Several trade organizations including AHIP, the organization that represents healthcare insurers, and PhRMA, the organization that represents pharmaceutical manufacturers, have proposed a healthcare reform plan that they’re willing to support which would reduce the increase in the cost of healthcare by 1.5%:
WASHINGTON -(Dow Jones)- Health-care trade organizations have formed a plan to reduce projected increases in health costs by $2 trillion over 10 years and will meet Monday with President Barack Obama to present the plan.
Health industry groups have pledged to reduce the rate of cost increases for treating patients by 1.5% each year, eventually resulting in the $2 trillion in savings, according to the White House. Participants in the plan are a diverse array of groups including the American Medical Association, the American Hospital Association, America’s Health Insurance Plans and the Service Employees International Union.
Getting control of escalating health-care costs is a centerpiece of Obama’s proposal to overhaul the nation’s health-care system and expand health coverage to those currently uninsured. The vast savings envisioned by the industry groups, if realized, would represent a major step toward achieving that goal.
Timeo danaos et dona ferentes, as Virgil paraphrased from the Iliad’s Greek. I fear the Greek even when they’re bearing gifts. As I understand the proposal they’re bringing forward it rests on three legs. First, there would be a mandate for everybody in the United States to have health insurance. Second, all insurance would be privately provided. There would be no public option, no government-provided plan as it has come to be called. And, third, the rate of increase of costs would be slowed. Don’t mistake that last leg as a commitment to reduce costs. It isn’t. It’s a commitment to reduce the rate of increase not to reduce the costs.
Paul Krugman welcomes the news but is similarly skeptical:
What’s presumably going on here is that key interest groups have realized that health care reform is going to happen no matter what they do, and that aligning themselves with the Party of No will just deny them a seat at the table. (Republicans, after all, still denounce research into which medical procedures are effective and which are not as a dastardly plot to deprive Americans of their freedom to choose.)
and urges the Obama Administration to hang tough and reject the second leg of the tripod plan. My guess is that will be a deal-breaker for the industry advocacy groups. Their view is that mandatory insurance conjoined with the option for the insurance to be provided by the government is just the nose of the camel in the tent and they’re probably right.
I’ve got to admit that I’m confused by all of this. The cost of healthcare insurance rises with the cost of healthcare. A commitment to slow but not reduce costs is a commitment that healthcare insurance will be increasingly unaffordable not less so.
Here in the United States we already spend three times as much per capita as most OECD countries do, with similar or poorer outcomes. I’m typically a half a loaf is better than none kind of guy but a commitment that what’s already intolerable will get more so over time isn’t much of a commitment at all.
To my eye this is the plan that should have been been arrived at 15 years ago. The cost basis now is far too high for it to be acceptable.