The Deficit Commission and Healthcare

jp-fiscal-articlelargeThe Washington Post and New York Times are ablaze today with top-of-the-page headlines about the proposals being made by the co-chairs of President Obama’s bipartisan commission on deficit reduction.  There may be a bit of an overreaction to the draft report since there’s no assurance it will receive the necessary support of 14 (out of 18) commission members, and Congress is under no obligation whatsoever to adopt the proposals.

Nonetheless, the commission co-chairs Erskine Bowles, former chief of staff to President Clinton, and former U.S. Senator Alan Simpson deserve credit for taking on the tough task of trying to curb the nation’s burgeoning red ink.  Their report doesn’t hesitate to put some political sacred cows on the chopping block in the name of deficit reduction.

The healthcare provisions of the co-chairs’ proposals illustrate the difficulty in trying to reconcile two very important goals Americans want to see achieved – reducing deficit spending and improving our U.S. healthcare system.  The Bowles-Simpson report illustrates how difficult it is to achieve one without potentially undermining the other.

For example, the draft report calls for the creation of a public health insurance option, a policy notion that Congress soundly rejected in the health reform debate.  As we’ve discussed ad nauseum, a public option will certainly drive down payment rates to physicians and hospitals, but those costs would then be shifted to private payers.  And a public option with arbitrarily-low costs would reduce the amount of competition in the insurance marketplace, a development that wouldn’t serve consumers well.

The report calls for strengthening the Independent Payment Advisory Board to an even greater degree than called for in the new health reform law.  This would create an even more potent entity in terms of simply axing healthcare spending, but without a focus on how to elevate healthcare value.

The report says doctors and other health providers will have to be paid less.   At the same time, we’re faced with the need to recruit more people into the medical profession to deal with the tens of millions of newly-insured Americans entering the system. 

Yes, there is an urgent need to address the nation’s rising deficits, and the health sector has to do its part.  But, understanding the challenges we’re facing in the years ahead, with one in every three Americans expected to have diabetes by the year 2040 and other chronic diseases on the rise, we have to look at the healthcare system as more than just numbers on a balance sheet.   

Work needs to accelerate on delivery reform, on payment reform, on changing the tort system (which, to their credit, the commission co-chairs recommend) to reduce defensive medicine costs, on attacking the chronic diseases that account for 75 cents of every health dollar we spend. 

But deficit reduction and quality healthcare should not be treated as an either-or choice.  The commission’s work is an essential exercise in numbers, but we can’t forget the real patients and consumers who would be affected.