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Flawed Underpinnings

This from Greg Scanden:

Flawed Underpinnings

The Wall Street Journal took a close look at some of the underpinnings of ObamaCare and found them wanting. It writes, “ObamaCare’s core promise – better quality care for everyone at lower costs – is being exposed as an illusion as it degenerates into the raw exercise of political power.”

It says the whole premise is based on Peter Orszag’s notion that “as much as 30% of health spending is waste that doesn’t affect outcomes. He argued the country could save $700 billion a year without harming quality-more than enough to pay for universal coverage.” This free lunch sounded swell, except now, “the new cost-control apologists concede that there isn’t any actual plan for controlling costs.” Peter Orszag is now admitting, “that ‘we don’t know enough’ to produce results right away, the key is to encourage ‘continuous improvement’ through pilot programs and demonstration projects. Cost containment will actually take years to decades, Mr. Orszag conceded.”

And, the other enabler, “Atul Gawande, likewise owned up to the fact that there is ‘no master plan for dealing with the problem of soaring medical costs,’ only a battery of small scale experiments.”

The Journal remembers back in 1983, it was promised that using “Diagnostic Related Groups (DRGs)” for Medicare hospital payment would help control costs. How’s that worked out? “Nominal Medicare spending has risen on average at an annual rate of 9.6% since 1980. Over the same period total Medicare spending has grown 13-fold, climbing from 1.2% of the economy to 3.2% today.”

The article further quotes Mr. Orszag as saying, “Everything that has been put forward in health policy discussions for a decade is in this bill. What specifically else would you do?” The paper responds better than I could have. It says –

Hmmm. One liberal sage noted in a 2007 paper that “four decades of empirical research” have shown that insulating people through third-party insurance coverage “from the full cost of health care has been responsible for anywhere from 10% to 50% of the large increase in health expenditures.” Ultimately, he concluded, increasing cost-sharing would give individuals a direct stake in more prudent purchasing, as opposed to today’s invisible health dollars that vanish as more expensive premiums, foregone wages and higher taxes.

Those are the words of Jason Furman, now the White House deputy economic director who seems to have been put into witness protection. Every serious health economist in the country recommends reforming the tax exclusion for employer-sponsored insurance, perhaps by converting it to a deduction or credit. Cost control will never stick unless it is extricated from politics and transferred to individuals to make their own trade-offs.


Wall Street Journal


December 17, 2009 - Posted by | Federal Government, healthcare | , , ,

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