For Dems, cutting costs now paramount

Yes, the Senate Finance Committee passed its healthcare reform bill out of committee. And though it was considered something akin to the Seven Wonders, key questions remain about cutting costs.
 
Any bill that Democrats pass that is perceived by the public as a tax increase will likely bring political heat. Any bill that also spends a lot in subsidies while mandating coverage but failing to cover enough people will also test the party's popularity. Any bill that spends, taxes, fails to insure enough people and then doesn't cuts healthcare costs could spell disaster.

This week The New York Times examined the question of costs, noting that total healthcare costs have doubled over the last 20 yeras to become 16 percent of the economy. That number is projected to rise steadily, to 20 percent a few years from now. The article looks at how the Democrats' plans will "bend the cost curve," and also at how fiercely lobbyists are working to stop the bending. It isn't heartening, but definitely worth a read.
 
The first and key factor at this point is that the House and Senate strongly disagree on how to even pay for reform. The House favors a millionaire's tax, while the Senate bill passed out of the Finance Committee taxes "Cadillac" insurance plans. Labor unions are fighting the tax on "Cadillac" plans, and more than 150 House members signed a bill opposing the tax. In addition, another cost-cutting measure — a Medicare commission — was included in the Senate Finance bill but not in any other bill passed out of the four other congressional committees.
 
The drug industry, which struck a deal early with the Obama administration to provide $80 billion in savings but not a penny more, is working to make sure a Medicare commission would not be able to negotiate prices. There was another deal made with the hospitals, and they too are seeking protection from the proposed Medicare commission. Their deal to limit payment reductions to $155 billion over 10 years stands, and they don't want the commission trying to take more.
 
Rep. Jim Cooper (D-Tenn.), a Blue Dog Democrat and a healthcare negotiator, said the deals struck in hopes of forging consensus could unravel it. "This will start a race for the exits," he told The New York Times. "Every other provider group will say, 'why are you letting these guys out? Why should we have to participate?"
 
Another interesting piece by The Associated Press explains that in order to fit the Finance bill into the limits President Barack Obama placed on price (under $900 billion), the benefits won't kick in until 2013, but Medicare cuts and tax increases to pay for the plan begin immediately. This is because: "Lawmakers use a 10-year accounting window to assess new programs. Starting the Medicare cuts and some of the taxes in the early years — and pushing the bulk of new spending into the latter years — helps keep the cost of the healthcare overhaul within Obama's $900 billion limit. Bush used the same maneuver to push the Medicare benefit through Congress," according to the AP.
 
So if Americans are going to get hit before they get relief, Democrats are going to take a hit politically. This should motivate them to make sure their bill cuts costs in the long term. No matter what.


WOULD YOU PREFER COST-CUTTING OR MORE COVERAGE FOR THE UNINSURED? Ask A.B. returns Monday, Oct. 19. Please join my weekly video Q&A by sending your questions and comments to This e-mail address is being protected from spambots. You need JavaScript enabled to view it . Thank you.