Can we control costs without choosing between Ryan v. Obama?

Gene Steuerle argues yes, that budget caps placed on total federal spending (Medicare, Medicaid, tax subsidy of private insurance) is the way to go. For one thing, he says we will never completely decide between the various approaches to cost control. Instead, we will maintain a muddled system with many mid-course corrections, likely driven by election victories of the various parties, fueled at least in part by opposition to efforts at health care cost control. And Steuerle notes that for all the heat between the sides and talk of fundamental differences, three basic questions loom over any approach to cost control.

  1. How should budget constraints be applied?
  2. Should automatic budget growth for health care programs (particularly, Medicare) finally be reined in?
  3. Should government health program budgets be limited even if neither side gets its way on question 1?

He notes that question 1 is the focus of most debate (think IPAB v. voucher), and any answer to this question will be politically hard (again, see comments on IPAB and town hall meetings on Ryan budget). This drives both sides to needing budget caps on federal health spending if we are to control health care costs. He says if we wait for political agreement on how to actually implement cost control (the last step, again IPAB v. vouchers for simplicity), we will never control costs, because we will never decide once and for all. So, the answer to question #3 must be yes, if we are to address health care costs. He believes budget caps that provide flexibility to implement different answers to question 1 is the way to go (and he makes a convincing case).

I especially like the reply that Steuerle makes in the comments section of his piece in a reply to Joe Antos (comments in parentheses are mine):

….I asked, but he (Joe Antos) did not answer, what one does if there is no permanent resolution of the health care debate.  Right now Joe is arguing with his partner (the Dems) over how they should raise their kid, but the kid is playing in the street.  To those who say we don’t know what to do, or we can’t do anything unless done my way—often those on the other side of the issue from Joe—I say we do know what to do: bring the kid in off the street.Common ground doesn’t mean agreement on everything.  Removal of open-ended budgets represents the common ground element of both the Obama and Ryan plans. [emphasis mine]

The bigger difference between the Obama v. Ryan approach is that the ACA aims to address costs while expanding insurance coverage, whereas the Ryan budget does not have a strategy to expand insurance coverage. Perhaps budget caps to control federal costs and fighting out the next election (and the next, etc) over the coverage issue and the mechanism of applying the agreed upon caps is the best we can hope for at this time.

About Don Taylor
Professor of Public Policy at Duke University (with appointments in Business, Nursing, Community and Family Medicine, and the Duke Clinical Research Institute). I am one of the founding faculty of the Margolis Center for Health Policy, and currently serve as Chair of Duke's University Priorities Committee (UPC). My research focuses on improving care for persons who are dying, and I am co-PI of a CMMI award in Community Based Palliative Care. I teach both undergrads and grad students at Duke. On twitter @donaldhtaylorjr

3 Responses to Can we control costs without choosing between Ryan v. Obama?

  1. steve says:

    This sounds good, but I still think it matters how you set those caps. If you do it through a voucher and private insurance system, then I would expect similar results to our current private system. We should see costs continue to rise with more and more people going without insurance, or having inadequate insurance.

    The part that worries me most about setting a budget cap is that it lets Congress to continue avoiding dealing with the cost issue. For our long term economic well being, there are few issues more important than our rising health care costs. Congress mostly avoids this issue.

    Steve

  2. Mark Spohr says:

    There is a lot of room to reduce costs as shown by the rest of the developed world where costs are half of what we spend per capita. However, since the medical industry have effectively captured the legislative and regulatory process, there is little hope in actually reducing the cost of medical care (and the profits of the industry).
    Instead, we are left debating how to shift more costs to patients and won’t even consider increasing revenue to help people obtain needed care. This is pathetic.
    The rest of the developed world functions just fine with tax burdens twice that of the US and they use this to fund cost effective universal access to health care (and a lot of other social safety nets).
    Our dysfunctional government can only argue about how much and which way to screw people out of needed health care and social services (and how they can ensure that the corporations and rich people have their profits and assets increase).

    • Floccina says:

      The rest of the developed world functions just fine with tax burdens twice that of the US and they use this to fund cost effective universal access to health care

      Not so the USA Government already spends more on health care that the Governments of most of rest of the developed world.

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