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What Obama Is Reading (And, Maybe, Thinking)

Both in and beyond Washington, people tend to be skeptical when the promoters of health care reform promise that it will reward efficiency and reduce the cost of care. In a piece that the president himself is said to have circulated in the West Wing, the Atlantic's Ron Brownstein explains why that reaction is wrong, at least with respect to the bill Senate Majority Leader Harry Reid has introduced. As Brownstein notes, Reid managed to preserve most of the cost-cutting efforts that were part of the Senate Finance Committee bill, even if he had to scale some of them back to soothe certain special interests. The tax on expensive health benefits plans isn't as big as it used to be, for example, but it's still there. Other elements, like incentives for physicians to form "accountable care organizations," remain virtually intact.

To be sure, these efforts still don't go as far as they could. As I write today, in my latest column for the Kaiser Health News, the bill could still impose much stiffer penalties on hospitals that have high rates of inpatient infection--something all hospitals should be able to avoid. But overall, the bill would introduce an enormous amount of change--and, quite likely, help restrain costs even if the Congressional Budget Office won't score such savings. As Brownstein explains, uncertainty in this case shouldn't translate into disbelief:

No one can say for certain that these initiatives will improve efficiency enough to slow the growth in health care spending. Some are only pilots; others would affect only a small portion of providers' revenue from Medicare. CBO typically evaluates them skeptically: it generally scores little or no savings from most of them. Former CBO director Robert Reischauer, who signed the November 17 letter, says that's not surprising. "CBO is there to score savings for which we have a high degree of confidence that they will materialize," says Reischauer, now president of the Urban Institute. "There are many promising approaches [in these reform ideas] but you...can't deposit them in the bank." In the long run, Reischauer says, it's likely "that maybe half of them, or a third of them, will prove to be successful. But that would be very important."

By the way, I think it's of more than passing significance we're hearing that Obama liked this article. The last time we heard that was about another article on making the health care system more efficient: Atul Gawande's now-famous New Yorker essay on McAllen, Texas, where the doctors and hospitals supply lots and lots of medical care but the patients don't seem any better off for it. This latest tidbit is one more signal from the White House that it considers cost control a priority--a message it has been sending privately, during negotiations with Congress and interest groups, from day one.