At the White House on Tuesday afternoon, President Obama met with Senate Democrats working on health care legislation. And while there were several items on the agenda, a primary purpose was to send a message about the importance of controlling costs.
It's a message he conveyed in his prepared remarks, which were made public, and then re-emphasized during the subsequent discussion session, which was held in private.
Speaking to the assembled group, Obama spent most of his time thanking the assembled lawmakers for their work--and urging them to move ahead in what he called a "make-or-break" period for reform. But the key passage of his speech came near the end:
I want to just make mention of something that I've talked to many of you privately about. I want to say this publicly. As we move forward on health care reform, it is not sufficient for us simply to add more people to Medicare or Medicaid to increase the rolls, to increase coverage in the absence of cost controls and reform. And let me repeat this principle: If we don't get control over costs, then it is going to be very difficult for us to expand coverage. These two things have to go hand in hand. Another way of putting it is we can't simply put more people into a broken system that doesn't work.
So we've got to reform the underlying system. And this means promoting best practices, not just the most expensive practices. And one of the things I'm going to be discussing with the health and the finance committees is how can we change incentive structures so that, for example, places like Mayo Clinic in Minnesota are able to provide some of the best health care services in the country at half or sometimes even less of the costs than some other areas where the quality is not as good. What we should be--and by the way, that's not just unique to Mayo. The Cleveland Clinic in Ohio, same thing: top-notch quality, lower costs.
This may sound like boilerplate. But there's a subtext worth noting.
In principle, virtually all Democrats agree coverage expansions and cost control should go hand-in-hand. In practice, controlling costs invites a lot political opposition. It means taking money out of somebody's pockets--insurers, hospitals, device makers, etc.
There's growing concern among some reform advocates--in the administration, in Congress, and in Democratic policy circles--that the emerging health care legislation won't push hard enough on costs. With these remarks, Obama was effectively saying, "push harder."
Of course, there was some deliberate stagecraft here. Political strategists, including those who work for Obama, believe that controlling costs appeals to middle class voters more than expanding coverage. Tuesday's events were, quite plainly, designed with that thinking in mind.
But Obama did one other thing to throw down a marker on cost control--something more subtle, perhaps, but also more concrete.
According to several sources, Obama during the discussion session went out of his way to mention a proposal, by Senator Jay Rockefeller, to beef up MedPAC. MedPAC is the Medicare Advisory Payment Commission, a quasi-independent board that advises Congress on what Medicare pay for treatments and other policy issues.
MedPAC has no formal power now. Rockefeller's proposal would change that, setting up MedPAC as independent but democraticaly accountable organization not unlike the Federal Reserve Board. During congressional testimony a few weeks ago, Obama Budget Director Peter Orszag called it "MedPAC on steroids."
You can read up on the idea here. For now, all you need to know is that it's got wide support among heatlh policy experts but is sure to draw fire from industry lobbyists and conservatives, who will call it an effort to ration care. It is, in other words, the kind of proposal you embrace only if you think controlling costs is worth a political fight.
Update: Ezra Klein has the goods on the administration's thinking, including an alternative version that may be even stronger than Rockefeller's.
--Jonathan Cohn