After yesterday’s substance-free pledge from the health-care industry to cut $2 trillion in costs over the next decade, or 1.5% year on year, Keith Hennessey figured he’d heard this before … and so had the President. If nothing else is reliable on this good Earth, it’s the annual pledge from the Chicago Cubs to win a pennant and go to the World Series. The pledges are long on good PR but short on specifics, and any Chicago fan should be able to tell the difference. Instead, Hennessey says, Obama just got “silly” in heralding this as a breakthrough:
Imagine if the mayor of your nearest big city were to hold a press conference with the General Manager of the city’s Major League Baseball team. The Mayor announces that the GM, working with the coaches and players, has committed that he will work to develop plans for the team to hit the Mayor’s new goal of winning 40 more games this season than they otherwise would have won. Those plans will improve the team’s hitting, pitching, and fielding. The Mayor also announces that the manager’s plans, combined with the Mayor’s new policy initiative for better parking at the stadium, will make fans happier and help the team win more games.
Baseball fans would reply, “Great, I’m all for it.” They might then ask a few questions:
- What do you mean the GM “will develop plans”? Doesn’t he have any specific plans yet? How will he improve hitting, pitching, and fielding?
- How are we supposed to verify that the team won 40 more games than they otherwise would have, since we will never know how many games they would have won?
- Other than picking the number 40, why is the Mayor involved in this press conference? What does the Mayor’s new parking initiative have to do with the coaching changes, and how will the new parking initiative help the team win more games?
- If this is such a good idea, what has changed to make it happen now? Is the Mayor claiming that his persuasive powers alone are worth 40 more wins? Why didn’t the GM make these changes before?
The only substance to this announcement is that the manager agreed to the Mayor’s target of winning 40 more games. Everything else is fluff or unrelated.
How about this question: Given that these insurers all make profit on their business, don’t they already work to keep costs down as a means of maximizing their return? After all, that’s what a for-profit corporation does. If one wants to increase efficiency in an organization, give its stakeholders an incentive to keep costs down. That’s the profit motive, and why the private sector always makes more efficient use of capital than the public sector.
That question leads to another. The push from the Left has not been to cut costs in health care as much as it has been to expand its reach, especially for the uninsured. Cutting costs by $2 trillion over 10 years, even if it actually happens (which Hennessey doubts) means rationing some care, not expanding it. The Obama statement makes this clear:
- Reducing over-use and under-use of health care by aligning quality and efficiency incentives among providers across the continuum of care so that physicians, hospitals, and other health care providers are encouraged and enabled to work together towards the highest standards of quality and efficiency;
- Encouraging coordinated care, both in the public and private sectors, and adherence to evidence-based best practices and therapies that reduce hospitalization, manage chronic disease more efficiently and effectively, and implement proven clinical prevention strategies;
I’m not saying that these aren’t necessarily good objectives, but that they seem incompatible with an expansion of health care. Also, while Obama’s statement doesn’t rule out tort reform, it’s worth noting again that private-sector insurers have always had incentives to reduce unnecessary treatments and hospitalization, but that threats of medical malpractice creates a need for “defensive medicine,” ie, treatments and tests not medically required but necessary to avoid lawsuits.
If this is the strategy on which Obama will rely for health-care reform, it seems destined for failure, sort of like the Ernie Broglio-Lou Brock trade made by his Cubs. Or maybe Obama’s a White Sox fan.