Obamacare

Health Care "Savings" Don't Actually Reduce Spending

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Robert Samuelson makes a good point about what many health reform advocates actually mean when they claim that expanding health coverage will produce "savings":

Unfortunately, the word "savings" is used misleadingly. It doesn't mean (as is usual) actual reductions; it signifies smaller future increases. There's a big difference.

Right. Seems to me like there's been a lot of confusion surrounding this issue. But even in the best possible post-reform scenario, expenditures still grow — they just grow at a slower rate. The White House and its defenders are, naturally, arguing that that's exactly the scenario we should expect. But as Samuelson notes, there's good reason not to put much confidence in such predictions.

Even with highly optimistic assumptions, health spending remains out of control. It absorbs more of government, business and family budgets. Higher health spending would put pressure on future budget deficits, already projected to total about $9 trillion over the next decade. If new taxes and Medicare "savings" are real, they could be used exclusively to pay down deficits, not finance new spending.

But many may not be real. Writing in The Wall Street Journal, Dr. Jeffrey Flier, dean of the Harvard Medical School, gave the various health bills a "failing grade" and said they wouldn't "control the growth of costs or raise the quality of care." Quoted in Newsweek, Dr. Delos Cosgrove, head of the Cleveland Clinic, said much the same. Richard Foster, the chief actuary of the federal Centers for Medicare & Medicaid Services, doubts the cost-saving provisions touted by CAP would save much money. He's also skeptical that Congress, facing complaints from hospitals and a squeeze on services, would allow all the Medicare reimbursement cuts to take effect. True, Congress has permitted some reimbursement reductions to occur but has repeatedly blocked the Sustainable Growth Rate adjustment for doctors, which most resembles the new proposals.