Some experts worry that cost controls in health-care reform are too cautious

White House budget director Peter Orszag said he is optimistic about the efforts to reduce health-care spending, calling them "realistic."
White House budget director Peter Orszag said he is optimistic about the efforts to reduce health-care spending, calling them "realistic." (Charles Dharapak/associated Press)
By Ceci Connolly
Washington Post Staff Writer
Wednesday, November 4, 2009

Democrats in Congress are embracing the spirit of President Obama's call to slow the runaway rise of health-care costs but are shying away from some of the most aggressive techniques for achieving that.

Instead of revolutionizing how care is delivered and paid for, experts say, the legislation being shaped takes a cautious approach to reining in costs.

"The bills are directionally correct, but they're not going far enough," said George Halvorson, chairman and chief executive of Kaiser Permanente and the author of "Health Care Will Not Reform Itself."

In years past, policymakers tried taming health-care growth with price controls -- in government reimbursements and through managed care. The Obama administration has advocated a third way: moving away from fee-for-service payments, which reward providers for doing more procedures, to a coordinated system that pays doctors and hospitals for doing better.

Under that vision, providers would be given a few years to move to performance-based medicine, in which fees and results are published, money is directed to evidence-based therapies, and harmful errors such as preventable infections are reduced. In short, the goal is to save money by modernizing and improving.

Now, as the debate reaches a critical juncture, many are worried that the president's ambitious hopes to constrain costs could result in tepid half-measures on Capitol Hill. Among the concerns:

-- A Senate plan to tax high-priced insurance policies saves far less money -- and is less likely to change medical consumption -- than eliminating the tax exemption for employer-sponsored coverage.

-- Proposals on comparative-effectiveness research and a new Medicare cost-cutting commission have been watered down.

-- An array of Medicare pilot projects aimed at paying doctors and hospitals for quality rather than quantity would take years to be implemented nationally -- if they ever were.

-- None of the bills addresses medical liability, even though the Congressional Budget Office has concluded that tort reform could save $54 billion over the next decade.

'Tried and true'

Overall, Democratic lawmakers have turned to "tried and true" strategies for reducing spending that merely ratchet down payments rather than fundamentally changing how the health-care system operates, said Drew Altman, head of the nonpartisan Kaiser Family Foundation.

More than $110 billion worth of Medicare "savings," for example, simply comes from a cut in reimbursements to insurers that run the private Medicare Advantage program, and much of the $80 billion extracted from drug companies is in the form of higher Medicaid rebates to the government. Both proposals would reduce costs but have little to do with fundamentally refashioning health care.

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