Health Care

Are Democrats Going to Tax Health Benefits and “Cap” Medicare?

September 15, 2009

Let’s start with some good news: the House health care bill is, for all intents and purposes, dead, and the president is the one who killed it.

In a key passage in his health care speech last week, President Obama committed himself to opposing any bill that would add “one dime” to the federal budget deficit over the next decade — or ever. As David Brooks pointed out in his Friday column, that presidential line in the sand should be the final nail in the coffin for the House bill because it would so plainly violate the president’s “deficit-neutral” commitment. And not by a little bit. The Congressional Budget Office (CBO) said in July that the House bill would set in motion a new entitlement program with costs growing at about 8 percent per year, while the revenue raised to pay for it would only grow at about 5 percent per year. In the medium and long term, after everything is phased in, the House legislation would therefore add increasing amounts of deficit spending to an already disastrous long-term budget outlook. Last week, the Lewin Group confirmed CBO’s finding and said the House bill, as reported out of the Energy and Commerce Committee, would add $1 trillion to the federal budget deficit from 2020 to 2029.

Of course, it was only a few weeks ago that the president was trying to strong-arm the House bill through the lower chamber. And a couple of months ago the president talked of “bending the cost curve,” not deficit neutrality. Still, given the unambiguous nature of the Obama pledge and where and when it was made, it’s hard to see how House leaders could resurrect the budget-busting bill they were working on in July.

Now for the bad news: The death of the House bill does not mean the death of Obamacare, unfortunately. The president and his allies are simply moving on to plan B (or perhaps it is C or D).

This latest version of Obamacare is likely to include two key provisions that Democrats hope will get them over the CBO hurdle. Depending on the specifications, it is certainly conceivable that provisions could be written to generate savings from within the “health system” that keep pace with the massive entitlement Democrats want to create.

The first provision the president endorsed was a new tax on health benefits. He didn’t put it that way in his speech, of course. He said he was for imposing a tax on high-cost insurance plans. But there really is no such thing as a tax on high-cost insurance plans. Senator Max Baucus has included such a tax in his draft proposal, but the financial burden would fall entirely on insurance enrollees, not insurance companies. Insurers, and employers who sponsor expensive insurance plans, would respond to such a tax by making adjustments in coverage, such as imposing higher deductibles, to ensure the cost of their plans fall below whatever threshold is set (now $21,000 for family coverage in the Baucus draft). And so its consumers and patients who would pay more if this particular Obama tax were to get enacted — including many in middle-class households and some who are union workers. Moreover, such a tax would amount to a tax on health benefits “for the first time in history” — which is the same criticism President Obama launched against the McCain plan in the final stages of the 2008 campaign.

The second provision the president endorsed in his speech was an “automatic trigger” to cut health spending if the savings he envisions from other changes don’t materialize. The president provided no specifics on how this mechanism would work, but a piece in the New York Times last week speculated that additional cuts in Medicare’s hospital and physician payment rates would kick in if health spending targets were missed.

We’ve seen this kind of “reform” before in Medicare. Physician fees are capped today, and Congress regularly overrides the automatic cuts which are supposed to occur to keep spending in line. There’s no evidence to suggest Congress will act differently in the future than it has in the past.

Moreover, Democrats have made a living attacking Republicans for harboring secret plans to undermine Medicare. Are they really ready now to endorse a plan that amounts to a permanent “cap” on Medicare spending? Apparently, some administration allies are trying to convince House and Senate members to do just that to get around their CBO problem. They argue that the trigger will never be pulled because other “reforms” in the bill will work so well that governmental health care savings will more than offset the expanded entitlement programs.

But that’s a very dubious assumption. The bills as they now stand have very little in them that will change the basic financial incentives for most health care providers, which is why CBO and most everyone else sees no reason to believe cost escalation will slow in any meaningful way. So if the Democrats impose a cap on Medicare spending, hospitals and physicians should assume the trigger will be pulled, forcing them into a never-ending struggle to get fully paid for what it costs to take care of Medicare patients.

It’s pretty clear at this point that President Obama will do just about anything to get a health care bill to his desk this year. It remains to be seen if he is so persuasive that he can convince his fellow Democrats that they are better off endorsing taxation of health benefits and a cap on Medicare than compromising with Republicans. Smart Democrats will be more than a little skeptical of that argument.

posted by James C. Capretta | 11:46 am
File As: Health Care

Health Reform Then and Now

September 14, 2009

Last Friday, I participated in a panel discussion at the American Enterprise Institute (AEI) entitled, “Health Reform Then and Now: What Do We Need to Know?” The session focused on the differences in analytical information available in 1994, when President Bill Clinton proposed a health-care reform plan, compared to this year. In 1994, the Congressional Budget Office (CBO) released a detailed analysis (available here) of the Clinton plan very early in the year, which gave Congress plenty of time to understand its implications and make judgments. This year, House leaders unveiled their plan and CBO’s analysis of it in mid-July with the intention of voting on it by July 31st. During the discussion, I focused my comments on three assertions made by President Barack Obama about the plan being worked on in Congress that are highly questionable based on the verifiable facts: that it won’t not add “one dime” to the federal budget deficit; that it will lower costs for households, businesses, and governments; and that most of the cost of new coverage will be paid for by eliminating “waste” in Medicare and Medicaid. C-SPAN carried the event live; the full (2 hour plus!) video is available here. More information on the event and biographical information for all of the speakers can be found here, at AEI’s website.

posted by James C. Capretta | 11:58 am
File As: Health Care

Presidential Assertions vs. Facts

September 13, 2009 • During his speech on Wednesday, the president made three crucial but unsubstantiated assertions. He said the plan he will sign won’t add “one dime” to the federal budget deficit, now or at any time in the future. He said this plan would lower costs for families, businesses, and government. And he said he would pay for most of the cost of the plan by eliminating waste and inefficiency in Medicare and Medicaid.

Again, these were assertions, with no facts or detailed legislative specifications to back them up. Indeed, the president made these assertions despite the fact that all available evidence indicates that the plans being worked on in Congress don’t come close to meeting these stated objectives.

First, regarding the budget deficit, we received confirmation on Wednesday from the Lewin Group that the House bill — as amended in the Energy and Commerce Committee — would increase the federal budget deficit by ever increasing amounts after 2019. The Lewin analysis — produced for the Peter G. Peterson Foundation, and available here — indicates the House bill would add over $1 trillion to the annual deficits between 2020 and 2029, including $188 billion in 2029 alone. So, the House bill would make our already bleak long-term budget outlook much, much worse — not better.

This should surprise no one. The Congressional Budget Office (CBO) said weeks ago that the House bill would set in motion a new entitlement program that would grow indefinitely at about 8 percent per year — just like Medicare and Medicaid have for four decades — while the “offsets” to pay for it would only grow at about 5 percent per year. That’s the makings for another very large unfunded liability on the federal books. In an earlier post, I suggested that the House bill would create a $10 trillion unfunded liability over seventy-five years.

Lewin also produced detailed estimates of what the House bill would do to household spending on health care. President Obama and other Democrats like to say they are providing “universal coverage.” But who is really paying for this coverage? It turns out it’s the uninsured workers themselves who would shoulder the financial burden in the Democratic plans. According to Lewin, households with at least one uninsured member would see a jump in their health-care expenses of $1,400 per year, on average. For uninsured households with incomes between $40,000 and $50,000 per year, the jump in annual health-care costs would average $1,700.

This, too, should not be surprising. The bills under consideration really only reduce the ranks of the uninsured by force. To keep federal costs “down,” the bills prohibit workers who are offered coverage on the job from getting new subsidies for insurance through the so-called “exchanges.” But these workers are required to have some coverage to avoid paying the individual mandate “penalty.” Consequently, they really have no choice but to sign up with their job-based plans. And that will mean paying for this insurance through lower take-home pay, whether they can afford it or not. Thus, the individual mandate — the basis upon which Democrats can claim to “cover everybody” — is really just a hidden and regressive tax on lower and moderate wage workers.

Finally, the president again said he could pay for “his plan” with painless reforms which will eliminate waste and inefficiency in Medicare. Where are these painless reforms? The president’s budget, the House bill, and Senator Baucus’s outline are filled with the same kinds of arbitrary, across-the-board provider payment reductions that have been used countless times in the past to hit budgetary goals. These are not “reforms” that will change the basic dynamics of how health care is delivered to patients. There is no effort to make distinctions based on quality or value. All hospitals will get smaller payment increases, no matter how well or how badly they treat their patients. Moreover, all the “fees” that are imposed on insurers, drug companies, and device manufacturers will simply get passed on to patients and consumers in the form of higher prices.

On Wednesday, the president described a health care plan that doesn’t exist. There is no proposal in Congress or offered by the president which would lower costs for households, businesses, and the government, and the president doesn’t have a magic solution which will “bend the cost curve” with painless efficiency gains.

What is clear is that the bills under consideration in Congress would impose massive new hidden costs on low and moderate wage households — the very people the president and his allies say they want to help. And that’s a fact, not an assertion.

posted by James C. Capretta | 5:49 pm
File As: Health Care

The President Has No Plan to Fix Health Care

September 9, 2009

President Barack Obama says he wants to be the last president who has to deal with health care. But it is abundantly clear from his speech tonight that he has no plan to fix the problems in health care as they exist today, much less to settle the issue for good.

The primary problem in health care is rapid cost escalation. The president has promised for months now that he would have a plan to “bend the cost-curve.” Indeed, even tonight, he spoke of the plans being worked on in Congress as if they would address the problem of rising costs and improve our long-term budget outlook.

It’s as if the president and his team haven’t read anything that the Congressional Budget Office (CBO) has said about the health care bills under consideration. The truth is that these bills would add an additional runaway health care entitlement to the ones already on the federal books. CBO has said that the House bill would set in motion new spending that would grow at about 8 percent rate per year, while the revenue to pay for it would increase only about 5 percent per year. You don’t have to be a financial genius to sse a problem here.

Today, the Lewin Group confirmed again how fiscally irresponsible the House bill is. According to Lewin’s estimates, the bill passed out of the House Energy and Commerce Committee would increase the federal budget deficit by $1 trillion between now and 2029, and permanently increase the nation’s total health care bill. Moreover, they estimate that the uninsured would face an average of $1,400 in increased costs from the House bill per year. Others with insurance would see a small decrease in costs, but that assumes no increase in taxes to pay for the government’s mounting bills.

The country does need to enact sensible health care reforms. But the plan the president is pushing would exacerbate the fundamental problem, not address it. And that’s why the public has turned against it.

posted by James C. Capretta | 10:10 pm
File As: Health Care

Apparently, August Never Happened

September 9, 2009

During August, in scores of meetings which were held in all parts of the country and attended by thousands, concerned citizens sent unmistakable signals to their elected political leaders that if Congress is going to produce anything on health care this year — and many openly stated they hope nothing at all will pass — they want it to be a more targeted, less expensive, and less controversial product, and one based on bipartisan consensus and not ideological ambition. Polls show most Americans are strongly opposed to a full governmental takeover of U.S. health care, and they rightly sense that is exactly what would happen if the bills currently under consideration were to pass.

And so how are Democrats responding to this spontaneous display of widespread public disapproval of their planned agenda? Not with a sensible course correction, it seems. No, by all appearances, it’s still full steam ahead.

Monday, President Obama delivered a campaign-style speech to his union supporters which made news mainly because the president went off of his prepared remarks to deliver a false attack on his political opponents. The president said those who are against his government-heavy plan have offered no alternatives, which is flatly not true. Months ago, Senators Coburn and Burr and Congressmen Ryan and Nunes offered the Patients’ Choice Act, which would build a true consumer-driven marketplace for insurance and medical services.

Today, Senate Finance Committee Chairman Max Baucus distributed a summary of his long-awaited plan to selected members of his committee, and it looks to be the same plan that was under discussion in June and July, with only the most modest of tweaks. It is built on the same flawed foundation as the House bills, starting with a so-called “individual mandate” that would penalize any American who didn’t sign up for government-approved insurance. Employers would also pay a tax if any of their lower-wage workers ended up on government-subsidized plans, which would create a strong disincentive for hiring such workers in the first place. The federal government would vastly expand health care entitlement spending by enrolling millions of people in Medicaid and standing up a new entitlement for persons with incomes between 133 and 300 percent of the poverty line. The new spending in the Baucus plan is said to be near $900 billion over a decade, but no official estimates are available.

To “pay for” the additional federal costs, Senator Baucus wants to impose a vast array of new taxes, on health insurers, drug companies, device manufacturers, and clinical labs, all of which will be passed on to patients, of course. In addition, Senator Baucus wants to impose payment rate reductions in Medicare and Medicaid, which will save between $400 and $500 billion over ten years. Among the cuts would be a deep reduction in Medicare Advantage payment rates, which would force millions of seniors out of their current coverage and back into the traditional Medicare program and expensive Medigap plans.

The Baucus plan is flawed from the get-go because it starts from the same misguided premise as its counterparts in the House. It seeks to achieve “universal coverage” but without building a functioning marketplace to slow the pace of rising costs. And so, if it were to pass, costs would escalate just as rapidly in the future as they have in the past, and it would only be a matter of time before the current administration or its successor proposed new and draconian “cost control” measures to hold down governmental health care spending. At that point, federal central planners would resort to the same kinds of price setting devices that have been tried for years in others settings, including Medicare. And the predictable result would be a large reduction in the willing suppliers of medical services, which would mean queues and lower quality care all around.

posted by James C. Capretta | 11:16 am
File As: Health Care

A “Narrowing” Experience

Is the administration really willing to compromise?
September 4, 2009

We learned this week that President Barack Obama’s aides are negotiating directly with Republican Senator Olympia Snowe of Maine to strike a deal on a “narrower” health-care bill.

It’s easy to see why the White House would be eager to secure Senator Snowe’s support for something. She signed onto the so-called “stimulus bill” earlier this year, and throughout her career has voted quite frequently with Senate Democrats on social and economic issues. If the White House is able to get her vote — again — they will be able to claim “Republican support” for the health-care effort, even if it is just one Republican with a voting record that is anything but conservative.

But would an Obama-Snowe deal mean something like the bills now moving through Congress will definitely pass?

Far from it.

The political problems with these bills are deep and structural. Democrats very self-consciously set out at the beginning of this year to pass something akin to the next New Deal or Great Society. Their goal is a dramatic and historic signing ceremony at which they take political credit for finally passing so-called “universal coverage.” They weren’t thinking “narrow” in January.

But passing “universal coverage” means a lot of additional political baggage that Democrats are now finding is not so easy to carry. Covering everybody means forcing Americans to buy government-approved insurance, whether they want it or not. And that means an expensive new subsidy program for lower income households, as well as a new tax on employers who don’t provide qualified coverage. The additional federal costs for the new subsidy program and an expansion of Medicaid will be at least $1 trillion over ten years, which means the bills also raise taxes by as much as $500 billion over a decade and impose cuts in Medicare and Medicaid of a similar magnitude. All of this is highly unpopular, as town hall meetings around the country over the last month have demonstrated. Moreover, many Americans rightly sense that the bills being written by the majority in Congress would amount to a federal takeover of U.S. health care, which they fear and adamantly oppose.

It should be clear based on what has taken place around the country this summer that the Obama administration and Democrats in Congress massively overreached on health care and now find themselves in a position where they can’t pass the bills they have been working on since the beginning of the year.

Leaks of pursuing a “narrower” bill are an indication that the administration finally understands this. So far, the only detail about what “narrow” might mean is the possible inclusion of the so-called Snowe “trigger.” Senator Snowe has suggested that the bill should not, at the outset, include a new government-run insurance option. However, if cost escalation does not slow and insurance coverage does not increase as expected, then in perhaps five years a new “government option” might be stood up. That kind of “deal” would find no support among Republicans other than Snowe, but it might placate some House liberals who are now threatening to jump ship if the bill were to drop the possibility of a “public option” altogether.

But even if the administration solves their “public option” problem, the bills as currently constructed still can’t pass unless they really do become much, much narrower. Is the president ready to drop the individual mandate and the Democratic goal of “universal coverage”? If he were to do so, many possibilities would open up. If not, the bill will still include massive new entitlement spending and taxes, deep cuts in Medicare, onerous requirements on employers, and far too much federal control. Which also means it will be near impossible to pass.

posted by James C. Capretta | 10:27 am
Tags: trigger, Snowe, mandate
File As: Health Care

Lack of Tort Reform Is Not the Main Problem with Obamacare

September 1, 2009

With Obamacare’s prospects sinking by the day, there’s no shortage of opinions about what the Obama administration should do to resuscitate it.

Former Senator Bob Dole has a piece in the Washington Post suggesting that the administration is running into trouble on health care because the president ceded too much control over the drafting of the legislation to Congress. But, truth be told, the specific ideas the president has offered up to date — the massive tax hikes and arbitrary across-the-board Medicare cuts in his 2010 budget, and a power grab for unilateral control over Medicare — do not build confidence that a plan drafted by administration officials would be at all attractive to Republicans.

Former New Jersey Senator and Democratic presidential candidate Bill Bradley has a different take on how to get Republicans on board in his piece yesterday in the New York Times.

Bradley was one of the main architects of the 1986 tax reform law, which President Reagan signed into law. That legislation dropped the top individual income tax rate to 28 percent by broadening the base of income subject to taxation. It was more or less revenue-neutral — not a tax increase or a tax cut. And it attracted large numbers of votes from both sides of the political aisle.

Bradley believes that the 1986 experience provides valuable lessons for this year’s health care debate. He says the reason tax reform enjoyed strong support from both Republicans and Democrats is that both parties got something they long desired in return for giving up a sacred cow. Republicans got lower rates but had to give up protecting energy and other business sectors. Democrats got more equity with the rich paying a higher percentage of the total tax take, but they had to give up explicitly higher tax rates to get there.

Why not strike a similar grand, bipartisan compromise on health care, Bradley says? Of course, there’s a certain appeal to his argument. No complex and sweeping legislation ever gets broad support from both parties unless there is something important in it for both sides. But what Bradley suggests as the makings for such a deal in health care is completely implausible. Democrats, he argues, should get “universal coverage” in return for giving Republicans tort reform, including serious reform of the nation’s medical malpractice laws.

Don’t get me wrong. Strong reform of medical malpractice laws is long overdue and could eliminate the serious distortions which now occur as hospitals and physicians reduce the risk of getting caught in the lottery-like system of jury awards.

But should Republicans sign onto something even remotely resembling the bills now being considered in Congress if tort reform were thrown into the mix? No way. The bills written by the Democratic majority are so fundamentally flawed from beginning to end that they can’t be fixed. They would cause tremendous economic harm with massive new unfunded liabilities, taxes, and job-killing mandates on employers. Moreover, they would cede vast power to the federal government over virtually every aspect of our health care system. The result would be a long and likely irreversible deterioration in the quality of U.S. health care, with less innovation and more government-driven rationing of care. No amount of tort reform would be worth agreeing to that.

The Obama administration isn’t running into trouble on health care primarily because of poor legislative tactics. In fact, for the most part, they played it brilliantly — from their perspective — for the first six months of the year, hiding the ball as long as possible and resorting to vague pronouncements of broader coverage and cost-control. Their hope was that momentum would build and allow them to shorten the time between bill introduction and final passage. Unfortunately for them, many Americans actually wanted to know what these bills would do to their health care, and as they learned more in the last two months, they turned against the administration’s plan in large numbers. That won’t change even if President Obama offers medical malpractice reform as a small concession to conservatives.

posted by James C. Capretta | 11:40 am
File As: Health Care

The Obama Agenda and Fiscal Reality

August 26, 2009

Yesterday, both the Obama administration and the Congressional Budget Office (CBO) released new, ten-year projections of the federal receipts, spending, deficits, and debt. The administration’s Mid-Session Review (available here) provides an updated forecast of what executive branch scorekeepers think will happen if the Obama budget plan is adopted in full. CBO’s forecast looks at federal revenue and spending over the coming decade assuming no changes from current law. Both documents, despite their different premises, point toward a fast-approaching fiscal crisis.

According to CBO, the federal budget deficit will approach $1.6 trillion in 2009 and $1.4 trillion in 2010. That’s $3 trillion in new borrowing in just two years. The country accumulated $5.8 trillion of government debt from 1789 to 2008.

According to the Administration’s own numbers, the Obama budget plan would push the debt burden to more than $17 trillion by the end of 2019. Total spending in the Obama budget would reach $5.3 trillion in 2019, or $2.4 trillion more than was spent in 2008 — almost doubling the size of government in a decade. And that doesn’t even include the health-care plan, which the administration assumes will be “budget neutral.” Piling up debt at this kind of rate is not sustainable, to put it mildly. Sooner or later, and probably sooner, something will give. More than likely, a time will come when the U.S. government will no longer be able to borrow money at preferential rates. Interest rates will go up, growth will slow, and unemployment will rise. At that point, there will be no choice but to embark on a painful period of austerity and pronounced fiscal contraction.

The Obama team made a strategic decision at the beginning of this year to focus first on passing a governmental takeover of health care and climate change legislation. Any effort to close the widening budget deficit was put off until 2010, at the earliest. The thinking was that the health care and climate change bills would be so controversial that they could only pass in the president’s first months in office, and they are what the Democratic left most wants to see enacted during the Obama era. Moreover, the health care plan, in the administration’s view, would lay the predicate for future deficit reduction because it would hand over to the federal government new levers to pull to keep costs down in the future. Or so they thought.

Things certainly look very different today than they did in January. The Obama administration has no credible plan to slow the pace of rising health care costs, and never really did. The health care plans emerging in Congress would add a new runaway entitlement program on top of the ones already on the books and substantially worsen both the near-term and long-term budget outlook. Beyond health care, the administration has not offered anything resembling a credible government reform or deficit-cutting plan. Recent suggestions by Treasury Secretary Timothy Geithner and National Economic Council Director Larry Summers that a large tax increase may be needed were quickly shot down by the White House.

So what’s the game plan? The federal government is rushing headlong toward a fiscal crisis that could seriously harm the U.S economy. The president has spent much of his political capital this year promising that health care reform would be tantamount to entitlement and budget reform because it would “bend the cost-curve.” Now that that contention has been thoroughly discredited, it appears the administration has no coherent plan B to get our fiscal house in order. Moreover, even if they did have such a plan, it’s not at all clear that the current Congress could or would pass the highly controversial tax increases and defense cuts that this very conventional Democratic president would almost certainly be pushing.

The first priority of a new president should be to make sure his administration has the capacity to govern. That means cultivating a reliable political coalition that can keep the trains from running off of the rails. President Obama has put at risk his ability to get the hard but necessary things done by pursuing an ultra-liberal agenda that will exacerbate the budgetary problems he should have been most concerned about during his first year. As a result, his entire agenda is now seriously at risk as fiscal reality pushes the federal government toward a massive course correction.

posted by James C. Capretta | 11:05 am
File As: Health Care

What Will Bring About More Mayo Clinics?

August 20, 2009

David Ignatius has an interesting piece in today’s Washington Post on what Dr. Denis Cortese, the head of the Mayo Clinic, is saying about the health care debate as it has been playing out this summer.

Dr. Cortese certainly comes to the reform table with unsurpassed credentials. Mayo is universally acknowledged to be an industry leader in high quality, low cost health care — the kind of health care people would like to see available in every town in America. So when Dr. Cortese speaks, people listen, and rightfully so.

And what is Dr. Cortese saying? According to Ignatius, it’s no ringing endorsement of Obamacare. He is concerned that the legislation moving in Congress is too focused on new insurance coverage and not enough on getting better health care value for what is already being spent. He advocates focusing first on reform of the programs the government already runs — Medicare, Medicaid, the VA, military and federal employees' health care — to make them much more efficient than they are today. If the government paid for value instead of services, Dr. Cortese suggests, new more efficient and patient-focused integrated systems of care — other Mayos — would replace the fragmented and disorganized arrangements which are dominant in most communities today.

So far, so good. But how exactly will the government move from paying for “services” to buying value? Here, it appears both Ignatius and Dr. Cortese fall into the same trap as the Obama administration. They all seem to hold the view that if central planners were just given the chance, they could devise new and clever ways to pay for health care that will drive physicians and hospitals to act differently than they do today.

But why would we expect future efforts to be any more successful than the scores of governmental initiatives that have been launched in the past? The federal government has been running Medicare for nearly half a century, and for at least twenty-five years, there have been repeated initiatives to move the program in exactly the direction Dr. Cortese recommends. They have come up woefully short. Why? First, there’s politics. Buidling a network of high value providers of care means excluding some hospitals, physician groups, labs, and home health agencies from favored status. That is nearly impossible for Congress to sustain, especially when those left out complain that the data used to measure their performance is inaccurate or of poor quality. A few years ago, HHS tried to designate certain hospitals as “Centers of Excellence.” The effort died when the centers deemed not so excellent went to Congress and complained of an unfair designation process.

But even if political considerations could be overcome, the idea that the federal government has the capacity to construct a new payment system which will provide ongoing rewards for innovation and quality is foolhardy. The U.S. health system is too complex, diverse, and dynamic to fit neatly into the kinds of one-size-fits-all payment systems bureaucracies inevitably devise.

If we want our health- are system to be patient-focused and provide the highest quality care possible, we have to give patients the financial power to hold doctors and hospitals accountable. That can only happen in a market-based system where consumers have the ability to take their money elsewhere if they are dissatisfied with how they are being treated. Building such marketplace will require changing the tax treatment of employer-sponsored insurance to give workers more control over the federal tax subsidy for such insurance, and reform of Medicare and Medicaid to give the beneficiaries more control over their entitlement. The government can provide appropriate oversight of the marketplace, but, fundamentally, it needs to be driven by consumers selecting the kinds of insurance and medical care arrangements they find most satisfactory for the prices that are charged. In that context, is there any doubt that organizations which can deliver high value at a reasonable cost — more Mayos — will flourish?

posted by James C. Capretta | 7:34 pm
File As: Health Care

Where Things Stand

August 20, 2009 • President Obama has changed his health care sales pitch. Gone is "health-care reform" and "bending the cost-curve." Now he emphasizes "health insurance reform" and "basic consumer protections." But the legislation moving through Congress hasn't changed to match the new rhetoric. The bills under consideration would still lay the groundwork for a complete federal takeover of U.S. health care. This disconnect is the subject of a column I wrote for Kaiser Health News, available here.

posted by James C. Capretta | 2:40 pm
File As: Health Care

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