Economic Scene - Congress May Be Finding the Nerve to Cut Health Costs - NYTimes.com

Economic Scene - Congress May Be Finding the Nerve to Cut Health Costs - NYTimes.com

Over the next several weeks, members of Congress will be confronted with one scary story after another about what will happen if they try to cut health care costs.

Tax the costliest health insurance plans? Workers will be denied medical care. Reduce the growth of spending on home health care agencies? Elderly patients living alone will be left to fend for themselves. Set up a commission to reduce Medicare waste? Again, the elderly will suffer. Impose a tax on plastic surgery? That’s unfair to unemployed women looking to enhance their appearance. (Seriously, the plastic surgeons are making that case.)

But here’s the thing: It is abundantly clear that our medical system wastes enormous amounts of money on health care that doesn’t make people healthier. Hospitals that practice more intensive medicine, to take one example, get no better results than more conservative hospitals, research shows. And while the insured receive better care and are healthier than the uninsured, the lavishly insured — those households with so-called Cadillac plans — are not better off than households with merely good insurance.

Yet every time Congress comes up with an idea for cutting spending, the cry goes out: Patients will suffer! You’re cutting bone, not fat!

How can this be? How can there be billions of dollars of general waste and no specific waste? There can’t, of course.

The only way to cut health care costs is to cut health care costs and, in the process, invite politically potent scare stories.

I’m as skeptical as anyone of the ability of the United States Congress to formulate good policy, but the last few days have offered reason to hope that its members may be summoning the political courage to endure the scare stories.

That would be a big deal. Health costs, through Medicare, are the main source of the huge long-term budget deficit. In recent years, they have also caused insurance premiums to rise so quickly that employers haven’t had the money to give workers a decent raise. David Cutler, a Harvard health economist, estimates that the measures already in the health bills will increase the typical family’s income $2,500 a year by the end of the decade. ...