Will Health Care Reform Heal the Federal Budget?

On November 6, US Budget Watch, a joint project of the Committee for a Responsible Federal Budget and The Pew Charitable Trusts, hosted an event on the current health care reform debate, called "Will Health Care Reform Heal the Federal Budget?" The event focused on the fiscal implications of reform, specifically looking at costs, offsets, and the extent to which health care reform can "bend the cost curve." New Health Dialogue twittered the entire event, a first for US Budget Watch.

The panel discussion was moderated by Washington Post reporter Ceci Connelly, and included health care policy experts Jim Capretta, Donald Marron, Len Nichols, John Rother, and Paul Van de Water. The panelists engaged in a discussion about several issues including: the role of the Congressional Budget Office as the official scorer of the proposals, the confusion surrounding the projected costs of expanding coverage, and the challenges of trying to bring down health care costs.

Donald Marron, of the Georgetown School of Public Policy, discussed the confusion over the true costs of the bills, a topic he frequently discusses on his blog. He laments that we do not get enough value for our dollar - a common theme at the event. He also discussed the pay-fors in the bills that cover some of the costs, and questioned if Congress will have the backbone and the willingness to pass stronger versions of the pay-fors. Jim Capretta, from the Ethics and Public Policy Center, agreed with Marron, saying that the true cost of the House bill is not $900 billion, but more like $1.5 trillion when the "doc fix" is included. He also said that offsets could be politically unsustainable, and that the House bill generally did not include enough incentives to slow growing costs.

Paul Van de Water, from the Center on Budget and Policy Priorities, argued that the bills are good first steps because they are deficit neutral. Impressed with how fiscally responsible the bills are, Van de Water listed the provisions such as the excise tax, accountable care organizations, and bundled payments as good potential policies that could revolutionize health care. John Rother, from the AARP (whose organization endorsed the House bill) noted that it would be more effective if the entire health system was addressed rather than solely Medicare. He also said it is important to not only to pay attention to the federal budget, but also to the overall national spending on healthcare and household budgets. He concluded with the theme that people are not getting what they deserve for the money that is being spent.

Len Nichols of the New America Foundation discussed how to bend the cost curve while reforming health care. In the short-run, Nichols argued that we could eliminate much of the waste in the current system (estimated at 30%) and adopt new technology in the long-run. He argued that certain incentives could make inefficient providers more efficient. These include payment reforms, which encourage care coordination and reward efficient care, and also measures that encourage more efficient consumption of care, such as a tax on high-cost plans.

Overall there was broad agreement that the health reform legislation will be passed - and many of the panelists believed it would make many positive inroads on cost control - but there was also concern that it would not do enough toward addressing the long-term pressures health care poses for the federal budget. In the end, they concluded, health care reform would be a continuing process.

Participants

Welcome
Doug Hamilton
The Pew Charitable Trusts

Opening Remarks
Maya MacGuineas
Committee for a Responsible Federal Budget & US Budget Watch

Moderator
Ceci Connolly
The Washington Post

Panelists
Jim Capretta
Ethics and Public Policy Center

Donald Marron
Georgetown School of Public Policy

Len Nichols
New America Foundation

John Rother
AARP

Paul Van de Water
Center on Budget and Policy Priorities