Controlling health costs

As the Senate starts to debate health care reform this month, the focus once again is turning to the cost of the bill. The Senate bill under consideration reduces costs, bringing most Americans into the health system while lowering the deficit by over $130 billion over ten years, according to the Congressional Budget Office. Indeed, the bill continues to reduce the deficit in out years. How? By instituting a tax on super-executive health plans like Goldman Sachs’ now tax-free $40,000 value family health plan that has nearly zero cost sharing and every extra imaginable, by making Medicare more efficient and effective, and by reducing the cost of prescription drugs in Medicaid.

It’s worth it to note what a break this is from the out-of-control attitudes that marked big legislation like this in the last decade. For example, both the 2001 and 2003 tax cuts and the Medicare prescription drug program were passed without any thought to their costs, thus adding literally trillions of dollars – yes, trillions – to the federal deficit. Now we have a fundamental reform to our health system that extends coverage to millions of Americans and it’s more than fully paid for.

But just paying the bills up front is no longer enough. The health bill also needs to start the process to bring overall health costs under control for everyone. However, it needs to do this while improving the quality and effectiveness of care and giving people confidence that the relationship between them and their doctors is not being interfered with.

It’s not going to be easy, but we can do this – we are good at it. Take the i-Phone. A couple years ago it cost $600 and did half of what it does now. Now you can pick one up for $200 and it does ten times as much as the original. We just need to apply that same kind of ingenuity to health care. One way we can do that is making sure doctors have access to the latest research comparing the effectiveness of different treatments and which drugs have the best results. Armed with that information, doctors and patients together can make more informed choices, rather than risking less effective treatments. Wasting money on care that we know doesn’t work makes no sense for anyone.

Another way to start to really control costs is to try different ways of paying doctors and hospitals when a patient is sick. For example, pilot programs in Medicare will test paying providers for each “episode” of care, or the whole range of doctor visits and treatments someone receives for an illness, rather than piecemeal for every test, scan, and visit. The idea is to let doctors and patients focus on the art of health care rather than the business of filling out forms and paying hundreds of bills.

These ideas are already in the health bills in Congress and there are more to come. This is how responsible legislating looks. Paying for what you enact. Addressing the hard questions. Making the choices necessary to reform our crazy health system. It’s long overdue.