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Robert J. Samuelson on health cost control

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By Robert J. Samuelson
Monday, November 16, 2009

There is an air of absurdity to what is mistakenly called "health-care reform." Everyone knows that the United States faces massive governmental budget deficits as far as calculators can project, driven heavily by an aging population and uncontrolled health costs. As we recover slowly from a devastating recession, it's widely agreed that, though deficits should not be cut abruptly (lest the economy resume its slump), a prudent society would embark on long-term policies to control health costs, reduce government spending and curb massive future deficits. The administration estimates these at $9 trillion from 2010 to 2019. The president and all his top economic advisers proclaim the same cautionary message.

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So what do they do? Just the opposite. Their far-reaching overhaul of the health-care system -- which Congress is halfway toward enacting -- would almost certainly make matters worse. It would create new, open-ended medical entitlements that threaten higher deficits and would do little to suppress surging health costs. The disconnect between what President Obama says and what he's doing is so glaring that most people could not abide it. The president, his advisers and allies have no trouble. But reconciling blatantly contradictory objectives requires them to engage in willful self-deception, public dishonesty, or both.

The campaign to pass Obama's health-care plan has assumed a false, though understandable, cloak of moral superiority. It's understandable because almost everyone thinks that people in need of essential medical care should get it; ideally, everyone would have health insurance. The pursuit of these worthy goals can easily be projected as a high-minded exercise for the public good.

It's false for two reasons. First, the country has other goals -- including preventing financial crises and minimizing the crushing effects of high deficits or taxes on the economy and younger Americans -- that "health-care reform" would jeopardize. And second, the benefits of "reform" are exaggerated. Sure, many Americans would feel less fearful about losing insurance; but there are cheaper ways to limit insecurity. Meanwhile, improvements in health for today's uninsured would be modest. They already receive substantial medical care. Insurance would help some individuals enormously, but studies find that, on average, gains are moderate. Despite using more health services, people don't automatically become healthier.

The pretense of moral superiority further erodes before all the expedient deceptions used to sell Obama's health-care agenda. The president says that he won't sign legislation that adds to the deficit. One way to accomplish this is to put costs outside the legislation. So: Doctors have long complained that their Medicare reimbursements are too low; the fix for replacing the present formula would cost $210 billion over a decade, estimates the Congressional Budget Office. That cost was originally in the "health reform" legislation. Now, it's been moved to another bill but, because there's no means to pay for it (higher taxes or spending cuts), deficits would increase.

Another way to disguise the costs is to count savings that, though they exist on paper, will probably never be realized in practice. So: The House bill is credited with reductions in Medicare reimbursements for hospitals and other providers of $228 billion over a decade. But Congress has often prescribed reimbursement cuts that, under pressure from squeezed providers, it has later rescinded. Claims of "fiscal responsibility" for the health-care proposals reflect "assumptions that are totally unrealistic based on past history," says David Walker, former U.S. comptroller general and now head of the Peter G. Peterson Foundation.

Equally misleading, Obama's top economic advisers assert that the present proposals would slow the growth of overall national health spending. Outside studies disagree. Three studies (two by the consulting firm the Lewin Group for the Peterson Foundation and one by the Centers for Medicare & Medicaid Services, a federal agency) conclude that various congressional plans would increase national health spending compared with the effect of no legislation. The studies variously estimate that the extra spending, over the next decade, would be $750 billion, $525 billion and $114 billion. The reasoning: Greater use of the health-care system by the newly insured would overwhelm cost-saving measures (bundled payments, comparative effectiveness research, tort reform), which are either weak or experimental.

Though these estimates could prove wrong, they are more plausible than the administration's self-serving claims. Its health-care plan is not "comprehensive," as Obama and the New York Times (in its news columns) assert, because it slights cost control. Obama chose to emphasize the politically appealing path of expanding benefits rather than first attending to the harder and more urgent task of controlling spending. If new spending commitments worsen some future budget or financial crisis, Obama's proposal certainly won't qualify as "reform," as the president and The Post (also in its news columns) call it. It's more like malpractice: a self-inflicted wound.


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