Epiphanyblog

All about ideas…

Health Reform Is the Only Long-Run Fiscal-Hawk Measure Moving

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My thanks to highly respected Economics Professor Brad DeLong for this quick economic analysis of the current health care reform bill.

Q: So why are so many who claim to be “deficit hawks” opposing it?

David Cutler:

David M. Cutler: Health Reform Passes the Cost Test: Many people are worried that the health-care reform proposed by President Obama and congressional Democrats will fail to bend the “cost curve.” A number of commentators are urging no votes because of this, and Republicans have asked the president to start health reform over, focusing squarely on the issue of cost reduction. These calls overlook the actual legislation…. 10 broad ideas have been offered for bending the health-care cost curve. The Democrats’ proposed legislation incorporates…. Form insurance exchanges…. Reduce excessive prices…. Move to value-based payment in Medicare…. Tax generous insurance plans…. Empower an independent Medicare advisory board…. Combat Medicare fraud and abuse…. Malpractice reform…. Invest in information technology…. Invest in prevention….

Create a public option…. The public option was eliminated because of Republican opposition, however. Grade: No credit.

So reform gets full credit on six of the 10 ideas, partial credit on three others, and no credit on one. The area of no credit (a public option) is because Republicans opposed the idea. One area receives only partial credit because of Democratic opposition (malpractice reform) and two other areas reflect general hesitancy to increase taxes (taxing Cadillac plans and taxing drivers of obesity).

Why is reform viewed so negatively?…

Of course, no one knows precisely how much medical spending increases will moderate. But one cannot doubt the commitment to try. What is on the table is the most significant action on medical spending ever proposed in the United States. Should we really walk away from that?

Hmm, I think I’ve unwittingly now come across at least a dozen well-respected economists, including a few Nobel Prize for Economics winners, who’ve said the current Health Care legislation should move forward as a means to control costs and the deficit. In my mind, their economics viewpoint beats a politician’s anytime.

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Written by Valerie Curl

March 9, 2010 at 8:22 AM

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