"He Said WHAT?"

Yesterday was a dizzying day in health care.  Mark-ups took place in each of the three House committees.  Obama was on the road yesterday and worked health care into every speech he gave.  And, of course, the opposition is in full “pull out all the stops” mode, throwing everything they can out there.  We’re told that health care reform will kill jobs, kill people’s financial security, just kill people in general (which is kind of funny because out dysfunctional system is already killing jobs – particularly small business -- killing people’s financial security and, yes, killing those who don’t get the care they need when they need it.)

What I’m trying to say is my inbox is overflowing with questions.

By far, the number one question is about Doug Elmendorf.  This is a surprise because, until yesterday, not many people knew who Doug Elmendorf was (he’s director of the Congressional Budget Office).  But soon the press wires and the Internet were ringing out with doom and gloom stories containing scary headlines like, “Congress's Chief Fiscal Watchdog Warns of Overhaul's Cost; Ammunition for Critics.”  And yes, people flooded my inbox asking if the CBO Director doesn’t think the legislation will control costs, then what are we doing?

I won’t list out Elmendorf’s comments at the Senate Budget Committee hearing because that’s been reported by everyone and their Aunt Suzie.  Sen. Conrad meant to put him on the spot, and he did.  But absolutely no one is reporting on his follow-up appointment at House Ways and Means, which greatly clarified what he meant to say:

“This legislation, like legislation being considered on the Senate side, adds substantially to federal health spending through the subsidies and expansion of Medicaid that would broaden health insurance coverage.  I’ve been very clear about that.  That amount of money is very difficult to offset.  That was the basis of my statement, that on balance, this legislation that’s being considered looks to us at this point to be raising federal health spending.  That’s not contradicted my other statement that there are provisions of this leg that are pushing on the levers in Medicare that experts think would over time reduce Medicare spending.”

For anyone who’s been following the health care debate, the simple truth is that it’s easy to measure how much expanded Medicaid and subsidies for insurance cost.  It’s very hard to project how effective savings will be in the health care system from things like primary care, prevention, wellness, chronic disease management, etc.  We know these things will save us money by looking at where they’ve been implemented here in the U.S. and how much they save money abroad.  But how much money?  And, further, how much of that will actually reduce Medicare spending?

As usual, Igor Volsky delivers a killer post on this topic: “For his part, Elmendorf, is isolating the ledger of the federal government from the context of the entire system. In other words, since many of the savings from reform won’t be reflected in the federal budget, Elmendorf does not consider them.”  This is a problem we’d face calculating the savings to the federal government for nearly any health care plan you can think of, from single-payer to the Patient Choice Act.  The cost outlays are certain.  The return on investment is not, particularly in a 10 year window.  Unless we're going to pay for reform by setting low rates or cutting reimbursements, something other countries do but which we likely do not have the stomach for, the CBO will have the same problem.

Elmendorf again:

“The coverage proposals in this legislation would expand federal spending on health care to a significant degree.  And in our analysis so far, we don’t see other provisions in this legislation reducing federal health spending by a corresponding degree.  That’s a different question than whether there are efforts, as you said, in this legislation, to change Medicare payment policy in a way that would over time reduce fed health spending relative to that part, relative to what would otherwise occur. So there are policies in this legislation about Accountable Care Organizations, about readmissions, about bundling, about rewarding primary care physicians, and so on, that cover a range of the areas that experts think should be investigated.”

Of course, it’s hard to write a sensational headline like, “CBO Chief Says Health Care Bill Stinks” based on the above nuanced talk of investigating a range of cost-saving options, which is probably why you haven’t heard of it.

You’re hearing the conventional thinking in the echo chamber calling this a body blow to reform efforts.  But let’s also not forget that House Ways and Means passed HR 3200 out of committee last night and House Education and Labor followed suit this morning.  3 out of 5 committees with jurisdiction on health care have passed their bills out of committee.  Just one fact you’re not likely to get from the Associated Press or the Wall Street Journal.

(Photo credit:  EconomistMom.com, whose post is also excellent.)