Monday, June 15, 2009

Don't extend an unsustainable plan

Robert Samuelson is harsh, but correct in his assessment of President Obama's argument that his plans for health care reform will actually reduce health costs.
It's hard to know whether President Obama's health-care "reform" is naive, hypocritical or simply dishonest. Probably all three. The president keeps saying it's imperative to control runaway health spending. He's right. The trouble is that what's being promoted as health-care "reform" almost certainly won't suppress spending and, quite probably, will do the opposite.
Samuelson points to a recent report from Obama's own Council of Economic Advisers projecting the disastrous growth of medical costs, government spending on health care, and the cost of private insurance if there is no change in today's payment structures.
The message in these dismal figures is that uncontrolled health spending is almost single-handedly determining national priorities. It's reducing discretionary income, raising taxes, widening budget deficits and squeezing other government programs. Worse, much medical spending is wasted, the CEA report says. It doesn't improve Americans' health; some care is unneeded or ineffective.
Despite Obama's rhetoric about reducing health care costs his plans to install a government option for everyone will actually massively increase government spending on health care. Real reform would tackle the root causes for our runaway health spending.
The central cause of runaway health spending is clear. Hospitals and doctors are paid mostly on a fee-for-service basis and reimbursed by insurance, either private or governmental. The open-ended payment system encourages doctors and hospitals to provide more services -- and patients to expect them. It also favors new medical technologies, which are made profitable by heavy use. Unfortunately, what pleases providers and patients individually hurts the nation as a whole.
Real reform and an actual plan to rein in spending would change this model instead of extending it to even more people.
The one certain consequence of expanding insurance coverage is that it would raise spending. When people have insurance, they use more health services. That's one reason Obama's campaign proposal was estimated to cost $1.2 trillion over a decade (the other reason is that the federal government would pick up some costs now paid by others). Indeed, the higher demand for health care might raise costs across the board, increasing both government spending and private premiums.

No doubt the health program that Congress fashions will counter this reality by including some provisions intended to cut costs ("bundled payments" to hospitals, "evidence-based guidelines," electronic recordkeeping). In the past, scattershot measures have barely affected health spending. What's needed is a fundamental remaking of the health-care sector -- a sweeping "restructuring" -- that would overhaul fee-for-service payment and reduce the fragmentation of care.
If Obama and the Democrats were so sure that they could save money by these methods, let's try them out on Medicare and Medicaid first before, in effect, extending Medicare to the entire population. If it indeed saves the sorts of money thta they're projecting it would then we'll have the ability to extend government control of health insurance. But that isn't what Obama is truly interested in doing.
The place to start would be costly Medicare, the nation's largest insurance program serving 45 million elderly and disabled. Of course, this would be unpopular, because it would disrupt delivery patterns and reimbursement practices. It's easier to pretend to be curbing health spending while expanding coverage and spending. Presidents have done that for decades, and it's why most health industries see "reform" as a good deal.
We're on a path that is unsustainable and all Obama plans to do is to widen the path so that we can go broke even faster.

We do have problems to be addressed in how we insure our health care in this nation, but extending a government plan that is already unsustainable is the exact opposite of how we should be going.