Healthcare Reform to Reduce Deficit?
Published by Bob Foster
I guess I’m just getting dense from information overload about healthcare reform, but I just can’t get my mind around how piling on all the additional costs of healthcare reform is going to reduce the deficit.
First we heard that improving efficiency in healthcare was going to pay for the added cost of the government’s new plan, but that is not going to happen according to the Administration’s major healthcare advisor, Dr. Ezekiel Emanuel, MD. Here is what he had to say about healthcare savings:
“Vague promises of savings from cutting waste, enhancing prevention and wellness, installing electronic medical records and improving quality are merely ‘lipstick’ cost control, more for show and public relations than for true change.” (Dr. Ezekiel Emanuel, MD, Health Affairs, February 27, 2008)
We haven’t heard much about savings from increased efficiency for some time now, so where does this deficit reduction come from? A $1 Trillion reduction in the deficit over the first 10 years of the plan…after spending about $1 Trillion in added healthcare costs?
I am in favor of healthcare reform generally, but I don’t understand how the current plan will reduce the deficit…I guess I have a mental block on this…maybe I can’t see the trees for the forest. Could someone please explain this to me?
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7 Responses to “Healthcare Reform to Reduce Deficit?”
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Bob – It would be interesting to compare Dr. Emanuel’s words to the non-partisan CBO’s recent findings. What I know FOR CERTAIN, having been in the medical billing business with a partner who developed the key fab for hotel entry, is that billions of dollars are lost through simple errors in coding. And, that’s just one inefficiency in the system. Some 12 plus years ago we tried to get Congress interested in looking at cost cutting measures by doing some of the very things that are being advanced today.
Judith Ellis´s last blog ..Being Republicans
Judith – Sadly, both education and healthcare are being bogged down by top-heavy and inefficient “administration.” Educators are stymied by administrators, and healthcare is heavily burdened by highly inefficient systems, procedures, and people who are not health workers. The question is: How will this ever change?
There certainly will not be any change from within. I have seen this first-hand, as have you. That means someone (with “clout”) will have to come in from the outside to make necessary changes. That will cost more money—a LOT of money.
When the government took over General Motors they sent in teams of Treasury Officials, and staff, to teach GM how to run their company. They also paid $7 million to The Boston Consulting Group (BCG) to help show GM the error of their ways…and that was only one company.
So, where will all the money come from to bring new efficiencies to the healthcare industry…and how long will it take to see a net payback—let alone a Trillion dollar reduction in the deficit. Frankly, I don’t see any net payback coming for a long, long, time—if ever. I think maybe Dr. Emanuel was correct.
Moreover, I am still stuck trying to find the connection between healthcare cost and the deficit—how do these two things interact? I haven’t seen any details from the CBO regarding their findings. Perhaps the feds are just going to put all the cost of Medicaid onto the states. Of course that does not lower the cost of healthcare, it would just push many states into financial default.
The CBO’s findings shouldn’t be too hard to find; they are in the Internet. The quote from Dr. Emmanuel is from two years ago. He is now in the administration and I’m sure he worked closely with the CBO. Perhaps an updated views can be found. The CBO’s findings were just released. Yes, big systems are difficult to navigate and they take time to do so. You ask where will the money come from? If we would only make the billing process easier, there is billions there. Simple errors are made that cost billions. And, it is very easy to game the system. There needs to be a crack down on fraud with insurance companies and doctors offices. My sister-in-law and brother have run a very successful medical billing practices for many years now.
Judith Ellis´s last blog ..Being (Un) Inspired by Others
Bob – Just thought I’d share these facts from Reuters about the bill: http://www.reuters.com/article/idUSN1914020220100319.
Judith Ellis´s last blog ..Being (Un) Inspired by Others
Judith — Thanks for the info. I read the Reuters article earlier, but I am still searching for information on the basis and methods used by the CBO in developing their findings. It appears these may be confidential (or at least very hard to find).
I did find it interesting that the majority of the deficit reduction calculated by the CBO comes in the second decade after the full implementation of the law. That apparently means there will be minimal deficit reduction before 2028 – 2038. Not quite what I was hoping for. Someone…somehow…must get medical costs under control before we can make this all work.
“The journey of a thousand miles start with a single step.” – Lao Tzu
Let’s hope that this is that “single step.” My suggestion regarding the CBO’s “basis and methods” is to write to them directly. If you do, please post your findings. I’d be interested to know also. But what is for certain, however, is that both sides have determined that the CBO’s “basis and methods” are non-partisan.
Judith Ellis´s last blog ..Being Violent
Judith – Thanks for the comment. I agree that the CBO is non-partisan–it has been the final word on Congressional cost estimates for some time. But I did note that the agency has stressed that long-term projections of deficit reduction by the healthcare reform bill are highly uncertain. That would only be natural, because who knows what the world is going to look like in 20 years, and how unforeseen events will impact healthcare in the U.S. between now and then.