Fixing health care won’t be so simple as Obama wants


If you listened to President Obama addressing the American Medical Association last week, you might think that the primary purpose of health-care reform is, as he said, “to control the spiraling cost of health care in America.”

Obama spoke passionately about the damage that rising costs cause to families, businesses, and the economy. He insisted that if Congress passes legislation that fails to change how America practices and pays for care, it will “not earn the title of reform.” Not until the sixth page of an 8 1/2-page speech did he come to the subject of extending coverage to all Americans.

Yet extending coverage is overwhelmingly the focus of congressional attention so far, and it is quite likely that any legislation that emerges will create a hugely expensive health-care entitlement with no guarantee of the upward cost spiral being slowed.

Why the disconnect? There are both substantive and political reasons.

Broadly speaking, we know how to insure most Americans: Order them to get insurance, help pay for those who can’t afford it, and tell insurance companies to enroll anyone who asks.

When it comes to slowing the cost spiral, we have some promising but tenuous ideas. It will take years to see which ones bear fruit, and even then, many will require sustained, politically unpleasant pressure on influential industries and interest groups.

As Douglas Elmendorf, the director of the politically neutral Congressional Budget Office, wrote last week, “many of the specific changes that might ultimately prove most important cannot be foreseen today and could be developed only over time through experimentation and learning.”

Obama said, for example, that we should “invest more in preventive care so that we can avoid illness and disease in the first place.” But the Congressional Budget Office cautions that preventive care is “less broadly effective at reducing health-care spending than might be expected.” Many tests or procedures, applied across a population, end up costing more than is saved for the few who avoid illness.

Obama wants to encourage more medical students to become primary-care physicians. But the Congressional Budget Office reminds that only simultaneously “reducing the number of specialists” will save money, and that is a long-term and politically dicey proposition.

Even on universal coverage, which Obama said would be “in all of our economic interests … further reducing costs for everyone,” the Congressional Budget Office insists on spoiling the party: “By themselves, insurance expansions would also cause national spending on health care to increase, in part because insured people generally receive somewhat more medical care than do uninsured people.”

Nonetheless, congressional Democrats and the most involved interest groups behind them are far more passionate about universal coverage than about controlling costs. Thus Obama’s political calculation: Push for health-care reform that delivers universal coverage — and insist on as many levers to control costs going forward as possible. He would reduce the deficit risk by insisting that the reform is “paid for,” in higher taxes or reduced spending, over the next 10 years.

You may believe that universal coverage is such a moral imperative that Obama’s calculation is more than reasonable. But, given a national debt already growing out of control and the risks that health-care costs won’t be controlled, you may worry about taking on a large new burden ($1.6 trillion over 10 years, perhaps). If so, here are a few alternative

• Insist that the new entitlement is really paid for. No gimmicks; no costs that explode in the second decade, running ahead of revenue that grows more slowly; no paper promises to cut costs years from now, if necessary, that will never get fulfilled.

• Insist that it be paid for only with health-related savings and revenue. Obama proposes to finance a chunk of the new entitlement by raising general taxes on the rich, limiting their deductions. That is revenue that won’t be available for other deficit reduction.

• Mindful of the next generation, get a handle on exploding health-care costs and only then take on additional government burdens.

Good luck with that one.

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