the hard truth about health care: Government works

[Guest guest]

The hard truth about health care: Government works By Ezra Klein

Everyone in Washington claims to want the same thing lately: a " serious

conversation " about health-care costs. So let's have one.

Republicans have a plan that has been tried repeatedly but that has never

worked. Democrats have a plan that might work in theory, but it is untested at

the scale they'll need for it to work in practice. And both parties are too

scared to talk about the only plan that has worked.

But before we get to that plan, I want to tell you about a graph.

I found it buried inside a Kaiser Family Foundation brief entitled " Health Care

Spending in the United States and Selected OECD Countries. " Inauspicious, maybe.

But it should change the way we think about health-care costs. Because what it

shows is that we've failed. Failed to control costs. Failed to restrain the

growth of government.

And it shows something else, too: Where we've failed, others have succeeded.

Everyone knows — or should know — that the United States spends much more than

any other country on health care. But the Kaiser Family Foundation broke that

spending down into two parts, the government's share and the private sector's

share (both measured as a percentage of total gross domestic product), then

compared the results with figures from 12 other countries that are members of

the Organization for Economic ation and Development. And here's the

shocker: Our government spends more on health care than the governments of

Japan, Australia, Norway, the United Kingdom, Spain, Italy, Canada or

Switzerland.

Think about that for a minute. Canada has a single-payer health-care system. The

government is the only insurer of any note. The United Kingdom has a socialized

system, in which the government is not only the sole insurer of note but also

employs most of the doctors and nurses and runs most of the hospitals. And yet,

measured as a share of the economy, our government health-care system is the

largest of the bunch.

And it's worse than that: Atop our giant government health-care sector, we have

an even more giant private health-care sector. Altogether, we're spending about

16 percent of the GDP on health care. No other country even tops 12 percent.

Which means we've got the worst of both worlds: huge government and high costs.

This is where a " serious conversation " on health-care costs would start — with

what has worked, and what we can learn from it. Instead, it's where our

conversation about health-care costs never quite goes.

The Republican plan, in fact, heads in the opposite direction: The GOP

outsources Medicare to private insurers and gives senior citizens checks that

cover less and less of the cost of insurance every year. Republicans hope that

when faced with more cost pressure and more options, seniors will be able to

exert the sort of consumer pressure that lowers prices while retaining, or even

improving, quality.

What they've got in mind already exists in Medicare. " Our premium-support plan

is modeled after the Medicare Part D prescription-drug program, "

(R-Wis.) told me. But Part D hasn't controlled costs. Instead, premiums have

risen by 57 percent since 2006, and the program is expected to see nearly 10

percent growth in annual costs over the next decade.

Moreover, this isn't the first time we've tried to let private insurers into

Medicare to work their magic. The Medicare Advantage program, which invited

private insurers to offer managed-care options to Medicare beneficiaries, was

expected to save money, but it ended up costing about 120 percent of what

Medicare costs.

The Democratic plan, conversely, quietly recognizes that government-run

health-care systems that are willing to throw their weight around can control

costs. So the plan is to have Medicare try to pay for quality, not volume.

The first step is figuring out what quality is. So Medicare has been collecting

vast amounts of hospital data on patients' experiences, the delivery of

pre-operative antibiotics, the prevalence of medical imaging and other topics.

Come October, the hospitals posting good numbers will get a bonus from the

Affordable Care Act; those posting bad numbers will face a penalty. Next year,

the bonus and penalty will get bigger. Democrats have also created and funded a

center to start testing the effectiveness of various drug, device and surgical

treatments.

As for the inevitable political blowback, Democrats created the Independent

Payment Advisory Board, a panel of 15 Senate-confirmed health-care experts who

can make tough, cost-cutting reforms to Medicare in Congress's stead. To be

stopped, Congress needs to vote the board down, and the president needs to sign

off on lawmakers' opposition. That creates ample room for Congress to hand the

IPAB the decisions it doesn't want to make on its own.

Could it work? Sure. But it's a gamble. It's easy to imagine that strategy

improving quality without cutting costs. That'd leave us with a better

health-care system than we have now but the same budget problems. Another danger

is that Congress could override the IPAB, rendering it useless as a tool for

cost control.

But that's the choice we've been left with: a plan that has never worked or a

plan that's never been tried. As for the approach that's helped every other

industrialized country achieve universal coverage at about half our costs? Well,

we're still not ready to talk about that.

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