The House Bill and Lowering Health Care Costs

The NY Times  reported yesterday on a figurative intrafamilial smackdown.  Ezekial Emmanel, a brilliant oncologist and ethicist and an adviser to the Obama administration, is concerned that the health plan isn’t going to do enough to lower costs.  His brother Rahm, Obama’s Chief of Staff, claims that critics (like Ezekiel) begs to differ.

“Let’s be honest,” Rahm Emanuel said in a recent interview. “The goal isn’t to see whether I can pass this through the executive board of the Brookings Institution. I’m passing it through the United States Congress with people who represent constituents.”

He went on: “I’m sure there are a lot of people sitting in the shade at the Aspen Institute — my brother being one of them — who will tell you what the ideal plan is. Great, fascinating. You have the art of the possible measured against the ideal.”

Of course, they’re both right. The House bill has far more generous subsidies to help the working class afford mandatory insurance – but it lacks the equivalent of a “Fed” to regulate medical prices, and it doesn’t impose a stiff tax on the most expensive plans.  But Rahm knows how to count his votes – and there is good reason to believe that passing a flawed bill is a better foundation than starting over.  

It’s easy to agree that none of the legislation with a prayer of passing does enough  to control health care costs.   However, the House bill (even if it is not as parsimonious as the Senate’s does make some early efforts to control cost.  Not all of these are good, and not all of them will survive in a final bill, but don’t believe those who say that the bill does nothing to lower cost.

* Create state based exchanges for the small group market – which can lower the transactional costs of small groups purchasing health insurance
* Decrease Medicare Advantage payments
* Reduce annual updates for hospitals, home health agencies, and others, and in the future take into account “increased productivity” to reduce annual increases
* Establish an independent Medicare Commission
* Reduce Medicare disproportionate share” payments to safety net providers. (Not necessarily a good thing, as we’ve found out in Massachusetts where the subsidies end before the number of uninsured drops adequately).
* Medicare pilots to test new payment methodologies
* Reduce payments for preventable hospital readmissions
* Reduce Medicaid payments to pharmaceutical companies
* Increase screening for fraud
* Administrative simplification by single set of operating rules for eligibility and claims
* Discounts for seniors on Medicare Part D drugs in the “donut hole.”

Here is a good summary of most of the major health care bills from Kaiser Family Foundation.  A briefer summary is available at from the Wall Street Journal  Thanks to Dan Schwarz of HSPH for pointing out these references.