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Counting the Costs of Health Care Reform

November 10, 2009 at 12:00 AM EDT
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Can health care reform change the system and cut costs? Judy Woodruff gets one take from Gail Wilensky, a former administrator of the federal Medicare program.

JUDY WOODRUFF: And now we get a different view. And that comes from health economist Gail Wilensky. She’s with the Project HOPE Foundation. She’s a former director of Medicare and Medicaid in the first Bush administration. She has chaired Congress’ Medicare Payment Advisory Commission.

Gail Wilensky, thank you for being with us.

GAIL WILENSKY, senior fellow, Project HOPE: Thank you for having me.

JUDY WOODRUFF: So, Peter Orszag says, yes, these plans are going to cut health care spending in this country.

GAIL WILENSKY: Well, Peter knows these issues about as well as anyone from his days as the Congressional Budget Office director.

What he said was, it won’t add to the deficit. That’s true, sort of. The amount of financing will make sure that you don’t add to the deficit. One of the big problems is, the physician payment fix is outside of health care reform. It’s about $210 billion over the next 10 years.

You can say, well, we have got to fix the way Medicare pays physicians anyway. And that’s true. But, of course, physicians are really key to changing how health care is delivered. So, while we go spend a trillion dollars, more or less, on health care reform, we better make sure that we have got another $200-plus billion to fix this payment problem.

JUDY WOODRUFF: And you’re not saying that’s not part of what you see moving through Congress?

GAIL WILENSKY: That is not included in the Senate bill that he’s talked about and how much it would reduce payments either in the first 10 years or the second 10 years. It’s a very big issue.

JUDY WOODRUFF: What else, Gail Wilensky, do you think ought to be in this legislation that isn’t there to get the overall amount that is spent on health care down?

GAIL WILENSKY: Two things that I would put on my wish list.

The first has to do with changing the tax treatment of health insurance provided by employers. There’s a version of it in the Senate bill. It’s the tax on Cadillac plans, an excise tax on the insurer if the plan costs too much money.

I hope it is maintained in what comes out of the Senate and then out of the conference. It’s nowhere in the House bill. So, this will drive some behavior change. It’s a little clumsy as a way to do it. It’s normally thought of as being directly on the employee. But it’s good enough.

But the second part has to do with all of the pilots that we heard discussed.

JUDY WOODRUFF: Pilot programs.

The trouble with pilot programs

GAIL WILENSKY: Pilot programs. It's absolutely true we don't know how to get from a -- a system where most physicians are paid on a fee-for-service basis, each individual service that's provided, to paying for taking care of somebody with diabetes, or to pay all the physicians that take care of somebody who is having a bypass procedure or a hip replacement.

That's called a bundled payment. We need to experiment how to do it. But our history with pilots is that, if there is not the authority up front to implement the pilots that work, they're not likely to actually find their way into action. And that's a big problem.

JUDY WOODRUFF: And this is an authority that I believe you think should be -- should reside in the office of the secretary of health and human services.

GAIL WILENSKY: Absolutely.

JUDY WOODRUFF: And my question, though, on that is that, you know, many on the Republican side of the ledger say, that's too much government control.

So, this argument that you need somebody with authority who represents the federal government flies in the face of the argument from Republicans you have already got too much government control in this plan.

GAIL WILENSKY: Well, Medicare is already paying how hospitals are paid, how physicians are paid. The question is, can we pay smarter, we -- and have incentives to provide the health care that people need, have it be evidence-based, but not just pay for more and more complex, if that's not actually the most medically appropriate?

We know what we have now doesn't work. We can see that by our unsustainable spending and our poor value. The question is, when we figure out what works, how do we get that actually into action? The secretary is an accountable person, accountable to the American public. The secretary can be dismissed, if the person gets completely out of line.

That's the better way, to my mind, rather than a Medicare commission, which, once appointed, is not accountable to anybody. So, we need to find a way to get the pilot programs that show we can improve quality and reduce spending actually into action. There's a long history of pilots that never go anywhere.

JUDY WOODRUFF: There are so many threads to all of this, and -- and we don't have time right now to get into all that. But what about coming down -- down to the way many people relate to the health care system? And that is through the premiums that they pay for their insurance.

We heard Peter Orszag say that he thinks those will go down. How do you see that?

GAIL WILENSKY: Well, for some people who haven't been able to get insurance or only very expensive insurance because they're uninsurable, their premiums may go down.

But for a lot of people, they actually may go up. It will depend exactly how many of the 50 percent of the population without insurance comes in. One of the troublesome parts is that, if you guarantee you can come in whenever you want, you can't be penalized if you have a preexisting condition, can't be denied insurance, some people may wait until they're sick.

If that happens, if very many of those people wait until they're sick to get insurance, it will actually drive up costs for all of us. It's a little of what happens in New York.

JUDY WOODRUFF: Bottom line, Gail Wilensky, you're concerned that this legislation doesn't do enough to address the rising cost of health care?

GAIL WILENSKY: Absolutely. Does a good job in reforming insurance that is cost containment-lite at best.

JUDY WOODRUFF: Gail Wilensky, thank you very much.