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The Democratic Strategist

Political Strategy for a Permanent Democratic Majority

Don’t Count Out Cost Controls Yet

This morning, NPR introduced a story to outline a supposed shift in the way that Democrats talk about the health care bill which was passed by the House of Representatives earlier this month.
For months, the President has used the phrase “health care reform,” detailing efforts to shift costs dramatically downward. But when he spoke from the Rose Garden ten days ago, he said that the House bill has, “[b]rought us closer than we have ever been to comprehensive health insurance reform in America.”
NPR says that reflects an important change in rhetoric:

“Health insurance reform” is the same label other Democratic leaders are now using — a phenomenon that coincides with the insurance industry having turned against the Democrats’ health care proposals, which force insurers to drop highly unpopular policies, such as denying coverage because of pre-existing conditions.

Thankfully the House bill only represents one-half the equation. The Senate must still pass a bill, and we have every reason to believe that the final piece of legislation from the upper chamber will much more explicitly embrace the principals of health care reform.
In fact, as Ezra Klein points out, there are three reasons to believe the Senate bill represent one of the most significant efforts at cost control in American history:

The first comes from the excise tax on high-cost health insurance plans. The idea here is simple enough: you’re taxing any growth in health-care premiums that’s faster than the rate of growth in GDP plus one percentage point, which is going to make people a lot less accepting of premium increases and unchecked growth. This is, in the simplest sense of the term, a cost control. In theory, it controls costs by taxing one of the drivers of cost growth into submission. It is, by far, the policy economists are most united on, and the one that works in the most straightforward and blunt way.
The second comes from the newly formed Medicare Commission, which is a lot stronger than people realize. The idea isn’t simply that a panel of experts gets to dream up interesting reforms to try out in Medicare. It’s that they are charged with making sure that Medicare hits certain growth targets, and their package of reforms has to achieve that goal. Those reforms are then sent to Congress, where Senate debate is limited to 30 hours, and amendments must be both budget neutral and “germane.” This report, in other words, is exempt from the filibuster. So far as anything is ever easy to pass, this is easy to pass. If Congress cannot manage action even within this streamlined process, then it simply cannot cut health-care costs at all, and our federal government will go bankrupt.
The third is the delivery-system reforms. The House bill has these too, though they’re a bit weaker. They key alchemy, however, is the interplay of the delivery-system reforms and the MedPAC commission. The Senate builds in a lot of pathways by which an idea that starts in Medicare through the commission and proves successful can be brought to pilot and then brought to scale across the health-care system. Medicare serves as the laboratory, but other institutions created in the bill serve as the factory

We should get a score of the combined Senate bill from the Congressional Budget Office any day this week, and that should give us a very strong indication of the direction that the health reform effort will take going forward. But at this point, it would be a mistake to say that cost controls aren’t a major facet of the legislation.

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