Obama team battles to portray healthcare reform as cost-cutting

House and Senate bills on healthcare reform include most cost-cutting ideas that have surfaced in recent years, asserts Obama's budget director.

By , Staff writer

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    President Barack Obama spoke about health care reform in the Rose Garden of the White House in Washington, November 8.
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The Obama administration is battling to persuade a skeptical public that healthcare reform legislation will help to curb the runaway cost of medical care.

The White House effort could be pivotal as Senate lawmakers consider how to refine their bill ahead of what promises to be a narrow-margin vote.

"I’m very pleased with how [the Senate and House bills] are shaping up ... in cost containment," Nancy-Ann DeParle, the administration's health reform director, said in a news briefing Wednesday.

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Peter Orszag, the White House budget director, said the legislation is expected to incorporate most of the major cost-control ideas that have emerged in recent years. Those include:

• Moving toward a "bundled-payment" system in which providers are paid for overall care – not for each test or procedure they perform.

• Starting to track what treatments work better than others (which could nudge hospitals toward more efficient care).

• Digitizing medical records to improve efficiency.

• Forming a Medicare commission to curb rising costs in the program that covers older Americans – and that accounts for a large share of expected federal budget deficits in the future.

The pre-Thanksgiving healthcare push comes at an important moment. The Senate is about to dig into the details of its bill, polls suggest that voters are wary about the prospect that costs will go up rather than down, and the calendar is ticking quickly toward an election year in which a voter focus on the economy could undercut momentum for healthcare reform.

Republican foes are attacking the legislation, questioning whether it will actually tame costs.

"Now it’s the American people’s turn to have their voices heard," Senate minority leader Mitch McConnell (R) of Kentucky said in a Nov. 21 statement. "For months, they have been asking Congress to do something about the high cost of healthcare and yet the sponsors of this bill responded with a half-trillion dollars in Medicare cuts, massive tax hikes, and an unsustainable expansion of new government programs which Congress’s non-partisan scorekeeper says will result in higher premiums."

In an ABC News/Washington Post poll this month, 52 percent of Americans said they expected their medical costs will rise with healthcare reforms, while 11 percent expected a decrease, and 35 percent expected no change. In this and other recent polls, the share of Americans opposing the Obama-backed reform plan is larger than the share supporting it.

Although important differences remain between the House and Senate bills, both appear headed toward a similar framework: All Americans would be asked to buy insurance, with the government footing the bill for those who are poorest and subsidizing millions with average incomes. The health insurance industry would reap a windfall of new revenue, but would have to cover people regardless of their medical conditions. Congress would also create a "public option" as an alternative to the private insurance plans.

To pay for this expanded access to healthcare, the House would boost taxes on high-income Americans, while the Senate would tax high-end health-insurance plans.
The approach has plenty of critics, but also many supporters. A band of high-profile experts on the budget and healthcare signed a letter to Obama last week "to stress the potential benefits of health reform for our nation’s fiscal health, and the importance of those features of the bill that can help keep healthcare costs under control."

Their arguments match many of the administration's views.

They endorsed the Senate Finance Committee's tax on Cadillac plans, arguing that it would not only raise revenue, but also "help curtail the growth of private health insurance premiums by creating incentives to limit the costs of plans to a tax-free amount." They backed the idea of a Medicare commission, to ensure that cost and payment reforms become an ongoing process. And they called for reforms of the way healthcare is purchased, such as the bundled-payments idea.

Many skeptics, while backing some of the same ideas, worry they won't be enough. Some cost controls are in the legislation but in watered-down form, they say. In the Wednesday briefing, Budget director Orszag fired back that the legislation is still evolving. He also said it will start a gradual process of learning what works, so that additional cost containment will follow in future years.

Critics on the left say a larger role for government could rein in costs – even while moving the nation toward universal medical coverage. Many on the right take an opposite view – that the Obama approach puts too much faith in government technocrats setting parameters, and not enough in private-sector competition.

"Increasing coverage does not mean larger government programs," Douglas Holtz-Eakin, an economist who advised presidential candidate John McCain, argued in a report earlier this year. "Instead, it should mean better and broader private health insurance for the U.S. population."

The pool of people who can't get coverage due to their medical conditions should be aided through targeted reforms, he argues.

Debate over healthcare is coming to a head at a time of soaring federal budget deficits. The House and Senate bills would cost the government more than $800 billion over 10 years, but would include tax hikes and other measures designed to make them "deficit neutral."

Both plans are designed to cover about 95 percent of the US population, up from the estimated 85 percent of Americans who have coverage today.

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See also:

Top four differences of Senate and House healthcare reform bills

Healthcare holdouts: Rep. Ben Nelson says abortion funds mean 'no' vote

Healthcare holdouts: Rep. Mary Landrieu likes her $300 million

Healthcare holdouts: Rep. Blanche Lincoln wants to focus on jobs

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