By Austin Frakt
Kaiser Health News
January 11, 2011
The problem is health care costs. They’ll cause budgetary distress with or without health reform. The CBO’s estimates, both of them, show it clearly. Health care costs have been the source of budgetary woes for decades, and there’s no end in sight under any realistic scoring of any serious health reform proposal.
One way to get serious is to embrace the cost control provisions of the new law and to protect them from the likely efforts of future policymakers to undo them. In this, I agree with health economist Henry Aaron, who wrote about the health reform law:
“[T]he bill contains, at least in embryonic form, virtually every idea for cost control that any analyst has come up with. ā¦ The most practical cost-control strategy that is now available to Congress is to accelerate the implementation of these provisions, not to stymie them.”
http://www.kaiserhealthnews.org/Columns/2011/January/011111frakt.aspx
And…
A Milestone in the Health Care Journey
By Ronald Brownstein
The Atlantic
November 21, 2009
“I’m sort of a known skeptic on this stuff,” (Jonathan) Gruber told me. “My summary is it’s really hard to figure out how to bend the cost curve, but I can’t think of a thing to try that they didn’t try. They really make the best effort anyone has ever made. Everything is in here….I can’t think of anything I’d do that they are not doing in the bill. You couldn’t have done better than they are doing.”
http://www.theatlantic.com/politics/archive/2009/11/a-milestone-in-the-health-care-journey/30619/
Comment:
By Don McCanne, MD
Austin Frakt’s voice is now added to those of Jonathan Gruber , Henry Aaron and others who claim that every cost control measure is in the Patient Protection and Affordable Care Act (PPACA). Yet they left out the most effective measure of all – single payer – the one that wasn’t even granted a seat at the table.
Over 30 percent of our national health expenditures are diverted to administration. That is almost twice the percentage of administrative costs in Canada – a nation with a single payer system. If we were to adopt the administrative efficiencies of Canada’s single payer system, we conceivably could recover about 14 percent of our national health expenditures, not in just the first year, but in every year to follow. Even if we were to recover only 10 percent, think of what that would amount to over the years.
The authors of PPACA were aware of this administrative waste, but because they elected to leave the fragmented system of private insurers and public programs in place, they focused narrowly on the administrative costs of the private insurers, which is only a fraction of the administrative costs of our system. They decided to allow the insurers to continue to use 15 to 20 percent of their revenues for administrative functions and profits. Since some were already functioning at this level – especially the non-profits – the net savings is almost negligible. More importantly, this did not address any of the other administrative excesses – especially the huge administrative burden placed on the providers of health care.
There are other important cost-saving features of a single payer system that were also left out of PPACA. These include very effective tools such as the monopsonistic power of a single buyer, global budgeting, negotiated rates, bulk purchasing, and preventing over-utilization of excessive capacity through separate budgeting of capital improvements. These measures, along with the permanent administrative savings, truly bend the cost curve down to more sustainable levels.
Austin Frakt asks the right question. Is anybody listening?