Cutting costs

CUTTING COSTS…. Arguably the most frequently cited concern raised by opponents of health care reform is that the Democratic proposal doesn’t do enough to cut costs. These critics rarely have much to offer in the way of substantive alternatives, but it’s nevertheless cited — politicians and pundits — as a key problem.

The truth, of course, is that this is the most difficult aspect of shaping the policy. In some instances, such as the public option, there’s a reasonable expectation that the measure would cut costs, but is nevertheless rejected for ideological reasons. In other instances, there are credible ideas that may or may not work as intended.

But the ideas are clearly there. President Obama reminded Americans last week, “We have now incorporated most of the serious ideas from across the political spectrum about how to contain the rising cost of health care.” Is that true? Actually, it is. Harvard economist David Cutler had an important op-ed in the Wall Street Journal yesterday, insisting that the “Obama plan will cut costs.”

Many people are worried that the health-care reform proposed by President Obama and congressional Democrats will fail to bend the “cost curve.” A number of commentators are urging no votes because of this, and Republicans have asked the president to start health reform over, focusing squarely on the issue of cost reduction.

These calls overlook the actual legislation. Over the past year of debate, 10 broad ideas have been offered for bending the health-care cost curve. The Democrats’ proposed legislation incorporates virtually every one of them.

Of the 10, the Democratic plan fully embraces six of the main ideas, partially incorporates three, and ignores one. That one? The public option, which was scuttled due to conservative opposition.

Cutler concluded, “What is on the table is the most significant action on medical spending ever proposed in the United States. Should we really walk away from that?”

He concedes that that no one can say with confidence “precisely” which ideas will be effective. That’s certainly true. But what Democratic leaders have done is shape a proposal that includes the best ideas — some of which may work better than others. If implemented, we’d have a chance to evaluate what’s most effective, and adjust accordingly.

This has been apparent for quite some time. Jonathan Gruber, a leading health economist at MIT who is consulted by politicians in both parties, explained in November, “[I]t’s really hard to figure out how to bend the cost curve, but I can’t think of a thing to try that they didn’t try. They really make the best effort anyone has ever made. Everything is in here….I can’t think of anything I’d do that they are not doing in the bill. You couldn’t have done better than they are doing.”

Around that time, Ezra noted, “If this piece of the bill was passed on its own, it would be the most important cost control bill ever considered by the United States Congress.” Kevin added that the reform package is the most “ambitious” attempt to “rein in both Medicare costs, and healthcare costs generally, than anything ever done. Nothing else even comes close.” He added that the Senate bill may be the “best prospects for healthcare cost control we’ve ever seen.”

I realize that some of the opponents of reform are just looking for an excuse, and citing cost concerns is just a rationalization. But for those who are serious about getting health costs under control, passing health care reform should be a no-brainer.