Harold Pollack is the Helen Ross Professor of Social Service Administration at the University of Chicago and a Special Correspondent for The Treatment.
More in sorrow than in anger, Washington Times editorialists are concerned that President Obama doesn't do enough to control costs. The Times particularly chides the President for delaying the proposed "Cadillac tax" on costly insurance plans.
One original cost-control measure was to impose a tax on high-quality insurance, dubbed Cadillac plans…. The idea was that this would free up resources and possibly even force medical providers to cut prices to attract more customers. But after striking a deal with unions, Mr. Obama decided to delay the tax for eight years - until he's out of office.
I and most health economists favor this tax, but as Ezra Klein has noted, it's odd to blame the President for its delayed implementation when the administration has been a main supporter of this unpopular provision. An entity called "Congress" that has something to say in all this.
There is another problem, too. Having slammed the President for pandering to the unions, Times polemicists faced an obvious dilemma. The conservative base hates the Obama plan. Yet many of the same people benefit greatly from Medicare, including some ill-advised programs and policies that provide genuine benefit but that simply cost too much. Moreover, Medicare provides a political opening conservatives wish to exploit. In finessing this issue in an ostensibly tough-minded call for cost control, the Times chooses the path of cognitive dissonance:
Mrs. Sebelius says the administration's proposal will control costs by ensuring "less spending in the Medicare system for things that we know don't add to people's health outcomes but were oversubsidizing insurance companies." Translated into plain English, the HHS secretary is talking about gutting the Medicare Advantage program, which allows beneficiaries an option to receive care through private health insurance plans. Seniors have voted with their feet in droves because they're convinced they get better coverage outside of the regular Medicare program.
To decrypt: the Time's definition of "gutting the Medicare Advantage program" is to pay private plans something akin to patients' expected costs of care. Medicare Advantage plans receive tens of billions of dollars in overpayments that exceed what Medicare would otherwise pay to meet consumers' needs. To my knowledge every Republican or Democratic policy wonk agrees that we are "oversubsidizing insurance companies" through this program. The policy specifics very aren't complicated, though the politics is.
Some of these overpayments are passed onto consumers through additional benefits. For reasons conservatives might explain, the immediate beneficiaries rather like this arrangement. I don’t begrudge that, but these overpayments are not a cost-effective or disciplined use of Medicare resources. In a different political universe, if we were passing bipartisan health reform, reducing these payments would be an obvious and prominent element of a compromise bill. When even arch-conservative newspapers can't support such an obvious fix, you get a sense of what President Obama is up against.
The Times goes on to write:
Medicare and Medicaid reimburse hospitals and doctors at rates that don't cover their costs. Even lower reimbursement rates will mean private insurers will have to offset those losses, or hospitals and doctors will start losing money, and many will go out of business.
Cuts in Medicare pass the buck to private insurance companies, which pass the costs to private customers who pay higher premiums to cover the Medicare shortfall. As costs rise, more people will opt out of buying insurance. This dynamic does not help lower costs and undermines the ostensible goal of getting more people covered by health insurance.
Having thrown down this sweeping opposition to both reasonable and unreasonable Medicare cost control measures, the Times then chides the President for his lack of seriousness in meeting the goal of controlling costs.
Administration officials brazenly claim that they have accomplished this goal. On "Meet the Press" on Sunday, Health and Human Services Secretary Kathleen Sebelius actually professed, "Every cost-cutting idea that every health economist has brought to the table is in this bill."
Where could she have found the chutzpah to profess such a thing? Maybe she pondered the letter released yesterday by 40 of the nation's leading health economists and public finance experts. It says:
The health care reforms passed by the House and Senate – with recent modifications proposed by President Obama – include serious measures that will slow the growth of health care spending. Putting the brakes on health care spending will take multiple measures, and we must start now. Democratic and Republican experts have proposed many different approaches to “bending the cost curve.” The President's proposal incorporates a long list of measures that will control rising costs and reinforce each other
The letter notes the long list of measures included in the President's proposal: establishing insurance exchanges to reduce administrative costs, increasing investments in prevention and information technology, establishing an Independent Medicare Advisory Board, curbing Medicare overpayments, and more.
Signers include three Nobel Prize winners, including Kenneth Arrow, who founded the modern field of health economics. Randall Ellis, President-Elect of the American Society of Health Economists, is on there. Some of the nation's leading behavioral economists--Daniel Kahneman, Richard Thaler, and Richard Zeckhauser—signed the letter. Henry Aaron, Peter Diamond, and Alice Rivlin--three of the nation's leading experts on public finance—signed, too. Leading health services researchers such as Alan Garber, Harold Luft, and Will Manning are there, too. David Cutler, Jon Gruber, and Harold Pollack are also on there, along with many others.
Many of these signers are not especially liberal. Many signed because they recognized the value of the President's proposal. I suspect that others some signed because they recognize that the current bill is the last, best hope for sensible incremental reform. They also recognized that defeat of this bill would be a huge political setback to any effort to control costs.
A personal note:
I want to salute two special people, one of whom is engaged in a brave project battling the ravages of a serious illness, one of whom passed away last week.
Tony Judt is familiar to many TNR readers. He has appeared often in these pages. He has tangled often with editors here over issues pertaining to Israel. He is the author of the captivating history of modern Europe, Postwar.
I will leave these global matters to those who know something about them. My interest is more personal. As you may know, Professor Judt is battling ALS (amyotrophic lateral sclerosis), better-known as Lou Gehrig's disease. He describes his predicament thusly:
With extraordinary effort I can move my right hand a little and can adduct my left arm some six inches across my chest. My legs, although they will lock when upright long enough to allow a nurse to transfer me from one chair to another, cannot bear my weight and only one of them has any autonomous movement left in it. Thus when legs or arms are set in a given position, there they remain until someone moves them for me. The same is true of my torso, with the result that backache from inertia and pressure is a chronic irritation. Having no use of my arms, I cannot scratch an itch, adjust my spectacles, remove food particles from my teeth, or anything else that—as a moment's reflection will confirm—we all do dozens of times a day. To say the least, I am utterly and completely dependent upon the kindness of strangers (and anyone else).
His mental powers remain acute, despite his infirmity. He is writing an elegant memoir, of sorts, published by installment in the New York Review. In his latest piece, he writes:
I prefer the edge: the place where countries, communities, allegiances, affinities, and roots bump uncomfortably up against one another—where cosmopolitanism is not so much an identity as the normal condition of life.
Judt's writings from this edge remind me of Orwell and a very few others. His unsentimental intelligence and humanity at this difficult life moment deserves notice. I await the next installment.
On other fronts, we in academia are blessed to cross paths with many gifted and giving people. I'm increasingly noticing how many of my students combine the energy of youth with substantial accomplishments in a way I didn't often see when I was in school. Kamilah Neighbors was one such person. She was one of my health policy students nearly ten years ago. She went on to do important work for families at Children's Memorial Hospital. She was pursuing her doctorate at the University of Michigan when she passed away last week. She is deeply missed.