The Courage and Cunning of the Administration’s Health Care Plans — and their Shortcomings
The administration’s new health care initiative has the distinctive “yes, but†quality of the Obama banking and housing plans: The focus is correct — here, address sharply-rising health care costs before moving on to guarantee universal coverage — even as the details fall and the proposed execution remains up-in-the-air.
Let’s start by recognizing the political courage and cunning involved in the way the White House is framing the issue. Facing growing unease about forecasts of years of stupendously and dangerously large budget deficits, the President has faced up to the prime driver of those deficits: Two programs vital to his core support — Medicare for retirees and Medicaid for lower-income Americans. He did so certainly knowing full well that most liberal parts of his political base see universal insurance as the number one priority.
The cunning lies not in some naïve delusion that measures to slow the pace of health care cost increases from a gallop to a brisk trot will attract bipartisan support. It is sadly evident that the Republican strategy for the party’s short-term revival pivots on the President’s failure, and GOP leaders will not countenance support for administration measures whose passage voters will greet as a notable achievement.
Rather, the President’s cunning lies in his apparent, long-term strategic view. First, he appears to know that the economic recovery on which his larger agenda probably depends could hit the rocks in a year or two, unless he can bring down the long stream of huge, expected deficits. His only option here is to slow health care cost increases, starting with the public programs whose costs he can influence most directly. He also seems aware of the danger from certain forces that could make his presidency look a lot like George W. Bush’s. For example, he may recognize, as we have argued for several years, that slowing cost increases for employer-provided health care coverage is vital to relieving financial pressures on businesses which, under Bush, drove down wages even as productivity rose. Unless President Obama and his team can figure out how to contain those costs, the end of his second term, like Mr. Bush’s, could also see the insolvency of a vital American institution — in this case, Medicare and Medicaid. And like Bear Stearns and Lehman Brothers, Medicare’s insolvency would trigger cascading effects across the country and the economy, and about which he could do little in the time he would have left.
The best way to avoid such a string of setbacks and an ignominious end is to recognize and address the problem — so unlike Bush — before it becomes a crisis.
The potential social and political benefits go far beyond avoiding Bush’s sorry fate. Most important, any realistic prospect for financing universal coverage depends on getting those costs under control. Otherwise, President Obama will likely find his administration caught in the same vise that has immobilized health-care reformers for two decades, pressed between the social imperative to cover everyone and understandable resistance to paying for it from the majority of voters who are already covered. On the current path of medical cost increases, the taxpayers’ tab to pay for universal coverage would rise by 5 to 7 percent every year, with damaging effects for other programs of the President which would have to be pared back to protect the new achievement.
Then comes the sticky matter of actually slowing down those increases. Earlier this week, the White House presented a roster of medical and insurance organizations pledged together to support $2 trillion in cost reductions over the next decade. The main strategy is to attack “overuse and underuse†of health care. But it doesn’t include many details about how to do it. The administration’s program to computerize health care records over the next five years makes sense here, to help avoid wasteful or needlessly dangerous treatments. The hurdles will be very high, however, to actually putting in place a workable system covering tens of thousands of hospitals, clinics and doctors’ practices across the country.
The stimulus also includes $1 billion for prevention and wellness programs to improve diets, encourage exercise, reduce smoking and drinking, and detect cancers and other conditions early. Various studies have shown that some community-based intervention programs in these areas achieve very high returns, especially those aimed at young people. An analysis of several community-based programs to promote physical exercise, better nutrition and stop smoking, for example, found long-term reductions in diabetes, high blood pressure, heart and kidney disease, with a financial payoff of $5.60 in savings for every $1 invested. Large, long-term savings also were reported in a Michigan program that provides continuing education to prevent, recognize and treat athletic injuries, as well as a number of local programs that counsel low-income, first-time mothers on how best to care for their infants. But there also are many other programs that save little or nothing; and it will be very hard for Washington to identify and responsibly scale up those that work best.
The other large, promising approach, touted for several years by this writer and, of late, by OMB Director Peter Orszag, involves developing and applying data about what medical treatments work best, or work as well at less cost. The Dartmouth Atlas study of 2008, for example, found that the costs of treating older people for nine serious conditions, with the same outcomes in each group across five leading medical centers, varied by 30 percent to 45 percent based on where it was done. We could develop much more information in this area, identify those “best practices,†and mandate their use by health care facilities that accept federal money (which is almost all of them).
So the administration’s health-care focus, goals and priorities are right in every way that matters. Now they need to provide a much more detailed blueprint of how they intend to reach those goals and achieve those priorities.