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COST: Obama Talks Health Care -- Bending the Curve

President Obama and Fred Hiatt, editorial page editor at The Washington Post, talked health care in an interview this week. Hiatt focused on one of the key questions in the debate. With the economy in such a rough spot, how will health reform bend the cost curve?

Throughout the week, and again in his primetime press conference Wednesday, Obama promised that the bill he signs will be deficit neutral. Obama has taken a lot of heat lately from Republicans (and Democrats) who worry about health reform increasing the deficit. Obama called these claims "misinformation" during his press conference. In his discussion with Hiatt, Obama said, "When I say that health care reform is fiscal reform, I mean it. And I think the facts are on my side on this."

Hiatt asked Obama what strategies are most important to bending the cost curve. Obama recalled his meetings with CBO Director Douglas Elmendorf and other health economists in recent weeks, and said they confirmed his belief that effective delivery system reforms could bend the curve. Obama named Geisinger and the Mayo Clinic as examples of high performing health systems that provide better care for less money. He believes their strategies can be applied throughout the whole health care system to get higher quality at a lower cost. Obama wants to see an independent board of medical experts and health economists making recommendations about how we can improve the health care delivery system (occasionally also known as "MedPAC on steroids").

The president recalled a letter sent by Elmendorf a few months in response to questions from Sens. Judd Gregg (R-NH) and Kent Conrad (D-ND), about what strategies would most effectively bend the cost curve. Obama said that of the 18 strategies named in the letter, 16 had been adopted into the House health care bill. The remaining two are the formation of a MedPAC style oversight board (under discussion now) and eliminating the tax exclusion on employer-provided health insurance. Obama is worried that rolling back the tax exclusion would put an additional burden on middle class families. He believes there might be alternative ways to get to the same cost saving goal. 

The health care system itself is vast -- it's public, it's private, and it's a huge part of the economy. The debate over cost savings in the health care system is complex. Obama argued,

The problem we have in this whole debate is that bending the cost curve, curbing health care inflation, is harder to measure in part because it doesn't just involve government outlays; it also involves what's happening in the private sector.

Obama maintained his commitment to bending the cost curve and expanding coverage. Controlling health care costs, and the very real threat of out-of-control health care inflation, is essential to America's future financial security and sustainability.

If we don't do anything on health care inflation, then we might as well close up shop when it comes to dealing with our long-term debt and deficit problems, because that's the driver of it -- Medicare and Medicaid. It is not possible for us to cut nondiscretionary -- or it's not possible for us to cut non-defense discretionary spending sufficiently to close the gap. The only way for us to close the gap in any serious way is if we get health care inflation under control.