From his interview with Fred Hiatt, in the Washington Post:
Hiatt: Okay. What in your mind are the most important things Congress could do to bend the [cost] curve in health care?
Obama: Well, you know, I had a meeting not just with [Congressional Budget Office Director Doug] Elmendorf, but also with a number of other health economists this week, and they confirmed what I had been hearing and reading about and studying over the last several months--there are a wide range of delivery system reforms that we can put in place that can make a difference.
We know that if the Mayo Clinic or Geisinger are doing things smarter for less money that there should be ways to incentivize other health systems, applying these models. So that's one set of major reforms. And what we think is the most powerful lever to achieve those reforms is this MedPAC idea that we provided a very detailed proposal to Congress on.
At this point, I am confident that both the House and the Senate bills will contain what we've been calling MedPAC on steroids, the idea that you continually present new ideas to change incentives, change the delivery system, understanding that because this is such a complex system we're not always going to get it exactly right the first time, and that there have to be a series of modifications over the course of a series of years, and we have to take that out of politics and make sure that an independent board of medical experts and health economists are providing packages that are continually improving the system. So I think there's general consensus that that is one of two very powerful levers to bend the cost curve.
Now, the second idea, which is the one that got more attention, even though Elmendorf, I think, has emphasized the benefits of a MedPAC board, as well, was the elimination of the tax exclusion [on employer-provided health insurance]. And I've been very clear on my position that I think to add additional costs to families right now when they're already seeing their premiums doubled is not the kind of health reform that I'd like to see, but I believe that there may be ways of getting at the same principle.
For example, you could conceivably set up an index of some sort that makes sure that health care inflation -- or to make sure that the exclusion only accommodates a certain amount of health care inflation -- as opposed to 8 percent or 9 percent, or what have you -- without burdening current plans, but over time assuming -- if we're assuming that health care inflation is going to continue to be a problem, that you could get at the problem in that way.
Hiatt: A kind of cap, but one that doesn't hurt anybody --
Hiatt: -- at the current level?
Obama: Exactly. You're also seeing, I think, some interesting discussions in the Senate Finance Committee about a variation that goes after the insurance companies, as opposed to directly taxing the benefits.
Now, this is something that I think economists find appealing partly because it's -- although it's a blunter instrument, it's more measurable than some of the delivery system changes -- although I actually think the delivery system changes are more long-lasting. And you could have a situation in which you cap the exclusion or eliminated the exclusion and, yes, that would drive health care inflation down, but it also could drive quality of health care down because you're not doing anything to change a perverse system in which we pay for more medical care as opposed to medical care that actually makes us healthier.
There are two newsworthy items here. First, Obama says he is "confident" that both the House and Senate bills will iinclude his ideas to create an independent board to set Medicare payment policy--the so-called "MedPAC on steroids" idea. It was clear after Tuesday's meeting with Blue Dog Democrats that House Energy and Commerce Chairman Henry Waxman was in favor of this idea, but this makes it sound like more of a done deal--and that it's a given the Senate bill will contain the same provision (although that's less surprising).
More important, though, Obama is giving his blessing to two variations on the exclusion cap. In one, a cap kicks in gradually, so that it exerts some downward pressure on medical costs over tie. In another, it's the insurance companies that are taxed. As far as I know, neither of these generates a huge amount of revenue, so it's not tremendously helpful when it comes to raising revenue. But the first and quite possibly the second do bend the cost curve over the long run. Or, at least, the Congressional Budget Office believes they do.