About the Author

James C. Capretta

James C. Capretta

New Atlantis Contributing Editor James C. Capretta is an expert on health care and entitlement policy, with years of experience in both the executive and legislative branches of government. E-mail: jcapretta@aei.org.


James C. Capretta’s Latest New Atlantis Articles

 Health Care with a Conscience” (Fall 2008) 

 Health Care 2008: A Political Primer” (Spring 2008) 

 The Clipboard of the Future” (Winter 2008)


 More on James C. Capretta

Text Patterns - by Alan JacobsFuturisms - Critiquing the project to reengineer humanity

Friday, March 27, 2009

There Is No Obama “Plan” to Control Health-Care Costs—Not Yet, Anyway  

President Barack Obama seems to think—or at least he wants voters to think—that he has a credible plan to control health-care costs in the United States. At various points in his televised press conference on Tuesday, he said the following:

[Our budget] invest[s] in reform that will bring down the cost of health care for families, businesses and our government....

I expect that [in an acceptable Congressional budget] there’s serious efforts at health care reform, and that we are driving down costs for families and businesses, and ultimately for the federal and state governments that are going to be broke if we continue on the current path....

What we have to do is bend the curve on these deficit projections, and the best way for us to do that is to reduce health care costs. That’s not just my opinion; that’s the opinion of almost every single person who has looked at our long-term fiscal situation. Now, how do we—how are we going to reduce health care costs? Because the problem is not just in government-run programs, the problem is in the private sector as well. It’s experienced by families. It’s experienced by businesses. And so what we’ve said is, look, let’s invest in health information technologies, let’s invest in preventive care, let’s invest in mechanisms that look at who’s doing a better job controlling costs while producing good-quality outcomes in various states, and let’s reimburse on the basis of improved quality as opposed to simply how many procedures you’re doing. Let’s do a whole host of things, some of which cost money on the front end but offer the prospect of reducing costs on the back end.

These statements are completely disconnected from reality.

The Congressional Budget Office (CBO) has already stated, unequivocally, that the Obama proposals currently on the table—more health IT, more comparative-effectiveness research, more preventative care—will do virtually nothing to slow the pace of rising costs, even after the “investments” are given plenty of time to kick in.

Meanwhile, the president is using the “cost-control” argument as a primary justification for Congressional passage this year of a massive new entitlement for health insurance. All of the Democratic plans under consideration are built around extending new federal health-insurance subsidies to households with incomes below 300 to 400 percent of poverty. Reasonable estimates show such a program will cost about $150 billion annually.

For more than three decades, federal per capita spending on Medicare and Medicaid has risen much faster than per capita economic growth—in fact, on average more than two percentage points faster per year. If Congress creates another health-care entitlement without also facilitating a properly functioning marketplace in the health-sector, the new program’s costs will escalate just as rapidly as Medicare and Medicaid costs have risen historically.

Of course, President Obama and his advisors understand all of this. They are hoping they can pass their massive coverage-expansion plan this year without endorsing the heavy-handed, government-driven cost-control measures they actually favor (price setting, benefit restrictions, premium caps, etc). They know that introducing such ideas now would be highly controversial—and perhaps sink the entire effort—because voters would finally see that the Obama approach to reform will lead, inevitably, to government-imposed rationing of care.

Indeed, to avoid a debate on government-driven rationing of care, the president would have been well-advised to not bring up cost-control at all. But, since he has, it would seem the press should ask him, and his team, the following obvious question: Where is this famous Obama plan for cost-control? It certainly hasn’t been presented yet. And, if the Obama team has their way, it won’t be until the coverage train has already left the station.

[Cross-posted at the Corner]

posted by James C. Capretta | 4:35 pm
File As: Health Care