Today, Joe Biden (in Barack Obama's overseas absence) issued the formal announcement we heard about yesterday. From the WaPo:
Vice President Biden today formally unveiled the latest attempt by the White House to rally the health-care industry behind its reform effort, announcing an agreement with hospitals to cut $155 billion in government costs over the next 10 years.
Cost is tremendously important. When looking at public reaction to health reform, costs (54%) beat expanding coverage to those who don't have it (38%) in the latest Q-poll, and cost has always been of equal or greater concern to the public than any other aspect of health care (the same June Q-poll said "72% Won't Pay More Than $500 A Year To Fix Health Care").
If hospitals don't have to indulge in cost shifting because everyone is covered, there's money to be saved at the hospital level. And if 'efficiencies and quality' can be achieved for every admission, readmissions and expensive unnecessary admissions can be cut back. But as the WaPo article noted, someone else will pay.
Richard Umbdenstock, chief executive of the American Hospital Association, made that caveat clear today with a blunt warning to the reporters assembled in the Eisenhower Executive Office Building. He said his association is committed to "coverage for all, paid for by all. And hospitals are ready to do our part. But so must all the other stakeholders."
That includes, he said, insurers, employers, doctors, the government and individuals.
The warning was a reminder that while Obama has so far achieved surprising consensus among industry players who in the 1990s had opposed then-President Bill Clinton's health-reform efforts, their participation and enthusiasm will remain tempered until a final, comprehensive approach is developed.
Are there other costs to wring out? Sure. Cost of drugs, cost of futile end of life care, cost of not doing prevention, and everyone's favorite whipping boy, "administrative costs".
As it happens, Ezra has a superb piece on that, showing that the admin costs are neither easy to define nor easy to get rid of.
But no matter how good you got at slashing administrative costs, they will never be a panacea to the problems of the system. Rick Kronick, a political scientist at the University of California at San Diego, has done some of the best work on administrative costs, and he summed the situation up quite well. "The main question," he said, "is why are health care costs going up at 2.4 percent a year faster than GDP? And most of the answers to that question have nothing to do with administrative costs. The answers are that we do more stuff and have more technology. Even if we could wring administrative savings out of the system, which I'm all in favor of and would be a good thing, we'd still be facing the question of how to slow the rate of cost growth."
The real argument here is over the public option, and whether it will be big enough to matter, and whether it will pay Medicare rates (which are too low, from the hospital and doctor POV) or the higher "same as private insurance" rates. If the latter, the hospitals and docs will stay at the table a while longer.
And, of course, any decrease in hospital revenue wil put pressure to increase money-making services and cut or shift away from 'marginal' or less profitable services that nonetheless do the community some good.
But there are other important aspects of this, even if symbolic or temporary. Keeping the momentum is important. Keeping the players at the table is good, and focusing on cost (and savings) is great. Look how much fuss the CBO report stirred up:
CNN, Fox News Channel, and MSNBC aired at least 15 segments to discussing the Congressional Budget Office's preliminary analysis of an incomplete version of the Senate health committee's draft health reform bill, but they have aired only one segment to the CBO's analysis of the updated bill.
Now, if you really want savings, let's talk about what you won't get from health insurance.
The question came from a Colorado neurologist. "Mr. President," he said at a recent forum, "what can you do to convince the American public that there actually are limits to what we can pay for with our American health-care system? And if there are going to be limits, who . . . is going to enforce the rules for a system like that?"
Indeed. Right now, it's the insurance industry that does the enforcement. Anything that changes that is a step closer to real reform. But the fact is that everyone is going to have to to give something to make this work, and that includes patients.
