Monday, May 11, 2009

Health Care Reform – Major Players Pledge to Reduce Costs, While the “Game Changing” Public Option Lurks

Today the Wall Street Journal reported (link) that “groups representing hospitals, health-insurance companies, doctors, drug makers, medical-device makers and labor” planned to pledge today in a letter to President Obama “that they will work to reduce cost increases in the nation's health-care system by $2 trillion over the next decade,” or, in other words, “to help reduce the growth of national health-care spending by 1.5 percentage points in each of the next 10 years.” The methods employed to achieve this result would include “simplifying administrative costs, making hospitals more efficient, reducing hospitalizations, managing chronic illnesses more effectively and improving health-care information technology.”

I think this is a fine attempt on the part of these stakeholders to demonstrate commitment to be part of the solution. However, insurers and providers have been trying all these approaches for years to control medical costs, with some success. This announcement seems to amount to a pledge to try harder. After all, there is no magic that will stop the steady increase in medical care spending. The main drivers are an aging population and continual, costly dramatic improvements in valuable medical diagnostic and therapeutic technologies, with a modicum of fraud, waste, the liability-driven excessive testing that is “defensive” medicine, and high malpractice premiums thrown in. The "solution" is multi-focal and incremental.

Grace-Marie Turner, president of the health policy-focused Galen Institute (link), wrote today (link) at National Review Online’s The Corner in a post titled Where’s the Beef?:

[T]he tools they said they would be using aren’t new, and the Congressional Budget Office has said they will save little if any money: administrative simplification, coordinated care, evidence-based medicine, and use of health-information technology, etc. So, where’s the beef? No one at the White House event or in a subsequent briefing with reporters by [HHS] Sec. Kathleen Sebelius was able to offer details.
Meanwhile, a Wall Street Journal editorial today (link) addressed the “public plan” option, which would be the real “game changer” in any reform of our health care system.
This new [proposed] entitlement -- like Medicare but open to all ages and all incomes -- would quickly crowd out private insurance as people gravitated to heavily subsidized policies, eventually leading to a single-payer system…. The truth is Democrats know that any policy guardrails built this year can be dismantled once the basic public option architecture is in place. The White House strategy is to dilute it just enough to win over credulous Republicans. That is what has always happened with government health programs….
I can’t think of a better example of a political “Trojan Horse” tactic than this Democrat effort to create a so-called “public option” health care benefit plan that would compete with private carriers. Democrats know that effecting full national health care is a bridge too far right now, so their tactic is to introduce now a seemingly salutary plan that in time will accomplish the same thing.

This Democrat plan illustrates their attraction toward achieving the shared miseries of socialism rather than improving upon the somewhat unequal sharing of health care prosperity that we now have with smart and well-designed reforms.

John M Greco

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