The World Around You

Anytime you can get budget analysts from the Urban Institute, the Progressive Policy Institute, the Brooking Institution, the American Enterprise Institute, the Heritage Foundation and the Concord Coalition to agree on anything, I’m going to listen.  In a joint statement a group of budget analysts who call themselves “The Fiscal Seminar” voice their support for the president’s goal of reducing long-term healthcare costs, but are concerned that the Senate bill, while coming closest to meeting the goal of the proposals so far, does not go far enough.

Now, the means of going further in cutting costs is where the group parts ways, but they offer what they call a “credible menu of solutions” to choose from:

More thorough reform of the open-ended tax treatment of employer-sponsored health plans. This subsidy creates strong incentives for higher health care spending, and perversely bestows its largest benefits on high earners with the costliest health plans. To really bend the cost curve, Congress must go beyond half-measures intended simply to raise revenue. Instead it should sharply limit the tax exemption or shift it toward a uniform credit.

A stronger Medicare Commission that delivers both structural reform and immediate savings. Medicare’s costs have risen steadily even though its payment rates are well below those of private insurers. Congress should empower the Commission to examine all aspects of Medicare – including its dominant, fee-for-service design – not just prices and payments. And it should take up on an expedited basis the Commission’s recommendations for savings that would be used both to defray part of the cost of expanding health coverage and to reduce the program’s long-term liabilities.

Powerful incentives to promote more efficient and cost-effective practices. Health reform should encourage public and private insurers to replace fee-for-service payment systems with innovative methods – including performance-based payments, bundled payments, and capitated payments – that promote more efficient use of resources. In addition, new approaches to health care delivery, such as accountable care organizations, should be developed as a way of improving the efficiency and quality of care provided to patients. Research into the comparative effectiveness of treatments also could help link payment systems to performance. Health IT bonuses for “meaningful use” should be linked to achieving better results as part of systems of quality measurement, quality improvement and care coordination. 

A federal health care budget. We believe substantive reforms in America’s big health programs are more likely to happen if they are buttressed by changes in the federal budget process. Last year, our group proposed that Congress establish an explicit budget for health care programs, and entitlements in general. Like budget caps and PAYGO rules, a health budget would be an action-forcing mechanism for moving toward serious, structural reforms of the nation’s entitlement programs.

Medical malpractice reform. None of the bills in Congress confronts the urgent need for a more reliable and less costly system of medical justice. Yet CBO recently estimated that enacting a “typical” package of tort reform proposals would reduce U.S. health care spending by roughly $54 billion over 10 years.

I applaud bipartisan efforts like this one, because we see far too few of them both inside and outside government.  As tight as the margins are in the Senate, I don’t know if adding any of these options would change the vote balance in a way that would put the bill in further jeopardy or not.  My belief is that these kinds of cost cutting measures will have to happen, whether or not they happen with this particular bill, and now is the time for that to be made plain.

I particularly like the group’s suggestion of developing an overarching budget for healthcare and entitlement programs in general.  That is a mechanism that is badly needed and I hope to see a serious push from Congress to enact such a proposal.

A huge thank you to this group of analysts for their work in trying to find common ground on such an important issue.  Keep up the good work.

Your comments are welcome below.