Commentary Magazine


What Happened to Bending the Cost Curve?

Megan McArdle has a typically thoughtful post on bending the cost curve, or not, through the Democrats’ health-care reforms. She explains:

What passes for delivery reform consists mostly of slashing reimbursement rates to providers, and then putting Medicare Advantage on the same plan. There are two problems with this.  The first is that there’s no reason to believe that providers will find ways to efficiently provide care at the new, lower rates, rather than just stop serving Medicare patients. That was the core point of the recent report from the Centers for Medicare and Medicaid Services — and though a lot of bloggers developed sudden suspicions about the integrity of government reports, in fact, this pretty much jibes with the warnings that Doug Elmendorf has been issuing, and also, reality. . . The second is that the treatment cuts — and any further cuts recommended by the cost effectiveness commission — can be undone by Congress.

Well what about the tax on so-called Cadillac plans? Maybe that’s going to discourage overspending, but as McArdle points out, it’s also quite possible that it “ends up just being a heavy tax on a random group of people who happen to have expensive health insurance, [and] then it won’t cut health care costs, and also, will probably end up being repealed.”

There’s really nothing in sight that will influence the cost of health care, because the Democrats refuse to address two issues: tort reform (with the ensuing problem of defensive medicine and unneeded procedures) and expanding markets (e.g., interstate sales, changing tax treatment of individually purchased plans).

What we are doing here is spending gobs of money, raising hundreds of billions in taxes, slashing Medicare payments, and empowering government bureaucrats to influence health-care treatment all in the name of expanding coverage. It isn’t remotely what Obama promised, and it’s not what voters seem to want. But we may get it anyway.