a single payer system can control costs. Will you stipulate, as Ezra does, that vouchers will too? Single payer does it by top-down centralized rationing of health care and creating long queue's for non-emergent health care services. In the UK, the National Institute for Clinical Excellence (NICE)determine what should be covered. Whether the NHS will provide photodynamic treatment to prevent blindness caused by macular degeneration is determined by a strange algorithm that looks at whether you are already blind, how advanced your lesions are, etc. So a board is deciding whether you go blind. And since you have to draw the line somewhere and since nothings really free, I can appreciate the need for NICE. I, and I think I speak for most American's, would resent the hell out of a board deciding whether I would go blind when treatments are available to slow or prevent macular degeneration.

With Ryan's plan, people would decide the level of care they wanted using their own "money". If you chose a plan that did not include photodynamic therapy, you could choose to pay for it out of your own pocket or you would go blind. In both systems, people go blind. I prefer the personal choice version of rationing myself.

Steve

Posted by: FatTriplet3 | March 9, 2010 3:36 PM | Report abuse

Multiple commentors on this blog keep suggesting that the only way to control costs is through single payer. Yet Singapore has a system very similar to what Fast Eddie suggests above. 3% of GDP is spent on health care. They provide universal catastrophic coverage. They have extremely impressive health outcomes. What's not to like?

Posted by: FatTriplet3 | March 9, 2010 3:42 PM | Report abuse

Scientician,

I agree the Republican's are stupid. Feel better?

Posted by: FatTriplet3 | March 9, 2010 3:43 PM | Report abuse

Ezra's argument for this costly (relative to single-payer) middling, pharma and insurance corporate-friendly reform is simply the other side of the coin to FastFlufferEddie's "Abolish comprehensive coverage" plan.

They are of a piece...

"But voters haven't evinced much appetite for either proposal."

Posted by: perhapsnot1 | March 9, 2010 3:47 PM | Report abuse

"Another is to try to bring individuals closer to the true cost of the insurance coverage, which is currently hidden by employers. That's in the bill."

So, let's see, my son breaks his leg skiing and instead of rushing him to the only emergency room within 30 miles, I get on the phone, asking my son to ignore the agony, and shop around for the cheapest emergency room within 100 miles, if I can even find one that will agree to tell me what they will charge. Yeah right. A sick or injured patient is generally in no position to bargain on costs, and has no clout in any case. Single payer means that all 300 million Americans get to bargain with providers. Now there's some clout!

Posted by: AuthorEditor | March 9, 2010 3:52 PM | Report abuse

perhapsnot and srw3,

What do you think of Singapore's health system? Why not that approach?

Steve

Posted by: FatTriplet3 | March 9, 2010 3:52 PM | Report abuse

AuthorEditor,

Great example. How about this one. If you only have one hospital within 30 miles of you and they're paid Medicare/single payer rates and they go bankrupt annually and stop seeing ER patients how do you think that's going to work out for your son and his broken leg?

Oh wait, are we going to FORCE doctors to treat you at what costs you want or are willing to bear even if it means they lose money when they factor in their overhead, med-mal insurance etc.

Posted by: visionbrkr | March 9, 2010 4:08 PM | Report abuse

therapsid1,

I too am a fair minded libertarian (although I'm probably more centrist than your typical libertarian - perhaps classical liberal is better). I'd support a NHS style approach that was generously funded - say 5% of GDP - and open to all, funded federally on a per capita basis and run at the state level by a manager selected by state governors, with management paid in terms of performance relative to the systems of the other states. The only guidelines for managers would be funding limits, open access to all legal residents of the state (and all U.S. legal residents for emergency care) and from there they best attempt to hit targets set by whichever federal body is managing pay for performance.

This is provided of course that all other government health care programs are phased out as this system ramps up.

While this funding would let us set up an impressive network of publicly funded health services, it would probably be insufficient for the U.S., and my model would explicitly allow the private healthcare market to operate along side the system, with the only regulations being those necessary to prevent insurance companies from dumping sick policyholders into the public system.

My primary concern is cost and the scope of government. I would happily accept a government-owned and funded system if costs were strictly limited and the basic structure acknowledged the difficulties inherent with central planning, and allowed a lot of discretion at local levels. While a completely free market in health care is economically efficient, from a moral perspective I think we need to make sure there is a basic minimum level of care to which all have access to. Also important would be that people who are willing and able to pay extra to be able to use healthcare services outside of this system can do so.

I'd like this even better than universal government provided catastrophic care, because the NHS-style system can easily and directly limit costs.

Posted by: justin84 | March 9, 2010 4:12 PM | Report abuse

My own calculations, mirrored by other observers and a host of business and provider groups, suggest that the reforms will save nearly $600 billion over the next decade and even more in the subsequent one.

---

From Cutler's article. Yet these are worthless numbers since they do not tell us how this:

http://www.cbo.gov/publications/collections/health.cfm

is changed, other than Cutler's numbers seem small compared to what needs to be achieved. During the campaign Obama made bending this curve down a primary goal of health care reform. Now the narrative we get - we see it in Cutler's language - is about savings, a very different topic. So, the answer to Cutler's question:

"Should we really walk away from that?"

is yes if the alternative is health care costs that continue to spiral out of control. And the fact of the matter is neither Cutler nor Ezra Klein have any idea what the answer to that question is despite all their smack talk about containing costs.

Posted by: JamesSCameron | March 9, 2010 4:13 PM | Report abuse

I think you are being very generous saying something is "in the bill." I think you have no idea how serious the action is that must be taken to lower costs; mere pilot programs won't do it. Here is a list of some more significant action:

1) Obesity: $150 billion opportunity per CDC. Don't give a first driver's license to an obese kid. Charge more for insurance premiums for companies with more obese workers. Not in the bill.

2) Defensive medicine/tort reform: $50-$250 billion. Caps on life and suffering. Not in the bill.

3) Medicare fraud: $54 billion per OMB. Some in Obama's proposal, very little in the bills.

4) Requiring privately-run single payer, meaning all insurers and hospitals must get on one or a few billing systems over say 10 years. An industry group could design the system; government doesn't have to take any more role. $250-400 billion per year. Not in the bill.

5) Paying for more care instead of better care. Require all hospitals to pay salary, with bonuses based on cost-effective outcomes. Not in the bill.

6) Tax health insurance premiums as income. $200 billion per year per The Economist in taxes; will make corporate folks think twice about the policies they buy if they are treated as income.

7) Ration end-of-life care. No heroic interventions for those at the end of life, where $200 billion of Medicare costs are incurred annually, about one-third. Keep folks comfortable.

These are the REAL cost control ideas. None are in the bill to any significant extent.

Posted by: Factified | March 9, 2010 4:16 PM | Report abuse

Steve,

Your analogy of getting to choose if you go blind or not only applies to those that have the "money" to make such a choice (not sure why you put money in quotes). For those of us in a less fortunate economic situation, that free market system only provides the illusion of choice.

I agree that both systems involve rationing care to some degree, but a single payer system would benefit the millions of Americans unable to pay for medical coverage out of pocket, while a free market approach benefits the comparatively fewer upper class citizens.

Posted by: jsrice | March 9, 2010 4:22 PM | Report abuse

I forgot to add one of the biggest:

8)Address the shortage of doctors, nurses scanning equipment, and hospital beds. Expand programs that pay for doctor and nursing education in exchange for X years of service. As these folks complete their tour of duty on good terms, they get their education bills paid back.

Posted by: Factified | March 9, 2010 4:26 PM | Report abuse

All this cost stuff is fine, Ezra. The problem is that Dems are also trying, simultaneously,to expand coverage by 30 million people. If the cost-control measures stood alone, I don't think anyone would object.

Read what you wrote: "The problem, of course, is that no one knows how well this stuff will work...We think a lot of this will work, but maybe it won't. So the bill is careful to move slowly."

No, "moving slowly" would be instituting/ testing all these cost-control measures and THEN trying to expand coverage once the system has been properly calibrated and rising costs have been slowed (or reversed).

On the other hand, guaranteeing coverage for tens of millions of additional people, paid for with cost-control measures that - you admirably admit - might not work, would be incredibly irresponsible. Most Americans realize this. Somehow, you and so many other liberal dreamers don't.

Posted by: krautj | March 9, 2010 4:32 PM | Report abuse

Re: FatTriplet

Having looked up Singapore's healthcare system online, I have no problem with it. But I don't think that it bears much resemblance to the catastrophic plans that either FastEddie or what most right-wing wonks are proposing.

From Wikipedia, "government ensures affordability, largely through compulsory savings and price controls." Also, they have government subsidies and are "actively regulating the supply and prices of healthcare services in the country" to keep costs in check. If you know of any Republicans supporting government price control, point them out, because I haven't heard of them.

The right wing catastrophic insurance plan, as I understand it, is to try and control prices by sticking everyone into the individual insurance market with a national catastrophic coverage plan to take care of costs about ~15% of annual income. The idea is that because people will now see what they're spending on healthcare, they won't always get the very expensive test or procedure which will pull down prices across the board.

In a normal market, this works very well - I can always not get a new TV, so I have sufficient bargaining power to bring down the price. In the healthcare market, the analogy is LASIK - conservatives like to point out that its cost has dropped dramatically, which is true. But no one dies because they don't have perfect vision. The ability to freely walk away is an essential component of a healthy market.

However, I think that increased awareness of first dollar spending won't, in the end, address the worst areas of cost inflation. It might do a lot to reduce the cost of, say, an office visit, but very little for things that generally fall into the >15% bin. A single hospital visit very quickly generates costs above that marker for most people at which point the individual stops caring what it costs. The government, however will, so we're left with the same problem as before.

Posted by: hrf_02 | March 9, 2010 4:37 PM | Report abuse

Mr. Klein, who has become a part time lobbyist for the President's health care plan (I hope he is getting compensated for his efforts), continues to argue his points using the oldest rhetorical tricks in the book. Draw a box, define whats in it, declare that only boxes like mine win and then say see I win, look at my box. "David Cutler runs through the 10 most promising cost control ideas of the past few decades": Really! are these the most promising cost cutting mechanism. who was the jury which decided these were the mechanisms? What about the simplest mechanism--reconnecting individuals to the cost of their healthcare, instead of passing costs through intermediaries (either the government or insurance companies). Healthcare costs will never go down (without rationing) as long as health insurance is not real insurance but a means to pre-pay our healthcare costs (think of it as if your car insurance paid for your gas and repairs for your car). Those who point to systems with universal care need to take a closer look--Greece is a great example. You can hide healthcare costs in your general budget, but you cannot ignore them for the long term. Canada and Britain ration care and that is why so many come to the US for care. The reality is the US is subsidizing care for the rest of the world (in terms of innovation, drug development, and high end care). So as John Goodman in his blog states, you can't ignore the 600 pound Gorilla in the healthcare bill (30 million more people covered and mandated higher care for all) and continue to claim you will lower costs. I don't care what tricks you use for a CBO score that hides the truth (which Mr. Klein has defended as the way the game is played), unless you are PT Barnum, you can't sell this bill to the public.

Posted by: BEHB | March 9, 2010 4:42 PM | Report abuse

Gee, Mr. Klein, what else do OBAMA campaign advisers say?

No lobbyist in the White House?

Gitmo will be closed in one year.

All attention is focused on that three letter word (Biden's count) J-O-B-S?

Oh, I get it now!

We are supposed to be impressed that you know OBAMA CAMPAIGN ADVISERS!

Wow. Aren't you smart and powerful!

Posted by: TECWRITE | March 9, 2010 4:44 PM | Report abuse

Conservatives and Liberals need to realize one point, that this bill is a step in the right direction no matter what your opinions about the future of the American healthcare system. If you want a privatized health insurance exchange whereby everyone is mandated to buy their own health insurance, then this bill introduces 30 million self-employed individuals and small businesses to state insurance exchanges. If you want a government-run health insurance option that will evolve into a single-payer system, then it could be offered on the exchange if Congress chooses to pass at a later date.

Americans need to realize that its time to change the way Congress operates by mandating publicly financed Congressional elections and term limits. Electing different political parties into Congress does nothing to stem endless game of buying officials with soft/hard money and running out the clock on the president because he/she has a term limit.

Posted by: photek00 | March 9, 2010 4:45 PM | Report abuse

Factified,

Great post. Too bad it makes too much sense for most around here. I still have faith that Ezra knows the truth though even if he can't speak it for fear of being taken off of "heavy rotation" on Olbermann and Maddow.

Posted by: visionbrkr | March 9, 2010 4:50 PM | Report abuse

Government cost controls NEVER WORK. When are we going to learn to stop thinking that government meddling in the marketplace will have positive results? Einstein' definition of insanity: doing the same stupid thing over and over, and expecting different results. Here.s what we know for a fact about government cost controls: 1. They never work. 2. They create artificial shortages, causing costs to go up. Thousands of doctors are already quitting due to Medicare cost controls). Obamacare will be 10 times the size of Medicare. 3. They cause the black market to flourish. Americans will head to free market contries for health care they are being denied here in the US. 4. They worsen conditions for the poorest people that they are supposed to help. 5. They punish productivity and reward idleness and paper pushing. 6. The unintended consequences overwhelm the meager results obtained.

The government has no legitimate role in trying to control the cost of anything. The free market responds to shortage by adding more supply. Costs go up, more suppliers appear. Government meddling does the opposite: supply goes down, shortages worsen, costs go up. Obamacare will inevitably led o rationing and denial of care, especially to the people who are paying for it. Sure, it will be a great deal for teh freeloaders, for a while, until there aren't any doctors for anyone.

Lets face the facts - Obamacare is about forcing private hospitals to abort babies, it's about rationing health care to preferred groups, it's about government control of the economy, it's about destroying the private insurance industry. It's not about reducing costs or increasing availability.

Posted by: doctorfixit | March 9, 2010 4:57 PM | Report abuse

The problem, of course, is that no one knows how well this stuff will work. So the legislation is careful in implementation.
*********************************************
So are you then saying that if we enact this brand new Entitlement Program and it is then proven that a)It does nothing to cut costs and b) people despise it even more than they currently do, Liberals such as yourself will push to do away with it? Since when has the joke known at the Federal Government EVER cut an Entitlement program. Folks enjoy getting free stuff someone else paid for...

Posted by: websterr1 | March 9, 2010 4:58 PM | Report abuse

Unusually lucid analysis for Ezra.

The only part that he fails to cover is where no one acknowledges that a central government cannot arbitrarily control prices without affecting the product. That's Econ 101. Canadians have a single-payer system, true, but they also have extreme waits and denials of service (the PM just came to the US for his health care - there's a reason).

Medicare is very popular - for recipients. With providers, who have their fee dictated to them (regardless of what it cost them to provide the service), not so much. And if we take away the private plan owners who are currently subsidizing it (through higher costs as well as taxes), it can't be sustained. "Medicare for everyone" is a fallacy.

We could control demand by making people more responsible for their own health care payments. Part of the reason for high prices is that people currently only pay a fraction of what something costs, which keeps demand artificially high. But this side has political issues, too, as reimbursing people for their own expenditures requires them to front bills they may not be prepared for, and we (most of us, anyway) don't really want to tell people not to ask for as much health care as they want.

It's a tough question, but one neither Republicans nor Democrats have had the courage to try to answer so far. So why are we wasting our time with a bill that admittedly doesn't try, either?

Posted by: INTJ | March 9, 2010 5:03 PM | Report abuse

hrf,
Thanks for your reply. I was aware of the price controls in the Singapore system. But most of the more detailed analysts I have read by health economists on the Singapore system note that, overwhelmingly, the cost controls for most routine care are found in that "compulsory savings" mechanism. In other words, health savings accounts (called Medisave). The primary price control mechanism's are found in Medishield, the universal catastrophic health insurance program for people with catastrophic, long term illnesses. There is a third program, Medifund, which provides means-tested subsidies for the poor to supplement Medisave accounts. There is also a robust private insurance market. The key thing to note is that the system is spectacularly successful at holding down costs because of "its emphasis on the individual to make a significant contribution towards their own healthcare costs". Ultimately, I think this works in direct contradiction to your conclusion.

Posted by: FatTriplet3 | March 9, 2010 5:20 PM | Report abuse

INTJ, you ideas would enslave America. Your lies about the Canadian health care system are funny. Guess what little man? US system rejects more primary care vs. Canada, it is pathetic.

Health care is a public good, not a business. You, doctornotfixit and slopster don't even know the first thing about love of country. You crave capitalism and its totalitarianism. You crave dissolving America and loving merchant caste rule.

You decry collectivism but are collectivist yourself. I know all about Libertarians and what they "really" want. Lets just say, it will not be pretty.

Posted by: Nationalist1 | March 9, 2010 5:24 PM | Report abuse

Thanks for your reply. I was aware of the price controls in the Singapore system. But most of the more detailed analysts I have read by health economists on the Singapore system note that, overwhelmingly, the cost controls for most routine care are found in that "compulsory savings" mechanism. In other words, health savings accounts (called Medisave). The primary price control mechanism's are found in Medishield, the universal catastrophic health insurance program for people with catastrophic, long term illnesses. There is a third program, Medifund, which provides means-tested subsidies for the poor to supplement Medisave accounts. There is also a robust private insurance market. The key thing to note is that the system is spectacularly successful at holding down costs because of "its emphasis on the individual to make a significant contribution towards their own healthcare costs". Ultimately, I think this works in direct contradiction to your conclusion.

Wrong, Singapore has price controls all over the place because they view health care as a "public good". Either get your stuff straight or get lost. The French system is also similiar to Singapore's yet you don't bring that up.

Posted by: Nationalist1 | March 9, 2010 5:26 PM | Report abuse

jsrice,

The "money" I referred to in quotes was the voucher offered in the Ryan plan.

Steve

Posted by: FatTriplet3 | March 9, 2010 5:27 PM | Report abuse

"Friends, I dont care what Ezra Klein's friends at CBO say about this bill, Congress will revisit health care legislation every year forever, and will always expand coverage, increase subsidies, lower any excise taxes, on and on and this will all cost exponentially more than whatever the final scoring of this bill says it will. To not believe this is to have arrived yesterday from Mars."

Actually, Zeppelin003, the CBO has consistently overestimated the cost of healthcare spending--check out the recent drug benefit expansion under the Bush administration...

Posted by: akminstral | March 9, 2010 5:28 PM | Report abuse

"Government cost controls NEVER WORK. When are we going to learn to stop thinking that government meddling in the marketplace will have positive results?"

Except, you know, for all the times they do work. Like all the single payer countries. No one will learn your childish lesson because it is simply counterfactual to over 100 years of history.

Besides, government meddling in the marketplace has positive results all the time. Upton Sinclair wasn't talking out his ass when he wrote the Jungle. T. Roosevelt didn't believe him, so sent meat inspectors. Despite 3 days warning to clean up their factories, the meat inspectors were simply appalled by what they found.

The first food safety law was passed later that year. That was 1906. Every time regulation slips, the inevitable result is lead on the toys, melamine in the milk or some other obscene concoction by sociopaths seeking profit.

Government only started "meddling" when the market proved irresponsible. This is why libertarians sicken me. They ask us to belive them instead of our lying eyes about the reality of what the "free" market does with its freedom. I don't know how to check my food for e-coli so I'm glad a well trained food inspector does it for me. It's worth the extra $0.06 I might pay for a steak.

Posted by: Scientician | March 9, 2010 5:29 PM | Report abuse

For all of the lefties who keep quoting European healthcare as a shining example, please understand this: We are not Europe. Does Europe have our immigration laws where a child born on their soil become a citizen? NO. Do they have 600 million people who can freely cross their border and partake in their entitlements? NO. They have very stringent guidelines for citizenship and entitlements. Until we fix our immigration policy, there can be no entitlement spending that is not purely open-ended. Also, Europe is no utopia and free health care is no panacea.

Posted by: dmorris1 | March 9, 2010 5:53 PM | Report abuse

Nationalist,
All credible analysts note that the primary means of cost control is individual responsibility. Yes, Singapore has a commitment to affordable health care for everyone. So do I. I don't think you can have that without people having some semblance of the price and cost of care.

By the way, do you know what a public good is? In what meaningful sense can healthcare be considered non-rivalous and non-excludable.

Posted by: FatTriplet3 | March 9, 2010 5:54 PM | Report abuse

Contrary to common usage, "price" and "cost" are not interchangeable words. Price is what one pays to receive something: cost is the resources given up or sacrificed in the production of something. The Obama/House/Senate health care reforms deal almost exclusively with controlling the price of health insurance and, hence, the price of health care. To control the cost of health care, government must control the quantity and kind of resources - materials, human labor, and capital goods - used in the providing of health care. Placing limits on the number of hospitals, clinics, MRI and CAT devices, treatments, exams, drugs, personnel, etc. is how Canada and other countries with a universial health care system hold cost down, while resources that would otherwise flow into health care are redirected elsewhere in the economy.

Posted by: ajp1474 | March 9, 2010 5:58 PM | Report abuse

Contrary to common usage, "price" and "cost" are not interchangeable words. Price is what one pays to receive something: cost is the resources given up or sacrificed in the production of something. The Obama/House/Senate health care reforms deal almost exclusively with controlling the price of health insurance and, hence, the price of health care. To control the cost of health care, government must control the quantity and kind of resources - materials, human labor, and capital goods - used in the providing of health care. Placing limits on the number of hospitals, clinics, MRI and CAT devices, treatments, exams, drugs, personnel, etc. is how Canada and other countries with a universial health care system hold cost down, while resources that would otherwise flow into health care are redirected elsewhere in the economy.

Posted by: ajp1474 | March 9, 2010 5:58 PM | Report abuse

Scientician,
Price controls work great when the floor or ceiling is set above or below the equilibrium price respectively. In those cases they don't affect the market price. Otherwise they don't work except to create shortages and surpluses.
Steve

Posted by: FatTriplet3 | March 9, 2010 6:06 PM | Report abuse

Singapore's health care system, like that of European countries, and unlike the United States, has a strong foundation on price controls for procedures and equipment. The U.S. has only the barest of price controls via Medicare.

Hence, despite what libertarians have already said in this thread, when it comes to price controls set by a central government, Singapore's health care system is well to the left of America's, and isn't entirely dissimilar to Switzerland's system.

Posted by: therapsid1 | March 9, 2010 6:13 PM | Report abuse

At the end of chapter 5 of Tim Harford's awesome book Undercover Economist, he summarizes: "Singapore's government had the power to tackle the problem head on by using forced saving and catastrophe insurance to make sure costs were manageable but keeping the power of patient choice at the heart of the system". Of all the proposals on the table that try this approach, Paul Ryan's is the closest.

Posted by: FatTriplet3 | March 9, 2010 6:54 PM | Report abuse

This from the book Singapore's Success by Ghesquiere:

"The Singapore government spent only 1.3 percent of GDP on healthcare in 2002, whereas the combined public and private expenditure on healthcare amounted to a low 4.3 percent of GDP. By contrast, the United States spent 14.6 percent of its GDP on healthcare that year, up from 7 percent in 1970... international experts rank Singapore's healthcare system among the most successful in the world in terms of cost-effectiveness and community health results.

The price mechanism and keen attention to incentives facing individuals are relied upon to discourage excessive consumption and to keep waste and costs in check by requiring co-payment by users.

The state recovers 20-100 percent of its public healthcare outlay through user fees. A patient in a government hospital who chooses the open ward is subsidized by the government at 80 percent. Better-off patients choose more comfortable wards with lower or no government subsidy, in a self-administered means test.

Posted by: FatTriplet3 | March 9, 2010 7:06 PM | Report abuse

Re: FatTriplet

"the cost controls for most routine care are found in that "compulsory savings" mechanism."

Okay, I believe that. I think that the key word there is "routine" - in other words, things like doctor visits, basic prescription drugs, etc. I fully acknowledge that having everyone in a catastrophic-type plan with individual accounts would help control costs on the routine end of things. But I'm pretty sure that that's NOT where most of the U.S. healthcare growth problems lie.

You also say, "The primary price control mechanism's are found in Medishield, the universal catastrophic health insurance program for people with catastrophic, long term illnesses."

Right, and this is where the real money lies. Did Paul Ryan (or any other conservative wonk) propose price controls? Because I don't think that Singapore's system would work without it.

Posted by: hrf_02 | March 9, 2010 7:20 PM | Report abuse

This from the Hong Kong Research Policy Institute:

"Singapore did not institute provider-side price controls, instead depending upon competition to bring down costs."

Posted by: FatTriplet3 | March 9, 2010 7:22 PM | Report abuse

From the annals of internal medicine:

The Singapore system is "premised on the philosophy of shared responsibility, and
the economic principle that health care services should not be supplied freely on demand without reference to price. In
persuading the people to accept this hard-nosed policy, the government reasoned that the question “who pays?” was not the right question to ask, for “whether it is the government, Medisave, employers, or insurance, it is ultimately Singaporeans themselves who must bear the
burden” — since insurance premiums are ultimately paid by the people, employee medical benefits form part of wage
costs, and taxes are paid by taxpayers."

and

"A most remarkable achievement has been the gradual shift of the financial burden from the government to the private sector (Fig. 2).5 Since access to needed care is explicitly guaranteed for the poor,6 and the state-run Medishield insurance scheme protects against financial ruin from catastrophic illness, the system is on the whole no mless humane than a state-funded one."

Posted by: FatTriplet3 | March 9, 2010 7:26 PM | Report abuse

Remarkable statistic: the governments share of expense on health care in Singapore fell from 50% to 23% from 1965 to 2000.

Posted by: FatTriplet3 | March 9, 2010 7:29 PM | Report abuse

hrf,

From Ryan's roadmap:

"For those currently under 55 – as they become Medicare-eligible – it creates a Medicare payment, initially averaging $11,000, to be used to purchase a Medicare certified plan. The payment is adjusted to reflect medical inflation, and pegged to income, with low-income individuals receiving greater support. The plan also provides risk adjustment, so those with greater medical needs receive a higher payment."

That is a price control.

Posted by: FatTriplet3 | March 9, 2010 7:36 PM | Report abuse

cost "control"? does little good if your still spending MORE MONEY. how can we spend more money on health care in the fiscal situation we are in for the next 10 years?

and dont even try to tell me "this cuts the deficit". in theory yes, but only if future a congress enacts SCHEDULED tax increases this congress is not willing to actually enact in this bill. kicking the can down the road? real impressive job democrats.

and even if this future congress comes through and raises this revenue, the bill spends 10 times as much money as it saves!

im sorry, we have no choice but to put every dollar (or close to that) we raise from here on out towards deficit and debt reduction not 10 cents on the dollar or we will become the next Greece.

Obama should be ashamed for lying to the american people about being serious about deficit reduction when he was campaigning for president.

Posted by: dummypants | March 9, 2010 7:37 PM | Report abuse

Admit it. This is a coverage bill. Let's assume for a moment that the bill passes yet none of the tax hikes (which are delayed) or spending cuts (which will face Congressional resistance) emerge.

CBO says the cost side alone is $100 billion dollars. Well, that is about 5% of 2009 tax revenues, not all that much frankly, to cover 30 million uninsured and put a stronger safety net underneath the rest of us.

In comparison, we spent $782 billion on defense and homeland security in 2009. So if we cut defense by 1/7th or so, we can have universal coverage.

A good tradeoff.

Then we can start the serious discussion about cost, upon which I've posted below. Medicare left to its own devices will bankrupt us if we don't attack the cost drivers listed above.

Posted by: Factified | March 9, 2010 7:58 PM | Report abuse

Admit it. This is a coverage bill. Let's assume for a moment that the bill passes yet none of the tax hikes (which are delayed) or spending cuts (which will face Congressional resistance) emerge.

CBO says the cost side alone is $100 billion dollars per year. Well, that is about 5% of 2009 tax revenues, not all that much frankly, to cover 30 million uninsured and put a stronger safety net underneath the rest of us.

In comparison, we spent $782 billion on defense and homeland security in 2009. So if we cut defense by 1/7th or so, we can have universal coverage.

A good tradeoff.

Then we can start the serious discussion about cost, upon which I've posted already. Medicare left to its own devices will bankrupt us otherwise.

I think we are wasting a lot of time arguing over this bill, which isn't that costly and if the taxes and offsetting cuts go in, may actually reduce the deficit as the CBO believes it will.

Posted by: Factified | March 9, 2010 8:02 PM | Report abuse

Health care is not a public good, it is not a human right, and it is not a legitimate function of government. Health care is a service. People are in the business of health care to be paid for providing a service. Do you want to go to a doctor that works for nothing? Go ahead. Do you want to go to a doctor that is a government employee? Go ahead. But don't presume that you are going to force me to do the same thing. Health care is not a human right, but having the freedom to pay for medical services from a private physician is a human right, and if the liberal fascists try to take that right away from me, then they are going to be needing medical services themselves, or funeral services. If you think that health care is a basic human right, then back up your empty words with action. Go to medical school, become a doctor, and work for nothing. Or, get out your personal checkbook and start writing checks for everyone else's health care. But please, stop pretending that you care about "the poor", and admit that you are a second-rate phony that wants the government to do your bidding.

Posted by: doctorfixit | March 9, 2010 8:07 PM | Report abuse

Oh please! Start over by working with the insurance companies and businesses (who pay most of the freight) to reduce costs. Scale back mandates that have insurers paying for everything from arthroscopic knee surgery for middle aged delusional weekend basketball players to unlimited cycles of fertility treatment with little hope of success.

I'm a middle class spouse of a small businessman. I want to see insurance costs sharply reduced. Think about it. Should a family be paying the same amount monthly for health insurance premiums that they pay for their monthly mortgage?

Posted by: alto1215 | March 9, 2010 8:08 PM | Report abuse

Ezra Klein is a joke. A bad joke. Just like the president he loves so dearly. I'm sure Dear Leader will have a special place set aside for you, Ezra, when he declares his dictatorship.....

Posted by: subframer | March 9, 2010 8:15 PM | Report abuse

mr klein, i am tired of liberal(progressive)telling me whats in these health care bills. i doubt seriously you know whats in hr3200, or the senate version,and lets not forget harry reid's 800 pages of amendments. before writing your next serious of rubbish regarding health care, i recommend that you actually read the bills (read carefully)than recite as we say in the bible-book,chapter,verse-when making your case to pass health. you see mr klein, i have read all bills and your claims of whose on first are not exactly accurate. for the readers out there,you need to check out the baystate(mass) health care and its unforeseen cost. source articles from the boston globe and herald-perhaps mr klein,you should do the same.

Posted by: dperteet | March 9, 2010 8:24 PM | Report abuse

NOBODY believe this bill will save any MONEY!! NOBODY! The CBO estimates are meaningless because they've been given a bunch of false data that will never happen for their calculations. It took Obama, Pelosi, and Reid some time to figure out how to fix the CBO numbers, but they finally realized that if you give them a bunch of fake assumptions they still have to use the fake data for their cacluations. Garbage in...Garbage out!!!This bill will cost 3 to 5 times the current estimates. Trillions and trillions of extra costs, taxes, and debts. It will likely destroy healthcare as we know it, and may well bankrupt the nation. EVERYBODY KNOWS IT!!!! Even Ezra Klein!!!!

Posted by: valwayne | March 9, 2010 10:00 PM | Report abuse

You can't convince me Ezra could envision his columns without without family background in the journalism trade at Pravda.

Posted by: jchu591 | March 9, 2010 10:13 PM | Report abuse

If this thing is forced on us, I pray that you will be long and specifically remembered as one of the architects of this fiasco, which is bound to increase our deficits, mortgage our future, and inevitably change the nature of our democratic republic.

Posted by: prosecutor1 | March 9, 2010 11:08 PM | Report abuse

As long as the US has the highest obesity rate in the world, 30.8%, it won't matter what "system" is in place we cannot afford it. I am disappointed that Congress and the Media have so far ignored the true root cause of our crises. Our neighbors to the North, spend 10% GDP on a population with an obesity rate of 14% compared to our 16% and 30.8%.

You can't have your "cake" and eat it to. As long as we make the lifestyle choices that we do we are going to have incredibly high medical costs. An ounce of preventative medicine would provide a pound of cost reduction.

Posted by: 196ski | March 9, 2010 11:09 PM | Report abuse

hrf_02 | March 9, 2010 4:37 PM,

Nicely reasoned.

Posted by: HalHorvath | March 9, 2010 11:19 PM | Report abuse

196ski, I've noticed the idea of taxing soft drinks (one major contributor to obesity) is getting a lot of airplay lately. This could be a good first step, as subsequent scientific studies would gradually refine the true health costs of such sweeteners and eventually the taxes would be made more proportional to the realistic health costs.

Posted by: HalHorvath | March 9, 2010 11:36 PM | Report abuse

We need to educate the population on the consequences of eating that Big Mac at 590 calories and 39 grams of fat.

Do we treat sugar laden soft drinks and fast food the same way we treat cigarettes and tax the daylights out of them? Cigarettes cause numerous diseases and as a result we severely limit advertising and even put an age on when you can buy them. I am all for freedom of choice and the rights of the individual but when obesity is pushing our healthcare system to the breaking point and everyone is being asked to pay their part when do you push back against the root cause?

Posted by: 196ski | March 10, 2010 1:37 AM | Report abuse

The most important way to control costs is to change the internal culture of hospitals.

Under GAAP accounting rules, only labor counts as a direct/variable cost. Capital expenditures and administrative costs go to general overhead, and are treated as fixed. So while the MBAs obsessively cut staffing to the bone (even though the resulting infections, falls and med errors cost more than the savings on labor), they spend money on the kinds of wasteful white elephant capital projects you might have seen in the old USSR, and have the kind of administrative overhead rivalling the Ministry of Central Services in Brazil.

And under GAAP rules, overhead doesn't matter because, thanks to the miracle of "overhead absorption," it just gets passed on to the customer as a markup. Hence the $3 bag of saline solution that's billed for $300--not to mention the infamous $10 aspirin. It's what Paul Goodman called "the kingdom of cost-plus markup"--the same culture that gave us the $600 toilet seats at Pentagon contractors.

The only solution is to let conventional bureaucratic hospitals rot, and start over from scratch. It means eliminating the organizational culture of prestige salaries, mission statements, Weberian "best practices," work rules, and job descriptions. It means, instead of interdepartmental "quality improvement committees," empowering those actually providing the care to act on what's right in front of them without interference from pointy-haired bosses.

It means, especially, decentralized delivery of service and cooperative finance: small, neighborhood cooperative hospitals that bypass the insurance system altogether and operate on the same flat-fee membership basis as John Muney's clinics in New York, and Qliance in Seattle. This would have two primary benefits: first, because of the flat-rate fee, there's no incentive to mutual logrolling between specialists, padding the bill with a $6000 CT scan, etc.; second, as Muney pointed out, it eliminates the 25% or so of costs that come from insurance paperwork.

Posted by: freemarketanticapitalist | March 10, 2010 2:19 AM | Report abuse

I'm noting "Fat Triplets" efforts to rehabilitate the Ryan plan as an example of "Singaporean" healthcare reform. Singapore is a tiny, geographically concentrated, authoritarian country with EXTREMELY restrictive residency requirements. Republicans/libertarians would, if they are principled in their beliefs, LOATHE the lack of civil liberties in that country.

Also, their healthcare system hinges to such great degrees on subsidies as well as the use of large, public and well funded hospitals (and private ones) that this system is very easily managed by the authoritarian Singaporean state.

Ryan's proposals about a consumer-driven market restructuring healthcare are VERY remote from this system.

It is unfortunate that in this discussion that BOTH sides are wrong. None are proposing solutions that have learned from the success stories in Canada, Switzerland, France, Germany, Japan, or Great Britain. Every attempt is made (including the latest references to Singapore) to avoid the obvious, which includes PRODUCER side price controls.

Consumers in healthcare cannot effectively control prices via their demand except in discrete services that are usually elective like plastic surgery.

Posted by: michaelterra | March 10, 2010 3:42 AM | Report abuse

Really Michaelterra?

Five PREVENTABLE chronic diseases (heart disease, cancer, stroke, chronic obstructive pulmonary disease, and diabetes) cause two-thirds of American deaths while 75 percent of total health expenditures are spent to treat chronic diseases that are largely preventable. In government programs, the problem is even worse with chronic disease spending consuming 96 cents of every Medicare dollar and 82 cents of every Medicaid dollar.

If the US could cut its obesity rate from 30.8% to the rate of Canada at 14% rest assured that the demand and cost for health services would go down.

Posted by: 196ski | March 10, 2010 6:56 AM | Report abuse

I have an idea. Why don't you buy my CAR? Seriously. Here's the deal. You start making payments RIGHT NOW, and in 4 YEARS you can start using the Car. Does that sound good to you.
And DON'T WORRY. Cause when it's time to start driving it, all the money you've given me, for those 4 YEARS, I'll still have the MONEY. I'm gonna put it in a LOCK BOX.
How STUPID are you people? What did Franklin say about LIBERTY? What did he say about: TRADING IT FOR SECURITY? This little weasel, EZRA, mentions PAUL RYAN. But he seems to leave out what Ryan said at the HEALTH CARE ROAST. IT'S A PONZI SCHEME. Why do you think that they're CUTTING MEDICARE $500 MILLION? They're trying to make THEIR SOCIALIST UTOPIA look less expensive. That's why you have to PAY MONEY NOW, for something you can't use, FOR FOUR YEARS. They know that this MONSTER will be in the TRILLIONS. That's why they have to use TRICKS.
Do we have any other examples of Government using this kind of SCHEME? You know, giving them MONEY, for a bunch of YEARS, for some benefits DOWN THE ROAD?
They have put a knife in our bellies, how many times? They TAKE, and they TAKE, and they TAKE some more. They always ask "How are we gonna PAY for TAX CUTS"? But they never concern themselves with how WE will pay for their NEVER ENDING TAX INCREASES and FEES. They ride in their LIMOSINES. Go all over the World in their JETS, on OUR DIME. They get RETIREMENT after 5 YEARS. Get the BEST HEALTH CARE. None of this OBAMA CARE for them! They BREAK OUR LAWS WITH IMPUNITY! Right, Charlie Rangel? Right Timothy Geithner? Right, Jack Murtha?
Social Security, Medicare, Medicaid, The Post Office, Amtrak. Where's all that STIMULUS MONEY? Where are all those "SHOVEL READY JOBS"? Where are all the NEW INFRASTRUCTURE we were PROMISED? Where is all the VAUNTED GREEN TECHNOLOGY? Where are the GREEN JOBS? Where's the NEW POWER GRID? WAKE UP!
There's none of those things. It's all a LIE. EVERYTHING this President says, is a LIE. We are systematically being destroyed from within. We're being turned in to VENEZUELA.
When will you wake up?

Posted by: GoomyGommy | March 10, 2010 7:00 AM | Report abuse

Cutler was on the President's payroll as his adviser. Need I say more?

Posted by: jchenn | March 10, 2010 7:18 AM | Report abuse

Ezra keeps making these pitches, but I find that they are getting less and less believable.

This one reads like a marketing brochure for a time-share.

Posted by: DanielBMarkham | March 10, 2010 7:19 AM | Report abuse

"The Bill"? The House did include the public option, all but dismissed by Obama, politicians and pundits.

Let's have an up-and-down vote, only on the public option too, win, lose or draw. We can still have healthcare pass without it. No charades. No posturing. True grit.

Posted by: brujos421 | March 10, 2010 12:44 PM | Report abuse

A Congress of career politicians will NEVER allow us to constitutionally term limit them by an amendment. But, we can IMPOSE term limits on them in Congressional elections (‘2010, 2012, 2014......):

1. Never reelect your Congressman or Senator.
2. Always vote, but only for the strongest challenger , regardless of party .

If Congress has not passed a term limits bill by 2014, repeat this in 2016, 2018....

Our only intelligent choice is to NEVER REELECT anyone in Congress!

The only infallible, unstoppable, guaranteed way to get a truly new Congress, AND a new politics, is NEVER REELECT ANY INCUMBENT! DO IT EVERY ELECTION until term limits is ratified. In other words, don't let anyone serve more than one term until Congress passes a term limits bill!

NEVER REELECT ANYONE IN CONGRESS. DO IT EVERY ELECTION! ... until we ratify term limits.

Nelson Lee Walker of tenurecorrupts.com

Posted by: nels96 | March 10, 2010 3:39 PM | Report abuse

196ski,
I am all for preventive medicine. However the countries that do THAT best have national health services or government run insurance which has an incentive (as a whole) to keep costs down.

Once sick, individual consumer CHOICE has very little leverage over healthcare costs. Furthermore choice of insurance seems also to have little leverage over the ultimate costs of healthcare. I'm just reporting the international experience with this...not market dogma.

Posted by: michaelterra | March 10, 2010 8:31 PM | Report abuse

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