Health Care


Plugging the Leaks in High-Risk Pools

July 2, 2010

(with Tom Miller)

This week, the Obama administration finally launches a poorly designed, hastily constructed, and severely underfunded high-risk pool program across the 50 states. It’s a shallow attempt to appear to be doing “something” soon to help Americans without health insurance due to pre-existing health conditions. But apart from its stumbling start, it’s also the initial poster child for the core flaws of ObamaCare. It misrepresents the real problem, promises more than it can deliver, tries to hide the real costs, and gives sensible reforms a bad name — all because the administration is more committed to its long-term vision of central government control than to actually building a sustainable solution. High-risk pools can address pre-existing conditions without the costs and burdens of the heavy-handed federal regulation of insurance planned for 2014. In short, we can do more by doing less, in a transparent, targeted, and adequately funded manner.

The Patient Protection and Affordable Care Act (PaPACA) enacted into law last March included $5 billion in federal taxpayer funds to finance a new version of state-based high-risk pools (HRPs). This provision was inserted into the broader healthcare legislation late last year to address two political needs. It provided a superficial bow toward bipartisanship (Republican presidential candidate John McCain had proposed a more robust version of HRPs in the 2008 campaign, which was promptly derided by Barack Obama’s supporters). It also would offer modest transitional relief in the form of subsidized insurance to at least some Americans with pre-existing health conditions who find individual market health coverage either unavailable or unaffordable (or both).

ObamaCare advocates hoped that this might distract voters from the unpleasant fact that all but a tiny portion of the new law’s provisions to expand health insurance coverage do not go into effect until 2014, even though the higher private insurance premiums, taxes, and regulatory burdens triggered by the new health law kick in much earlier.

Ironically, the Obama team has both overstated the problem and underfunded the solution. For the past year, ObamaCare advocates have led the public to believe that private insurers regularly scheme to refuse coverage to most people with higher-cost conditions. Last summer, the propaganda arm of the administration’s Department of Health and Human Services (HHS) recycled a dubious Commonwealth Fund survey claiming that 36 percent of all people who tried to buy their own insurance plans (12.6 million non-elderly adults!) were discriminated against because of a pre-existing condition. The real dimensions of the problem of the “medically uninsurable” are a good bit smaller (because most insurers need to sell more, not fewer, policies), but it’s nevertheless serious and costly to solve. Most credible estimates, by the Government Accountability Office, the Congressional Budget Office (CBO), and the Agency for Healthcare Research and Quality, place the figure closer to 2 to 4 million Americans, depending on various definitions and assumptions.

CBO’s assessment is that the new law’s funding for HRPs will only cover, on average, 200,000 enrollees a year — or no more than one in ten of the 2 to 4 million people who are likely in need of assistance. CBO acknowledged that the actual number of people who would be eligible for the program if adequately funded could be much greater — and in the millions — and conceded that if more people were allowed to sign up initially, the available funds will probably be exhausted prior to 2013.

Of course, the estimated cost of dealing with this problem is subject to political mood swings. For example, when Senator McCain proposed a somewhat broader high-risk pool program in 2008 and budgeted it at $7 billion to $10 billion a year, then-Georgetown University professor and HRP critic Karen Pollitz guesstimated to the New York Times that “it may cost 7 to 10 billion dollars a week” and criticized state HRPs that “leave the illusion that there’s a safety net without there really being much of one.” By the fall of 2009, an administration-backed HRP proposal pegged at the ultimate $5 billion total was included in a pending Senate health reform bill. Pollitz had revised her estimates, telling the PBS NewsHour that although it probably cannot cover everybody, it’s a good start and can cover “a lot more than you’re covering now.” She was recently appointed director of the office of consumer support at HHS in the Obama administration.

In any case, the actual cost of a more extensive and robust HRP program would depend on where policy makers set such insurance benefits parameters as cost-sharing and supplemental income-based subsidies, as well as the level at which beneficiary premiums are charged. Although the risk characteristics of the population in broader HRPs could be somewhat healthier and less expensive to cover, the average cost of government subsidies (after premiums) in current state HRPs was about $4,341 per enrollee in 2008.

But the ObamaCare/PaPACA version of HRPs is about to operate very differently from those already established in 35 states that are designed to match more limited resources. Under federal rules, the new state pools cannot allow any exclusions or waiting periods for coverage of pre-existing conditions, age-based premium differences must be compressed, enrollees can only be charged standard rates, and cost-sharing is restricted.

Not surprisingly, estimated costs for these more generous and seemingly less restricted health benefits are much higher, and as many as 20 states have balked at participating directly in the new program when it formally commences this week. Many governors and state legislators fear being left holding the bag when federal funds run out ahead of schedule but political expectations of continued coverage remain. They will leave it to Washington to run new HRPs in their states, in some case redundantly parallel to existing state-run ones operating under older rules.

The flawed design of ObamaCare’s shallow and leaky HRPs reflects the overreaching delusion that the HRPs could somehow fast-forward future assumptions of mandated coverage, standardized benefits, and risk-insensitive insurance premiums (envisioned under PaPACA for new health insurance exchanges and eventually the rest of the “private” insurance market) more than three and a half years ahead of schedule. Over-promising the deliverable benefits of HRPs was aimed at briefly allowing the Obama administration to cover itself politically while building its preferred long-term architecture of federal-directed health insurance regulation.

Drafters of the law authorizing the new HRPs tried to leave some budgetary wiggle room, by limiting their enrollment only to those already uninsured for at least six months and authorizing the HHS secretary to close enrollment to comply with funding limitations and make other unspecified “adjustments” as needed to eliminate any annual deficits. Enrollees already “insured” in older versions of state-based HRPs must remain in their higher-priced, less-comprehensive coverage. Other individuals already suffering from high-cost health conditions (but not yet uninsured for a full six months) must simply wait their turn. In other words, the administration would first encourage a new wave of enrollment in HRPs and boost coverage expectations through over-generous promises, but then renege on them when budget funds run short. If private insurers did this, they would be accused of illegal bait-and-switch practices. However, applying the healthcare spending accelerator and brake at the same time, which inevitably leads to violent collisions, looks like it will become standard policy for the Obama administration’s broader vision of healthcare reform.

The lessons to be learned do not include abandoning the concept of HRPs but rather restructuring them more effectively, sustainably, and transparently. Adequately funded HRPs need to be augmented with broader remedies: supplemental income-based subsidies, stronger protection for those maintaining continuous insurance coverage against the risk of new insurance underwriting based on future changes in health status, and more effective incentives and tools for both patients and providers to make higher-value healthcare decisions.

High-risk pools that deliver what they can promise will be more expensive. But compared to the sweeping burdens of ObamaCare, they will cost much less and do less damage to the rest of the private healthcare market that many Americans prefer and from which they still benefit greatly. They can represent the foundation for what it means to “replace,” and not just “repeal,” its flawed prescription for health policy change.

[Cross-posted at American.com]

posted by James C. Capretta | 2:31 pm
File As: Health Care

About Those Presidential Promises...

June 24, 2010

From my latest column today in Kaiser Health News:

Over the past three years, President Barack Obama made many promises to the American people about his health care plan. Among other things, he said it would reduce the federal budget deficit in coming years, promote better quality care and improve access to physicians.

But two promises stood out in the sales pitch because they were aimed at assuaging the deepest fears of a broad cross-section of the electorate: those who already have good health insurance today.

First, during the presidential campaign, Obama promised on numerous occasions that families with existing coverage would see their annual premiums fall, on average, by $2,500 per household. Jason Furman, an adviser to candidate Obama and now an economic aide in the White House, even said that the Obama campaign team believed this level of premium savings could be fully achieved, or nearly so, by the end of an Obama first term.

Second, throughout the campaign and many times since taking office, the president has promised to let Americans stay with the health insurance plans they are enrolled in today if they want to. In other words, the changes he favors in health care arrangements would not force anyone out of something they find entirely satisfactory.

The rest of the piece looks at how those two promises have been panning out. Short version: not all that well. Read the whole thing here.

posted by James C. Capretta | 2:24 pm
Tags: broken promises, costs, coverage
File As: Health Care

How to Cover Pre-existing Conditions

June 24, 2010

The new issue of National Affairs, the excellent journal edited by my EPPC colleague Yuval Levin, includes a piece that I wrote with Tom Miller of the American Enterprise Institute. The focus of the piece is the problem of pre-existing conditions:

The health-care legislation enacted this spring followed more than a year of heated, rancorous debate. But rather than subdue the public's passions, the bill's passage has only stoked them. Opposition to the new law remains very high, and Republicans have made clear their intention to push for its repeal if they gain control of Congress and the White House in 2010 and 2012.

For their part, President Obama and other champions of the legislation insist that public attitudes will soon change. More Americans will come to appreciate the law, they argue, once people have a better grasp of its benefits. And foremost among these benefits is the law's prohibition of "pre-existing condition" exclusions in health insurance — which would prevent insurance companies from denying coverage to customers with serious medical problems.

Like most of the health-care bill's major provisions, this ban will not take full effect until 2014. But the mere prospect of finally addressing the "pre-existing condition problem" is held up as an enormous selling point of the law. At long last, the bill's advocates claim, America has a solution to a profound failing of our current system — a solution that will eliminate a source of worry for millions, and that opponents would not dare undo. Indeed, while describing the plight of a young woman in the audience at a rally he attended in April, Obama told the crowd: "If [opponents of the law] want to look at Lauren Gallagher in the eye and tell her they plan to take away her father's ability to get health insurance ... they can run on that platform."

The president's dramatic talents notwithstanding, the choice he presents is a false one. We do not face an either-or showdown between cruelly denying sick people treatment and a massive new federal health-insurance entitlement. The problem of covering Americans with pre-existing conditions is certainly real, but the notion that the only way to solve it is through a massive transformation of America's health-care system — one that will increase costs, raise taxes, displace millions of the happily insured, create a new entitlement, and undermine our private insurance sector — is simply wrong.

The case for repealing the newly enacted law, then, is not that there are no problems to solve in American health care. Rather, it is that there are far better solutions available....

The entire piece can be found here.

posted by James C. Capretta | 10:06 am
Tags: pre-existing conditions
File As: Health Care

Should People Be Paid to Stay Healthy?

June 15, 2010

The New York Times has a symposium on wellness incentive programs in insurance and health care. I argue that they're worth a try:

In health care, as in so much else in modern life, money matters immensely. It matters for those who provide services to patients, as well as for those who consume them. We would have a better health care system today if public policy harnessed financial incentives in the right way — to produce higher quality care at a lower cost.

Alas, U.S. health care is awash in third-party payment arrangements that fundamentally distort decision-making and drive up costs. Public insurance and heavily tax-subsidized employer-provided coverage pay the bulk of the nation’s health care bills, which means consumers are largely insulated from the financial consequences of their choices, including the health care costs associated with unhealthy behavior.

Read the whole thing here.

posted by James C. Capretta | 10:34 am
Tags: wellness programs, patient incentives
File As: Health Care

Introducing ObamaCareWatch.org

June 9, 2010

I am pleased to announce the launch this week of what I hope will be an important new resource in the debate over the future of American health care: ObamaCareWatch.org.

Yesterday, the Obama administration embarked on an ambitious effort to again “sell” the new health law to a skeptical public by highlighting the supposed benefits of it in speeches, mailers, and planned advertising campaigns.

ObamaCareWatch.org is aimed at setting the record straight with facts. It will provide, in one convenient and searchable website, all of the most important research, analysis, news, and commentary related to the new health law. Proponents of the new law have claimed that it will produce many positive results for the country. When the new law instead produces precisely the opposite results of what was promised, ObamaCareWatch.org will make that information available to ordinary Americans so they can hold those who sponsored and passed it accountable for what they have done.

ObamaCareWatch.org is sponsored by economics21, an excellent new research institute dedicated to promoting sound economic policies in a rapidly changing global economy. I am pleased to be serving as the project’s director, even as I continue in my role as a Fellow at the Ethics and Public Policy Center and as a contributing editor to The New Atlantis.

Please go to the new website regularly, spread the word to those who might benefit from visiting it, and sign up for the weekly “ebrief” to get periodic updates with all of the latest information and developments.

posted by James C. Capretta | 6:23 pm
Tags: ObamaCareWatch.org
File As: Health Care

The Debt Commission, Health Care, and Obama’s Budgetary Game Plan

June 4, 2010

In another Web Memo for the Heritage Foundation this week, I wrote a bit more about the debt commission and the budgetary and political problems that Obamacare creates for the nation's finances. Here's an excerpt from the beginning:

Unfortunately, the timeline for the United States to take corrective action may have already been shortened in just the past few weeks. What began as a slow-motion crumble of Greece’s economic house of cards has now quite clearly become the triggering point for full-fledged examination of the risks posed by massive increases in governmental debt combined with aging populations around the developed world. No country is exempt from the scrutiny of the bond markets, including the U.S. Moreover, if Europe’s economy slides back again into a deep recession as the debt crisis spreads, no part of the global economy will be completely spared from the fallout, including the U.S. The new health care law will only worsen the nation’s fiscal situation, and despite President Obama’s claim that “everything is on the table,” it is clear that the Administration wants to lock in Obamacare and force the commission to look elsewhere.

You can read the entire memo here.

posted by James C. Capretta | 11:36 am
Tags: Debt Commission, Obamacare, debt
File As: Health Care

Obamacare: Impact on Future Generations

June 1, 2010

I have a column up at Heritage.org today on the health care reform law's supposed budget pressure reduction:

The President and congressional leaders have argued that a primary benefit from the health law will be reduced long-term budget pressure and thus a brighter future for coming generations of taxpayers. But when the cost estimate is adjusted for omissions, gimmicks, double-counting, and unrealistic assumptions, it is clear that the new health law will increase the burden, not lessen it.

One recent estimate projects the bill will add more than $500 billion to the deficit over the next 10 years and $1.5 trillion in the decade following. And any cost-cutting that does occur under the new law will come in the form of arbitrary governmental controls that will put up barriers to care in future years.

Read the whole thing here.

posted by James C. Capretta | 3:02 pm
Tags: Medicare, doc fix, CLASS Act
File As: Health Care

Obamacare’s Cooked Books and the “Doc Fix”

May 24, 2010

The Obama administration continues to insist (see this post from White House Budget Director Peter Orszag) that the recently enacted health care law will reduce the federal budget deficit by $100 billion over ten years and by ten times that amount in the second decade of implementation. They cite the Congressional Budget Office’s cost estimate for the final legislation to back their claims.

And it is undeniably true that CBO says the legislation, as written, would reduce the federal budget deficit by $124 billion over ten years from the health-related provisions of the new law.

But that’s not whole story about Obamacare’s budgetary implications — not by a long shot.

For starters, CBO is not the only game in town. In the executive branch, the chief actuary of the Medicare program is supposed to provide the official health care cost projections for the administration — at least he always has in the past. His cost estimate for the new health law differs in important ways from the one provided by CBO and calls into question every major contention the administration has advanced about the bill. The president says the legislation will slow the pace of rising costs; the actuary says it won’t. The president says people will get to keep their job-based plans if they want to; the actuary says 14 million people will lose their employer coverage, many of whom would certainly rather keep it than switch into an untested program. The president says the new law will improve the budget outlook; in so many words, the chief actuary says, don’t bet on it.

All of this helps explain why the president of the United States would be so sensitive about the release of the actuary’s official report that he would dispatch political subordinates to undermine it with the media.

It’s not the chief actuary’s assignment to provide estimates of non-Medicare-related tax provisions, so his cost projections for Obamacare do not capture all of the needed budget data to estimate the full impact on the budget deficit. But it’s possible to back into such a figure by using the Joint Tax Committee’s estimates for the tax provisions missing from the chief actuary’s report. When that is done, $50 billion of deficit reduction found in the CBO report is wiped out.

And that’s before the other gimmicks, double counting, and hidden costs are exposed and removed from the accounting, too.

For instance, this week House and Senate Democratic leaders are rushing to approve a massive budget-busting tax-and-spending bill. Among its many provisions is a three-year Medicare “doc fix,” which will effectively undo the scheduled 21 percent cut in Medicare physician fees set to go into effect in June. CBO says this version of the “doc fix” would add $65 billion to the budget deficit over ten years. The entire bill would pile another $134 billion onto the national debt over the next decade.

If the Obama administration gets its way, this three-year physician-fee fix will eventually get extended again, and also without offsets. Over a full ten-year period, an unfinanced “doc fix” would add $250 to $400 billion to the budget deficit, depending on design and who is doing the cost projection (CBO or the actuary).

Administration officials and their outside enthusiasts (see here) say the Democratic Congress shouldn’t have to find offsets for the “doc fix” because everybody knows a fix needs to be enacted and therefore should go into the baseline. (By the way, the history of the sustainable growth rate [SGR] that Ezra Klein provides at the link above is a misleading one. The SGR was a replacement for a predecessor program that too had run off the rails — the so-called “Volume Performance Standard” enacted by a Democratic Congress in 1989.)

But supporting a “doc fix” is not the same as supporting an unfinanced one on a long-term or permanent basis. Not everybody in Congress is for running up more debt to pay for a permanent repeal of the scheduled fee cuts, which is why such a repeal has never been passed before. In the main, the previous administration and Congresses worked to find ways to prevent Medicare fee cuts while finding offsets to pay for it.

But that’s not the policy of the Obama administration. The truth is the president and his allies in Congress worked overtime to pull together every Medicare cut they could find — nearly $500 billion in all over ten years — and put them into the health law to pay for the massive entitlement expansion they so coveted. They could have used those cuts to pay for the “doc fix” if they had wanted to, as well as for a slightly less expansive health program. But that’s not what they did. That wasn’t their priority. They chose instead to break their agenda into multiple bills, and “pay for” the massive health entitlement (on paper) while claiming they shouldn’t have to find offsets for the “doc fix.” But it doesn’t matter to taxpayers if they enact their agenda in one, two, or ten pieces of legislation. The total cost is still the same. All of the supposed deficit reduction now claimed from the health law is more than wiped out by the Democrats’ insistent march to borrow and spend for Medicare physician fees.

And the games don’t end there. CBO’s cost estimate assumes $70 billion in deficit reduction from the so-called “CLASS Act.” This is the new voluntary long-term care insurance program which hitched a ride on Obamacare because it too created the illusion of deficit reduction. People who sign up for the insurance must pay premiums for at least five years before they are eligible to draw benefits. By definition, then, at start-up and for several years thereafter, there will be a surplus in the program as new entrants pay premiums and very few people draw benefits. That’s the source of the $70 billion “savings.” But the premiums collected in the program’s early years will be needed very soon to pay actual claims. Not only that, but the new insurance program is so poorly designed it too will need a federal bailout. So this is far worse than a benign sleight of hand. The Democrats have created a budgetary monster even as they used misleading estimates to tout their budgetary virtue.

There is much more, of course. CBO’s cost projections don’t reflect the administrative costs required to micromanage the health system from the Department of Health and Human Services. The number of employers looking to dump their workers into subsidized insurance is almost certainly going to be much higher than either CBO or the chief actuary now projects. And the price inflation from the added demand of the newly entitled isn’t factored into any of the official cost projections.

We’ve seen this movie before. When the government creates a new entitlement, politicians lowball the costs to get the law passed, and then blame someone else when program costs soar. Witness Massachusetts. Most Americans are sensible enough to know already that’s what can be expected next with Obamacare.

posted by James C. Capretta | 6:45 pm
Tags: doc fix, CLASS Act, CBO, chief actuary
File As: Health Care

The Independent Payment Advisory Board and Health Care Price Controls

May 6, 2010 • I have a column up today at Kaiser Health News on the new Independent Payment Advisory Board created in the recently passed health legislation. Here's an excerpt:

....the [Independent Payment Advisory Board] — a 15 member independent panel, to be appointed by the president and confirmed by the Senate — is now charged with enforcing an upper limit on annual Medicare spending growth. That’s right: Medicare spending is now officially capped. Even most people who follow health policy closely don’t seem to know this. Perhaps it’s just too hard to believe that a Democratic Congress, prodded by a Democratic president, actually voted to cap spending for a cherished entitlement.

But make no mistake: Beginning in 2015, Medicare spending is now supposed to be limited, on a per capita basis, to a fixed growth rate, initially set at a mix of general inflation in the economy and inflation in the health sector. Starting in 2018, the upper limit is set permanently at per capita gross domestic product growth plus one percentage point.

One might be tempted to think this is an area of the legislation which should have gotten some bipartisan support. After all, in the past, it’s the Republicans who have pushed for these kinds of caps on entitlement costs, with Democrats fighting them every step of the way. Conservatives know that if they are to have any hope of fighting off a major tax increase to close the nation’s budget gap, Medicare spending growth has to be slowed, and soon.

But the IPAB provision is actually an indicator of why there is a great divide in American health policy. To hit its budgetary targets, the IPAB is strictly limited in what it can recommend and implement. It can’t change cost-sharing for covered Medicare services. Indeed, it can’t change the nature of the Medicare entitlement at all, or any aspect of the beneficiary’s relationship to the program. The only thing it can do is cut Medicare payment rates for those providing services to the beneficiaries.

This wasn’t an accident. It reflects the cost-control vision of those who wrote the bill. They believe the way to cut health care costs is with stronger federal payment controls. They envision the IPAB coming up with new payment models which will push hospitals and physicians to emulate today’s most efficient delivery models. Call it “government-driven managed care.”

Read the full column here.

posted by James C. Capretta | 4:35 pm
Tags: IPAB, Medicare, entitlements, Obamacare
File As: Health Care

The Debt Commission and Obamacare

April 29, 2010

The president’s debt commission had its first meeting this week, and all of the talk was of getting serious about putting our fiscal house in order, with everything “on the table” for consideration.

There’s no arguing with the need to get serious. According to the Congressional Budget Office (CBO), if the Obama budget were adopted in full, just the interest on the national debt would exceed $900 billion in 2020 and consume one out of every five dollars in federal revenue. To put that in perspective, in 2007, before the financial crisis hit with full force, interest payments on debt stood at $237 billion, or just 9 percent of total tax collections. A sudden and steep rise in the percentage of governmental revenue dedicated to servicing past excess consumption is a clear warning sign to lenders and credit-rating agencies that a country’s finances are approaching the point of no return.

Unfortunately, the timeline for taking corrective action may have shortened even in the past few weeks and days. What began as a slow-motion crumble of Greece’s economic house of cards is now threatening to become a serious global crisis. The flight from sovereign debt risk is now spreading to other vulnerable, highly leveraged countries, including Portugal, Ireland, and Spain. The implications for European economic recovery are ominous. And, if Europe’s economy slides backward again into a deep recession, no part of the global economy will be completely spared from the fallout, including the United States.

So we are long past the point when national leaders should have been sitting down together to hammer out a budget framework to avert the crisis everyone could long see coming. Indeed, one might have thought it would be the first order of business for a newly elected president of the United States.

But it wasn’t. Instead, President Barack Obama decided to spend 2009 using unusually large Democratic majorities in the House and Senate to jam a partisan and highly polarizing health care bill through the Congress. No Republican supported the measure, in large part because it vastly expanded federal entitlement commitments at the very moment when it was abundantly clear that the existing entitlements are the problem.

With the health legislation signed into law over the objections of a united Republican party, the president now wants Republicans to help him finance the newly enlarged welfare state.

Of course, the commission itself is a transparent maneuver to pass the buck in an election year. Voters are beyond fed up with the massive spending spree taking place in Washington. To every hostile question Democratic candidates will get in coming months about the exploding national debt, they are therefore planning the following answer: we’re waiting for the commission to make its recommendations in December. Never mind that Democrats control the White House and Congress. If they wanted to cut the budget, they could certainly do so, starting right now. Instead, they will try to use the appointment of a non-binding commission to create the appearance of a proactive agenda.

For the commission itself, the elephant in the room is Obamacare. Former Senator Alan Simpson, the co-chair of the commission, says the president has agreed that even the health law is “on the table” for discussion.

That’s good, if he means it. Because it is not possible to write a durable, bipartisan budget framework with health spending written entirely according to one party’s formulation.

Health care remains the largest problem in the nation’s long-term budget outlook, even after enactment of the health bill. On paper, the bill makes massive cuts in Medicare. But all of the supposed savings would go toward standing up a new entitlement that costs even more than the savings. So, health entitlement spending expands under the legislation, not contracts.

Moreover, the Medicare savings are from arbitrary payment-rate reductions. OMB Director Peter Orszag continues to argue the health law lays the predicate for cost-control through painless efficiency improvement in the delivery of medical services. But that’s either a smokescreen or the most alarming kind of wishful thinking. The “delivery system reforms” in the legislation are at best small pilot projects that will amount to very little. Certainly CBO assumed no savings from them. Neither did the chief actuary of the Medicare program.

The real cuts in Medicare come from reductions in payment rates. The cuts apply to all providers, across-the-board. There’s no attempt to calibrate based on the quality of the patient care or performance. If the debt commission takes Obamacare as a given when looking for additional savings in health care, it will inevitably fall into the same trap. To find quick and “scoreable” savings (that is, savings that CBO will recognize), the easiest thing to do is to further ratchet down payment rates and pretend the cuts will solve the budget problem. Going down that road would be a disaster for the quality of American medicine and would not provide a lasting solution.

What’s needed in American health care is a dynamic marketplace that drives up the productivity of those delivering medical services. That’s the only way to cut costs without harming quality. That’s genuine delivery system reform. Building such a marketplace requires, first and foremost, cost-conscious consumers, which in turn requires fundamental reform of the health entitlement programs and the tax treatment of health insurance. Fortunately, Congressman Paul Ryan’s roadmap has already shown us the way.

Like it or not, the budget debate remains in large part a health-care debate. Obamacare settled nothing because it did not solve the health care cost problem. It papered it over with price controls.

posted by James C. Capretta | 5:20 pm
Tags: debt commission, debt, Alan Simpson, Greece, Peter Orszag, CBO, payment-rate reductions
File As: Health Care

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