THE BLOG
07/13/2010 11:00 am ET Updated May 25, 2011

In The Public Interest : Healthy Ways to Cut the Deficit

Proponents of repealing health reform have recently been trying to wrap their campaign in the rhetoric of fiscal responsibility. These repeal supporters want to portray this year's health care law as a step backwards on deficits even as the bipartisan President's Commission on Fiscal Responsibility and Reform is struggling mightily to reach a consensus on further steps to contain skyrocketing health care costs.

The Commission's recommendations, due out this December, could be a critically important step toward tackling the country's fiscal woes. That's why it's important to show what's beneath the mask of fiscal rectitude that the repeal-supporters like to wear.

The Affordable Care Act is affordable not just for consumers; it's also affordable for taxpayers. The Commission should not have to re-fight last year's health care debate.

Numbers don't lie, and the numbers from the nonpartisan, independent experts at the Congressional Budget Office (CBO) are a good place to start peeling back the repeal-supporters masks.

CBO figures show that repealing the new law would be the last thing the Commission should recommend. In fact, thanks to the new health care law, projections on the nation's long-term fiscal imbalance has shrunk by between one quarter and one third, according to an new Office of Management and Budget analysis of CBO projections. And even these substantial savings may be understating the law's potential for cost containment - for both taxpayers and consumers.

Of course, such understatement is entirely appropriate. The CBO's estimates should be conservative, but we should also all understand that the implementation of new policies -- like outcomes research, prevention investments, accountable care organizations, and the Independent Payment Advisory Board - can be expected to yield substantially more savings than the CBO currently projects.

Harvard economist David Cutler estimates health system reforms could achieve a $590 billion reduction in national health spending over ten years (2010-2019). And the best thing is that these savings will come not from skimping on care, but by delivering it more effectively and efficiently

That's why, far from supporting repeal, every member of the Commission ought to be pushing for the full, aggressive implementation of the new health care law. But even if political realities make that difficult, there are additional areas ripe for savings that deserve the Commission's attention.

What are they? To alter a presidential campaign slogan from the nineties, "it's the special interests, stupid."

The hospitals, drug companies, medical device manufacturers and medical specialty societies have spent decades building a marketplace which rewards the sale of more care, and especially more profitable care, rather than rewarding the care that might be the best-suited for the patient.

Some specialists guide patients to invasive surgery when basic exercises and physical therapy sessions might be more effective. Some hospitals and physicians who have a financial stake in expensive diagnostic equipment order more tests than their patients need. Drug manufacturers spend millions marketing a newer, more expensive purple pill, when the old yellow pill worked just as well or better.

As noted above, provisions of the new health care law are starting to lead us down the path to a more efficient health care system, which means savings for taxpayers and smaller deficits.

But there are a number of ways to speed up that progress. Here are five that are worthy of the Commission's consideration and support:

  1. Strengthen the Independent Payment and Advisory Board. Adopt proposals first advanced by Senator Jay Rockefeller (D-WV) to remove the provision exempting hospitals from the IPAB's cost-lowering jurisdiction and to give the Board more power to encourage reform amongst private plans included in state exchanges.
  2. Tame inflated drug prices. Senator Byron Dorgan (D-ND) and Senator John McCain (R-AZ) proposed allowing consumers to purchase prescription drugs from other industrialized nations (PDF), allowing competition to drive down inflated costs for consumers. And requiring Medicare to demand the same rebates as Medicaid for dual eligible, low-income seniors, as proposed by Senator Bill Nelson (D-FL), would do the same for taxpayers.
  3. Speed up implementation of health information technology. Require all Medicare providers and hospitals to meet new standards for efficient IT by 2015.
  4. Address geographic disparities. Lower the annual increases to reimbursement rates in regions of the country with the highest health care spending.
  5. Establish a Failsafe Mechanism for National Healthcare Expenditures. If specified cost-containment benchmarks are not met both in public programs and across the economy as a whole, Congress or administrative agencies would be required to implement new policy steps that would.

Winning additional cost-containment reforms, like these, will not be easy. The special interests that profit from today's unchecked medical inflation can be expected to mount formidable opposition.

But that's why the Commission might be the ideal vehicle for advancing these reforms. The Commission's recommendations will receive extraordinary consideration by Congress. And it may be that tough cost-containment policies like these can only pass with the kind of bipartisan support the Commission can help create.

A comprehensive solution to the nation's budget problems will encompass more than health care. U.S. PIRG has also presented some other ideas worthy of consideration. But confronting the rising health costs that the CBO characterizes as the nation's "central fiscal challenge" is indispensable to a serious effort.

Finding solutions to that challenge should be every Commissioner's focus.