David Brooks Is Right About Health Care Costs

I’m sure a lot of my fellow liberal bloggers will object to this viewpoint from David Brooks (partially because it is from David Brooks). The problem with such an argument is that David Brooks is right that current proposals will not significantly reduce health care costs in the near future:

Obama aides talk about “game-changers.” These include improving health information technology, expanding wellness programs, expanding preventive medicine, changing reimbursement policies so hospitals are penalized for poor outcomes and instituting comparative effectiveness measures.

Nearly everybody believes these are good ideas. The first problem is that most experts, with a notable exception of David Cutler of Harvard, don’t believe they will produce much in the way of cost savings over the next 10 years. They are expensive to set up and even if they work, it would take a long time for cumulative efficiencies to have much effect. That means that from today until the time President Obama is, say, 60, the U.S. will get no fiscal relief.

The second problem is that nobody is sure that they will ever produce significant savings. The Congressional Budget Office can’t really project savings because there’s no hard evidence they will produce any and no way to measure how much. Some experts believe they will work, but John Sheils of the Lewin Group, a health care policy research company, speaks for many others. He likes the ideas but adds, “There’s nothing that does much to control costs.”

If you read the C.B.O. testimony and talk to enough experts, you come away with a stark conclusion: There are deep structural forces, both in Medicare and the private insurance market, that have driven the explosion in health costs. It is nearly impossible to put together a majority coalition for a bill that challenges those essential structures. Therefore, the leading proposals on Capitol Hill do not directly address the structural problems. They are a collection of worthy but speculative ideas designed to possibly mitigate their effects.

The likely outcome of this year’s health care push is that we will get a medium-size bill that expands coverage to some groups but does relatively little to control costs. In normal conditions, that would be a legislative achievement.

I know we are supposed to hate David Brooks and disagree with everything he says but, not only is he right, he is saying the same thing I have said in several posts, including here and here. There is reason to believe some of these measures will save money in the long run if done right (a big if) but it will take years to see any savings. In the short run measures such as expanding health information technology and increasing preventive care will cost more money.

Preventive care is worthwhile and should be done regardless of whether it leads to saving money. While it probably will save money in the long run, there are also benefits to having a healthier population independent of any cost savings. The Obama administration has made a mistake in pushing for health information technology at this point as the technology is not yet ready for prime time. This could very well turn out to be a case of spending a lot of money which turns out to actually increasing health care costs without providing much benefit.

Brooks might also be right about only seeing a medium-sized bill. At the moment John Kerry’s 2004 health care plan is looking very good. Democrats will no longer embrace it as it is not a universal plan, but it would have significantly increased access to health care while reducing costs for employers and individuals. In the 1990’s we saw zero progress because Hillary Clinton convinced Bill to threaten to veto any plan which did not meet her standards. As a result we got nothing–which was unfortunate but preferable to HillaryCare. Obama is probably far more pragmatic on this issue than Bill Clinton was, and in the end will probably support a more modest bill if that is all that is possible. Hopefully Obama turns to John Kerry as opposed to  Hillary Clinton for ideas.

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1 Comment

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    Don Vander Linde says:

    The greatest expenses in health care are in the weeks before death and the weeks saving pre-mature infants which never could occur without modern medicine.  Heart by-passes for 90 year olds to live longer in a nursing home,  Octo baby s  physically and mentally dependent on society their entire lives, these decisions  are the issue:  not eating broccoli. Until the lid is placed on these expenses .which only a government going broke can  do, health care expenses will continue to rise.  On an individual basis this question is extremely difficult on a nation wide scale it is imperative.

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