Drawing blood from a stone

I support many parts, as well as the overall sentiment and trajectory, of federal health reform (PPACA), but it was clear from the beginning that the size of some of the proposed cost savings were… fuzzy.  Still, Ryan Lizza’s New Yorker piece on the administration’s overt budget gimmickry is dismaying. According to Lizza’s analysis of internal memos, the  administration shifted from a straight arrow estimate of costs when constructing its first budget to a convenient estimate of cost and potential savings:

The White House could also save billions by fiddling with the way it presented savings from Obama’s health-care-reform bill. Check.

I think its pretty safe to say that most administrations engage in budget manipulations to some extent, whether it’s ignoring unfunded pensions, selling then leasing your capitol building, or assuming no one really pays attention to rising short term interest rates anyway.  They are just estimates, after all.

But the administration dedicated serious resources to defending federal health reform’s deficit-cutting abilities, despite doubts from good-faith critics. At a time when the public was highly skeptical of PPACA (for solid reasons and not), and the real budget-savers were DOA, the administration needed to garner support by trying to draw blood from a stone.

Via Peter Suderman at Reason:

But in this case, the specific budgeting tricks and the dollar figures they represent are less important than the clear admission that as the ObamaCare fight was happening, the White House was knowingly fudging the savings numbers on its health care law (not to mention other aspects of the budget) behind the scenes —and then publicly insisting that the law was a sound and responsible fiscal move not built on gimmicks.

My sense is that in order for health reform — a necessary, worthwhile, heroic undertaking — to actually reduce the deficit and reverse the unsustainable rise in annual medical costs, PPACA had to include much bolder and more courageous efforts, all of which were bargained away during negotiations.  The pieces that remained were either the bare minimum needed, or actively worked against the problems the law was intended to solve.

For instance, the most important reforms in the law focused on the insurance industry — guaranteed coverage, community rating, health exchanges, subsidies, basic health plans, mandated benefits, the end of rescission, expanded Medicaid eligibility, I could go on.  But the law doesn’t effectively address payment reform or the provider’s role in containing costs.

Ultimately, what will transform the health care delivery system is holding providers accountable for the cost and outcomes of each patient’s care, and crafting support that make this monumental change possible, a la EHRs and BCBS’s Alternative Quality Contract. Full-risk arrangements are present in PPACA, but only as pilots, or as the underlying, long-term reason for EHR incentive payments.

To be sure, full-scale implementation of something like global payments without reforming the underlying data, health benefit, and physician referral systems is neither feasible nor advisable.  But it has to happen at some point, because it’s the only way to turn this ship around.


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