Obama’s Dreaming

From Obama’s speech tonight:

I will not sign a plan that adds one dime to our deficits – either now or in the future. Period. And to prove that I’m serious, there will be a provision in this plan that requires us to come forward with more spending cuts if the savings we promised don’t materialize. …

We’ve estimated that most of this plan can be paid for by finding savings within the existing health care system – a system that is currently full of waste and abuse. … We will also create an independent commission of doctors and medical experts charged with identifying more waste in the years ahead. …

Because Medicare is such a big part of the health care system, making the program more efficient can help usher in changes in the way we deliver health care that can reduce costs for everybody. We have long known that some places, like the Intermountain Healthcare in Utah or the Geisinger Health System in rural Pennsylvania, offer high-quality care at costs below average. The commission can help encourage the adoption of these common-sense best practices by doctors and medical professionals throughout the system – everything from reducing hospital infection rates to encouraging better coordination between teams of doctors.  Reducing the waste and inefficiency in Medicare and Medicaid will pay for most of this plan. …

Add it all up, and the plan I’m proposing will cost around $900 billion over ten years.

So he’s going to save $500+ billion over ten years by having an independent commission “encourage best practices”?  Actually doing that would require this commission to have enormous power and be willing to use it to create many politically powerful enemies.  I see no sign whatsoever that they are actually willing to do this, nor any sign that they would actually be willing to cut medical spending if “spending cuts” somewhere were required by law.  So far this still looks like the usual empty campaign promise to pay for spending deficits by “cutting waste and abuse.”

Added: The Post fact-checker agrees on Obama’s cost-cutting claims: “This is, at best, wishful thinking.”  The White House website elaborates that the Commission will not ration or cut benefits or access:

An independent Commission, made up of doctors and medical experts [will] make recommendations to Congress each year on how to promote greater efficiency and higher quality in Medicare.  The Commission will not be authorized to propose or implement Medicare changes that ration care or affect benefits, eligibility or beneficiary access to care.

So they will cut vast waste without ever telling anyone they can’t get a treatment they want?  Fantasy.

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  • http://t-a-w.blogspot.com/ Tomasz Wegrzanowski

    If there are actually spending cuts triggers included in it, then the commission might get a lot of political power.

    A second thought is that “cutting waste and abuse” is such an easy and effective thing to say, that Obama would be a stupid politician not to talk about it. And Obama proved many times that he’s really good at playing politics.

    • pdf23ds

      I agree. I think this is more of a “little white lie” than anything.

  • http://www.colindocherty.com Colin

    It worked in Australia. Best practice style commissions that oversaw and made recommendations to governments, which were followed through on and resulted in less wastage.

    Maybe you’re just getting too pessimistic.

    • http://hanson.gmu.edu Robin Hanson

      Sure it could work if they put teeth in it; I just don’t see any signs of teeth.

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  • http://hanson.gmu.edu Robin Hanson

    I just added to the post.

  • Albert

    Sounds like rationing. Insurance companies ration care today and any govt plan will do the same. Saying so in this climate=legislation suicide. Our public discourse is too immature for such plainspeak without the other party quickly hijacking the message. What you end up with are ambiguous speeches. So go ahead, tell me what you’ll limit and I’ll say you’re trying to kill grandma.

  • Curt Adams

    They plan to get almost $200 billion by cutting the Medicare Advantage subsidy given to private insurance companies to make up for the fact that they’re considerably less efficient than Medicare proper. Kind of a no-brainer there. You could get almost all of the rest from cutting back similar Medicare D subsidies – which Obama has promised to let the drug companies keep getting, but a cost-cutting commission could be freed of that promise. And don’t forget the grotesque over-prescription of doctor-owned testing equipment like in McAllen, Texas.

  • http://oregonguythinks.blogspot.com/ OregonGuy

    I just hope the commission has really cool uniforms and black helicopters. Imagine clinic and hospital adminstrators hiding under their desks when the ‘choppers arrive.

    It’s hard to take any of this “debate” seriously, when the arguments are seriously flawed to begin with. Can anyone, with a straight face, claim that somehow innovation in drugs and therapies will result in a lessening demand for better treatment? Me? I’m glad that the government didn’t get involved in “cost control” of computers, back when 386 PC’s were selling for 29-hundred dollars. Imagine the world we would live in today if we controlled IT sector spending to 1979 levels.

    The whole debate is a straw man.
    .

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  • Kenny Evitt

    While watching the speech, I kept hearing Robin in my head saying “put a tax on medical care!” – but then Obama would say something that would make me think that there is too little care. What’s our problem again? We’re paying too much, a lot of it for care we don’t need, but … we also need to spend more to ensure even more people have access to largely useless care? [My friend made me leave the room when I started arguing with the TV …]

  • Floccina

    Early in the speech he said these are the facts nobody disputes them. I dispute some of them and I know many people that dispute some of the things head had said. Oh well he is a politician. He seems not worse than most politicians.

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  • ducktator

    Why the admin does not try first to eliminate waste and fraud from Medicare/Medicaid and then have Medicaid offered (with fee) to all people that can not afford private care? Is this possible?

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  • http://shagbark.livejournal.com Phil Goetz

    Anytime a politician talks about “eliminating waste”, you should immediately dismiss him/her. Waste is inherent in the democratic process. AFAIK nobody has ever been successful in all of American history at making big savings by eliminating waste.

    When Obama says he’s simultaneously going to lower costs and increase coverage, that’s even more of a fantasy. That just tells us he’s either ignorant, or not telling us what he really wants.

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