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Will Marshall

Will Marshall

Posted: November 10, 2009 02:03 PM

On Health Reform, Cost Containment Remains the Missing Piece

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President Obama's push for health care reform has provoked so many political sideshows that it's easy to lose track of the main plot. The most important debate - how to slow the inexorable growth of health care costs - has scarcely begun.

Instead, Democrats spent months wrangling over the public option, which is basically a proxy for the endless debate over the proper size and role of government. Now they are tussling over abortion, that hardy perennial of the culture wars. And the Senate may add immigration to the already combustible mix.

These are, of course, large and important issues in their own right. But they distract progressives from what health reform is really supposed to accomplish. What most Americans want is relief from constantly rising health care costs and the nagging fear that they could lose coverage altogether if they get sick or lose their job. The public also wants a system that leaves no one out, though polls show mounting worry about the cost of guaranteeing universal coverage.

The House bill passed last weekend passes the coverage test. Through a mix of insurance market reforms, public subsidies and a mandate on individuals to buy insurance, it extends coverage to 39 million Americans. That's as close to universal coverage as we are likely to get, and by itself a major progressive achievement.

But it comes at a stiff price: $1.2 trillion over the next decade. At a time when the federal deficit has tripled in just a year, many Americans think that's a lot of money to spend. According to the Congressional Budget Office, the House bill includes enough offsetting savings to pay for health reform without adding to deficits. To his credit, President Obama has vowed to veto a bill that isn't deficit-neutral.

But if it doesn't aggravate America's short-term fiscal woes, the House bill fails to deal seriously with the long-term challenge of reducing the unsustainable pace at which health care costs grow each year. That is what drives premiums up for working Americans, helps to price U.S. businesses out of global competition, and escalates spending on Medicare and Medicaid.

Today's New York Times reports on a "growing revolt" among some Democrats and prominent health care experts over the lack of strong cost controls in the House bill or others under consideration. "My assessment at this point is that the legislation is heavy on health and light on reform," the Times quotes Sen. Ron Wyden (D-Ore) as saying. He's exactly right.

As the action now shifts to the Senate, Wyden and pragmatic progressives need to insist on adding credible measures for "bending down" the health cost curve. The menu of plausible options includes a Medicare Commission with real powers to reduce payments for low-quality or ineffective health care, and strict limits on the federal government's open-ended tax subsidy for employer paid health plans.

It goes without saying that real cost containment will meet resistance from powerful interests, from doctors to organized labor. Against that, Democrats must weigh the dismal prospect of a health care "reform" that merely makes a deeply flawed system bigger and more expensive, without changing the incentives and behaviors that lead to runaway medical inflation.

Marshall is the president of the Progressive Policy Institute. This item is cross-posted at ProgressiveFix.com.