Tuesday
Mar102009
It's Expensive, Yes, But What is the Cost of Doing Nothing?
Tuesday, March 10, 2009 at 5:16PM
Coffee Brown, University of New Mexico, Talk Radio News Service
Dr. Peter Orszag, previously the Director of the Congressional Budget Office, currently the Director of the President's Office of Management and Budget, told the Senate Committee on Finance that the cost of doing nothing about healthcare reform would be fiscal crisis, decreased take-home pay, 46 million uninsured Americans, and an increasing burden on state governments which is already cutting into other services, such as increased tuition costs for college.
"Do you know of anyone in either party who wants to do nothing?" Sen. Chuck Grassley (R-Iowa) asked.
Orszag replied, "No, Sir. That's why I am confident that we can get healthcare reform passed this year."
Grassley said there was not yet any conflict between Republicans and Democrats about healthcare reform, but that that was partly because the president's budget, while "bold", was "not very detailed."
Still, $634 Billion is a lot of money.
Sen. Max Baucus (D - Mont.) said, "Would healthcare reform now lead to substantial savings?"
"Yes," answered Orzack.
"Should we accept short term deficit spending to achieve that?" asked Baucus.
Orzack replied, "The president's budget for healthcare reform is designed to be deficit neutral for the first 5-10 years, then we should begin to see savings. If we could cut one percent per year from medical cost growth, we could realize savings of 20 percent of GDP in 50 years. For forty years, medical costs have risen 2 to 2.5 percent faster than inflation."
The hearing, at which Orszag was the sole witness, turned from general costs to specific strategies.
Baucus asked, "Can we incentivize consumers to be more cost effective?"
"25 percent of beneficiaries use 85 percent of the cost. That's the group to target," Orszag replied.
"Would costs come down if everyone were covered? And how could we do that?" Baucus asked.
According to Orszag, we need to reduce consumer costs, reduce complexity, and encourage enrollment. We can encourage enrollment by subsidies, mandates, and automatic enrollment with an opt-out choice. Social norms need to change, so that people would be as shocked if you had no health insurance, as they now are if you don't buckle your seatbelt. the key to that is massive public awareness campaigns, he finished.
Grassley said he was concerned that Medicare Advantage might be cut too sharply under the new budget. Physicians might opt out of Medicare if reimbursement is too low.
Orszag said that Medicare Advantage was targeted because it paid substantially more than basic Medicare.
Expansion of the public sector would place new pressures on the private sector.
"Would a public plan undermine Obama's promise that people who prefer to can stay with their current plan? Would Obama support a plan that would 'crowd' 18 million people off private plans onto public?" Grassley wondered.
Sen. Maria Cantwell (D - Wash.) was also concerned about proposed cuts: "We've found medical homes, home care, and Medicare Advantage to be cost effective, but they face cuts under the new budget."
"Evidence strongly favors integrated care...Long term health care is in the budget...Competitive bidding should reflect local costs," Orszag replied.
He pointed out later, however, that the budget office had found that home care typically had much higher profit margins than other sectors of healthcare, and had been targeted for that reason.
Public funding means public accountability.
Orrin Hatch (R - Utah) said, "A Federal Reserve-style medical board would be a disaster, leave standards of care to the specialty boards. Keep these decisions in the private sector. We should not be be setting prices."
"Those problems are common to all the models. Both public and private systems must change," Orszag said.
Sen. Baucus closed the meeting by pointing out that time is of the essence, and the Senate must move quickly.
"We have our sleeves rolled up; we're ready to go," said Orszag.
Dr. Peter Orszag, previously the Director of the Congressional Budget Office, currently the Director of the President's Office of Management and Budget, told the Senate Committee on Finance that the cost of doing nothing about healthcare reform would be fiscal crisis, decreased take-home pay, 46 million uninsured Americans, and an increasing burden on state governments which is already cutting into other services, such as increased tuition costs for college.
"Do you know of anyone in either party who wants to do nothing?" Sen. Chuck Grassley (R-Iowa) asked.
Orszag replied, "No, Sir. That's why I am confident that we can get healthcare reform passed this year."
Grassley said there was not yet any conflict between Republicans and Democrats about healthcare reform, but that that was partly because the president's budget, while "bold", was "not very detailed."
Still, $634 Billion is a lot of money.
Sen. Max Baucus (D - Mont.) said, "Would healthcare reform now lead to substantial savings?"
"Yes," answered Orzack.
"Should we accept short term deficit spending to achieve that?" asked Baucus.
Orzack replied, "The president's budget for healthcare reform is designed to be deficit neutral for the first 5-10 years, then we should begin to see savings. If we could cut one percent per year from medical cost growth, we could realize savings of 20 percent of GDP in 50 years. For forty years, medical costs have risen 2 to 2.5 percent faster than inflation."
The hearing, at which Orszag was the sole witness, turned from general costs to specific strategies.
Baucus asked, "Can we incentivize consumers to be more cost effective?"
"25 percent of beneficiaries use 85 percent of the cost. That's the group to target," Orszag replied.
"Would costs come down if everyone were covered? And how could we do that?" Baucus asked.
According to Orszag, we need to reduce consumer costs, reduce complexity, and encourage enrollment. We can encourage enrollment by subsidies, mandates, and automatic enrollment with an opt-out choice. Social norms need to change, so that people would be as shocked if you had no health insurance, as they now are if you don't buckle your seatbelt. the key to that is massive public awareness campaigns, he finished.
Grassley said he was concerned that Medicare Advantage might be cut too sharply under the new budget. Physicians might opt out of Medicare if reimbursement is too low.
Orszag said that Medicare Advantage was targeted because it paid substantially more than basic Medicare.
Expansion of the public sector would place new pressures on the private sector.
"Would a public plan undermine Obama's promise that people who prefer to can stay with their current plan? Would Obama support a plan that would 'crowd' 18 million people off private plans onto public?" Grassley wondered.
Sen. Maria Cantwell (D - Wash.) was also concerned about proposed cuts: "We've found medical homes, home care, and Medicare Advantage to be cost effective, but they face cuts under the new budget."
"Evidence strongly favors integrated care...Long term health care is in the budget...Competitive bidding should reflect local costs," Orszag replied.
He pointed out later, however, that the budget office had found that home care typically had much higher profit margins than other sectors of healthcare, and had been targeted for that reason.
Public funding means public accountability.
Orrin Hatch (R - Utah) said, "A Federal Reserve-style medical board would be a disaster, leave standards of care to the specialty boards. Keep these decisions in the private sector. We should not be be setting prices."
"Those problems are common to all the models. Both public and private systems must change," Orszag said.
Sen. Baucus closed the meeting by pointing out that time is of the essence, and the Senate must move quickly.
"We have our sleeves rolled up; we're ready to go," said Orszag.
Massachusetts’ Health Care Reforms Could Provide Lessons On The National Level
Policy analysts are taking their cue from Massachusetts’ 2006 health care reforms. Fellows from the Cato Institute and the Heritage Foundation discussed the results of Massachusetts’ reforms Monday, contrasting the state's health care system with the possibility of health care reform on the national scale. All said there are lessons to be learned from the state of Massachusetts and certain problems that cannot be ignored.
Michael Tanner, senior fellow of the Cato Institute said, “Massachusetts’ biggest mistake was that they made universal coverage the loadstone of their reforms. That the whole idea of whether or not this was to be a successful reform was did they get a piece of paper into everybody’s hands that said they had health insurance. They neglected the all important issue of cost containment.”
Turner said Massachusetts could have pursued more consumer involvement and deregulated their health care system. Instead, he said they chose to go with a system that imposed government controls on the individuals, the insurers, and the providers.
Turner believes these are all issues the federal government should take into consideration and learn from Massachusetts’ mistakes.
Greg Scandlen, president and CEO at Consumers for Healthcare Choices asked, “If we reform all [U.S.] health care assistance the way Massachusetts was done, what’s going to happen with all these newly insured people coming in to see a doctor?”
Scandlen brought up the issue of accommodating such a large number of insured people. He said the rate of people going to the emergency room could rise if doctors have a difficult time providing for such large additions of insured patients.