COST: The $64,000 Question (Make that the $6.4 Trillion Question)

Ceci Connolly at the Washington Post asks the $64,000 question -- or maybe it's more of a $6.4 trillion question. Do the House and Senate health care bills go far enough in reshaping how we deliver health care so that we can control rising costs?

A lot of experts, she notes, see the approach as too timid by far.

"The bills are directionally correct, but they're not going far enough," said George Halvorson, chairman and chief executive of Kaiser Permanente and the author of "Health Care Will Not Reform Itself."

You've heard it before: we need to move away from fragmented fee-for-service care that rewards quantity over quality. Instead we need to encourage a more coordinated or integrated care system that pays hospitals and doctors for doing better and begins to shift the system away from acute care and more toward chronic diseases. (And chronic diseases nowadays include a lot of diseases we used to think of as more acute conditions but which we may live with for years, such as cancer and some heart-related conditions.) Different experts have different pet phrases for this new vision --  performance based medicine or value based purchasing or multispecialty integrated care -- but the general thrust is the same. Quality and efficiency versus quantity and cost chaos. As Ceci put it:

Under that vision, providers would be given a few years to move to performance-based medicine, in which fees and results are published, money is directed to evidence-based therapies, and harmful errors such as preventable infections are reduced. In short, the goal is to save money by modernizing and improving.

But most of the folks she quotes (OMB chief Peter Orszag is the exception) see the health reform bill as too many half-measures. That's partly for political reasons; you may have noticed that it is hard to get 60 Democratic senators and at least 218 Democratic House members to agree on specifics, especially if they may be disruptive (or even just confusing) to one constituency or another. And, in fairness, while we can point to innovators who are already moving toward these kind of delivery systems, we don't know exactly how all these new systems will work en masse in the real world meaning that the CBO is reluctant to attribute the savings that many experts believe are possible or even probable. Examples she cites:

• A Senate plan to tax high-priced insurance policies saves far less money -- and is less likely to change medical consumption -- than eliminating the tax exemption for employer-sponsored coverage.
• Proposals on comparative-effectiveness research and a new Medicare cost-cutting commission have been watered down.
• An array of Medicare pilot projects aimed at paying doctors and hospitals for quality rather than quantity would take years to be implemented nationally -- if they ever were.
• None of the bills addresses medical liability, even though the Congressional Budget Office has concluded that tort reform could save $54 billion over the next decade. (NOTE from us: Section 2531 of the House bill does include a grant program to states working on medical liability alternatives. Senate Finance just had a nonbinding and no-money down "sense of the Senate.") 

Most of the savings do come from changes in payment  to programs like Medicare advantage, or more drug rebates from Medicaid. They save money, but they don't transform the system.

White House budget chief Peter Orszag is still reasonably chipper about the whole thing. Orszag after all has been highly influential in broadening the reform dialogue to include delivery system change, to make people understand the whole 'less can be more' aspect of health reform. (MedPAC too has had a key role alhough it gets less publicity). He told the Post that he remains pretty optimistic that a set of Medicare pilot projects could dramatically reshape the U.S. medical practice. That includes assorted payment changes aimed at reducing things like hospital acquired infections and unnecessary readmissions, as well as encouraging medical homes, accountable care organizations and other new forms of delivering care. 

"There's always the potential to do more," he was quoted as saying. "When you look at the details in the legislation, it is a substantial step, especially within the realm of the politically viable and realistic, as opposed to a think tank or academic ideal."