Economists have mixed views on Senate health bill's cost controls

Nov 30 2009

With the public fretting about rising health costs and deepening federal budget deficits, White House officials, including budget director Peter Orszag, were quick last week to trumpet the optimism of some economists who said the Senate's version of health reform would help control costs, the San Francisco Chronicle reports, adding: "But many experts, including some who signed the letter, said Orszag is only partly right. Parts of the Senate bill could control costs but no one knows how much. Nearly everyone agrees that the bill's cost controls have been weakened and may grow weaker. And all agree that the House bill would do even less." 

"The cost question is vital. ... Rising costs are devouring wages and bankrupting individuals, businesses and government at all levels. They are a main driver of scary U.S. budget deficits. Failure to slow health spending would aggravate the nation's economic problems; success could begin to address them" (Lochhead, 11/30).

The two camps of economists include the "optimists" who say the Senate bill "contains all the most promising ideas for transforming the health-care system and encouraging doctors and hospitals to work more efficiently" and would eventually lower premiums and government liabilities for health care, The Washington Post reports. In the other corner are the "pessimists," who "don't necessarily disagree," but who fear those promising ideas would be slow to "bear fruit," leaving the government to pick up hundreds of billions in new costs while the rolls of existing programs swell with retiring baby-boomers (Montgomery, 11/30).

John Kitzhaber, a former Democratic governor of Oregon who is once again running for office, holds firm to the message that costs are the key to reform, NPR reports. Kitzhaber, an emergency doctor before entering politics, pioneered Oregon Health Plan, which spread Medicaid dollars to more people by rationing care. Now, he says, "I don't believe that what's going to come out of Congress is going to have any impact on the medical cost inflation, which is what's really crushing individuals and businesses, and really putting the country at economic risk" (Brady, 11/30).

Related KHN story: Dr. John Kitzhaber's Unorthodox Ideas On Reforming Health Care (Moore, 10/21)

Some people may be wondering about the Congressional Budget Office's cost projections for the bills. The Chicago Tribune answer:s "In the House and Senate health care bills, many of the changes to spending and taxes wouldn't take place for a few years. That means that cost estimates for those provisions only account for a portion of the decade, but the CBO 'score' is still a 10-year estimate" (Oliphant and Geiger, 11/29).