Missing the Boat on Cost Containment

As I have said repeatedly — and as my colleague, Christy Romer, is discussing today at the Center for American Progress — reducing health care cost growth is the key to our fiscal future. To anyone who has studied our fiscal facts, this central conclusion seems indisputable.
And yet — perhaps because of the long-standing (and sometimes warranted) skepticism toward government, the fiscal irresponsibility of recent years, or just the generalized jaundiced view that journalists often like to project — every few days, there seems to be another commentator who fails to believe that we can pass deficit-neutral health insurance reform that also puts us on a path to reduce the deficit over the long term.    
Fred Hiatt in today’s Washington Post is the latest of these naysayers, writing in his column that the two biggest steps that can be taken to reduce the rate of health care cost growth — changes in health care’s tax treatment and an independent Medicare commission — are missing.  I agree with Hiatt on the potential substantial benefits in terms of cost containment from these two changes. But a note to readers who have not read their Washington Post the past few weeks: the Senate Finance Committee bill includes both of these measures.
Indeed, that committee’s final mark creates an excise tax on insurance companies offering high-premium plans — which would create a strong incentive for more efficient plans that would help reduce the growth of premiums. And it establishes a Medicare commission — which would develop and submit proposals to Congress aimed at extending the solvency of Medicare, slowing Medicare cost growth, and improving the quality of care delivered to Medicare beneficiaries.
If the concern is that these two provisions would not survive the rest of the congressional process, then say that — rather than suggesting that they aren’t already reflected in legislation.
Moreover, as I blogged a couple of weeks ago, the Senate Finance Committee’s bill is not the only measure that includes important cost constraining provisions. The other bills in the House also include provisions that experts from across the spectrum agree will help transform health care so that it delivers higher quality care and constrains cost growth.  From penalties for hospitals with high, preventable 30-day readmission rates to encouraging the establishment of accountable care organizations and bundled payments for high-cost, chronic conditions, these bills undertake many of the reforms that hold the most promise for controlling costs and boosting quality.
Hiatt writes that "no one knows for sure how to control costs."  True, we have never transformed the health sector before, and it is therefore difficult to quantify precisely how these steps will work together to promote quality and reduce cost growth.   But it is wrong to conclude that these steps — even the ones beyond the excise tax on high-cost plans and the Medicare commission — are merely hypothetical pie in the sky. They represent what independent analysts and bipartisan groups such as the Engelberg Center at the Brookings Institution all say hold the most promise. In addition, recognizing that we need flexibility to adjust measures in a dynamic health care system, many of the bills start programs as pilot projects that can be quickly scaled up as results come in, and a Medicare commission too will be able to respond to changes as the health system evolves.   
As the contours of the Senate and House bills are still being hammered out, we can’t lose sight of how far we’ve come — and how close we are to reform that could help move the health system in a healthier direction. As the President has repeatedly emphasized: Doing nothing is the surest way to fiscal failure, while reform is the best path for fiscal responsibility.

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