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For the Obama Administration Health Care Reform Will Require Tough Cost Containment

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The President has made a powerful argument— America cannot get its economic house under control without comprehensive health care reform. The cost of existing entitlements – public and private —and any new ones are just too big a ball and chain on our short and long-term economic health.

The
President has also argued that there could be no better time to fix
this mess than now—when it is so critical to get our economic house in
order once and for all.

The President is right on both counts.

As any of us who have studied this issue know, the number of those uninsured in America are not really the problem—they are a symptom of health care costs
run amuck as individuals, employers, and government just can’t afford
to insure everyone. Adding more people to this unaffordable mess
without fixing it first is not an answer—it’s a prescription for even
more fiscal irresponsibility.

So if cost is the real problem then cost containment is the whole ballgame.

As the Congressional Budget Office (CBO) pointed out
in its December tour de force on costs and options, the cost
containment “lite” proposals out there will not get the job done.
Things like more health information technology, wellness efforts,
comparative research, and pay-for-performance are all fine and
important but individually, or all taken together, result in hardly a
rounding error on the huge health care bill America faces.

Real
cost containment means paying providers (doctors, hospitals, insurers,
drug companies, nursing homes, device manufacturers, and all the rest)
less than they would have gotten.
It also means paying less out
for beneficiaries than they would have received. That probably means
more premium sharing, copays, adopting effective consumer-driven
principles, and it probably has to include means testing as a
progressive way to get wealthier people to pay more and ease the burden.

It might even mean redoing our decades old and now obsolete tax system that rewards too much easy money for health care.

Real
cost containment will also absolutely mean more mandatory cost/benefit
decisions on what will be covered—the kind of “big brother” intrusion
into coverage decisions lots of people hate. But what good is comparative research if, as has been the case for years, it is more often ignored than used?

If you want to contain costs do you know what you have to do? You have to contain costs.

If
the Obama administration and the Congress cannot produce these real and
politically problematic savings then the same CBO that put everyone on
notice about where the real money is in our bloated health care system
is going to score the health plan effort as not in fact bringing our
long-term entitlement costs under control.

That is where the Obama strategy meets itself coming and going.

If you say health care reform is needed now to bring our out of control health care costs
under control and make a big difference in rebalancing our economy then
you have to produce a bill that actually does that—that actually
controls these costs by succeeding with those politically problematic
cost containment challenges.

There will now be lots more “irrational exuberance” over the chances for health care reform in the wake of the President’s speech in the coming days just as there was in the days following the election.

I
would rather we had a much more sobering discussion on just what it
will take to craft a health care bill that does make the difference we
so sorely need to bring our deficits, and our overall economy, back to
an acceptable place.

That would be a discussion that included
the incredibly politically problematic challenges we will need to face
in order to get the health care special interests on the right side of
this issue.

When I finally see that discussion taking place, I will be optimistic.

Otherwise our new President is just going to meet himself coming and going.

Robert Laszweski has been a fixture in Washington health policy circles for the better part of three decades. He currently serves as the president of Health Policy and Strategy Associates of Alexandria, Virginia. Before forming HPSA in 1992, Robert served as the COO, Group Markets, for the Liberty Mutual Insurance Company. You can read more of his thoughtful analysis of healthcare industry trends at The Health Policy and Marketplace Blog.

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KatieJOAN PETTYmattJohn H.dcl Recent comment authors
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Katie
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Katie

I’m still learning too about all the complications and loop holes of our health care system, but here are some thoughts if interested. I like the idea of comparing our need for health care reform to our current need for a change in our awareness of impact on the environment. It’s like the damage we do to our bodies is reflected as the pollution we put into our atmosphere/planet. Our immune systems are becoming weaker because we over-sanitize our hands and reach for an antibiotic every time we sneeze. Children who attend public pre-schools grow up to be generally healthier… Read more »

JOAN PETTY
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JOAN PETTY

SHOW ME THE LAW ! For many years Congress has omitted Product Liability for Prescription drugs,with a protected shield preemption of the Law in the FDCA ACT leaving the public at risk. Thousands of American Consumers have been killed and injured with defective prescription drugs.This is driving the cost of Medicare and Medicaid up.Congress needs to make the drug manufacturing companies accountable for the damages they do to the Consumers. Because there is NO LAW, Federal or State the public is at risk and the drug manufacturing Companies are protected with a shield. Show me the Law.

matt
Guest

I am a nurse anesthetist. My salary may be considered by you to be rediculous. Fact is; it barley covers my student loans. I drive a 1998 camry and rent a home for 1200 a month. I was involved in a surgery last week where the surgeon accidently lacerated the patients liver. the patient lost one third of their blood within 40 seconds. after 5 hours, “we” meaning me saved the patients life. (these types of situations are part of my life they happen more often than you know) If they want to pay me one iota less than what… Read more »

lexrex
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lexrex

john h., i have to respectfully disagree. i believe that’s bad news about embryonic stem cell research.
the zealotry of some to open this door has overshadowed the real promise of adult stem cell research. they have spent way too much time and money on it, when adult stem cell research has shown so much more progress and hope.

John H.
Guest
John H.

Obama to Lift Ban on Funding for Embryonic Stem Cell Research The Washington Post (3.6.09) reports that President Obama is planning to sign an executive order on Monday rolling back restrictions on federal funding of human embryonic stem cell research. That’s great news! The lifting of funding restrictions on stem cell research may have been prompted, in part, by Orrin Hatch’s (R – Utah) comments at the White House Health Care Summit yesterday. Below is a transcript of what Senator Hatch had to say: “I hope this Administration will revoke any Executive Order with regard to stem cell research. I… Read more »

dcl
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dcl

How can any discussion of health care reform be had without discussing tort reform? If doctors and other providers have to charge more for their services because their premiums are sky high because of the plaintiffs’ attorneys out there who will file a lawsuit at the drop of a hat, then how can we get anywhere?

AKB
Guest
AKB

If Obama wants to cut compensation for hospitals without going after the insurance companies he is headed into a world of trouble. Eliminating insurance companies and replacing them with a well compensating government plan is the best way to go. Imagine no insurance companies, they are nothing but a bunch high school graduates determining if treatment can be initiated. How can insurance companies cut costs when they are listed on the stock exchange. Cigna, aetna, metlife are all listed. These companies only care about profits. The way they profit is denying care for as long as they can. This is… Read more »

rbar
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rbar

Mr. Bruce Quinn’s points are interesting. If you want to save money on office visits, you have to put pressure on providers as well as patients. What kind of pressure? Following simple guidelines in common situations where there is a lot of waste. Examples, from the top of my head: -no ABx for sketchy “infections” that are – at best – a common cold -no brain scans for typical migraines -no back scans for axial low back pain, at least not initially and not by PCPs For some if not all of the above, there are pretty clear guidelines. In… Read more »

Helen Darling
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Helen Darling

We have known for many years that we have a wasteful health care system full of overuse, misuse and underuse. The system is not getting better and people are less healthy than ever. It is exciting and inspiring that we have political leaders who are willing to fight the tough and thankless battles that they will have to fight to get us on the right track as a nation. While there will be plenty of specifics to make everyone unhappy about one element or another, can’t we all pull together to have a much better, more effective and affordable health… Read more »

bruce quinn
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bruce quinn

I worked as a regional Medicare medical director from 2004-2008. While I am in favor of comparative effectiveness research, obviously, most of those commenting on it, anywhere, have little data on how much money is “saveable” through this route. Specific technology issues – like whether a CT, MRI or PET scan is better for staging pancreatic cancer – are NOT necessarily a major part of US health care costs. I suspect (and would love to see a data wonk document) how much is actually the softer decisions – e.g. should Patient X may be admitted to a likely-$200K ICU stay… Read more »

Nate
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Nate

Michael Millenson in now way have doctors fought third party payment. It wasn’t insurance companies that added assignment of benefits to claim forms. Providers LOVE third party liability and have helped force the system to the point consumers only pay for 18% of their care today versus 50% in the 60s. Peter – “What costs can the government control/cut” State premium taxes, regualtion, compliance to name a few. The government requires me to mail all sorts of notices to plan members every year. If every insurance company has to mail every covered women the same women’s health notice why not… Read more »

agilog
Guest

Do you want a for-profit business making decisions about your health care?
Besides the fact that our archaic system is costly and unsustainable, it does not provide the best care.
For-profit health care insurers can deny doctor recommended treatments based on their bottom line and sometimes people die.
But the CEOs still get their bonus at the end of the year.

Deron S.
Guest

jd – Are you saying that individual Americans contributing to reform is off the table? I’m not thinking we can wait much longer to change the lifestyles of our society, particularly with the vast numbers of aging boomers.
Universal healthcare is a worthy goal, but don’t you think that universal healthiness is a little more important? It costs less and it’s a more logical way to reduce the number of uninsured.

jd
Guest
jd

Too bad you can’t edit after posting. The second to last paragraph should have read more like:
I know it sounds like the responsible thing to say we can’t afford universal health care without deep reforms to how health care is provided and paid for. It’s absolutely true in the long run, but I don’t think it’s the smartest thing to insist on in the short run. Not if your goal is to have both universal health care and deep reforms in the next 6 years. If you insist on both simultaneously, be prepared to get neither.

jd
Guest
jd

Count me in the camp that sees full scale reform as an elusive dream in 2009. Universal health care is possible. Reforms that restructure the entire incentive system or that in some other way force a halt to the outsized growth in the medical cost trend are NOT possible. Not this year. There are many, many reasons why this is not yet the time for full scale reform: 1) We are in a recession. To cut back health care expenses now would be to cut revenues to health care industries now, and that would result in layoffs around 6-9 months… Read more »