Thursday, January 21, 2010

McClellan in WSJ

writes about Dem bills in WSJ. What he says about making faster track from demo project to actual policy makes sense to increase savings, with savings defined as spending less than what we would do without a change....but a demo project that leads to spending less than otherwise would have been will then be decried as rationing.

We have to decide among the following per Medicare:
(1) raise the Medicare payroll tax, becuase it is not high enough to finance the baby boomers with limited/no changes in how Medicare works;
(2) Have tremendous cuts in some other part of federal spending....and most of it will have to come from either Social Security, Medicaid or Military, as that is where the big spending is (in addition to Medicare).
(3) Try and slow the rate of spending growth somehow. The most likely way to do this are to change payment incentives in the program, and also begin to systematically ask do the benefits of what we do outweigh the costs? If no, then we should stop. Then we have to say, are there some things we do that produce such a small marginal benefit that it is not 'worth it'. All of this is inherently a value judgement, and it is hard. We will mess up trying. Eventually you will get to changes that are in danger of hurting people. There are certainly changes that won't. It won't be simple to figure out. If you don't want to try, see options 1 and 2, or 4 below.
(4) Continue to run a budget deficit that will continue even as economy rebounds. I think this is a terrible idea and it will eventually do really bad things to the economy....not clear exactly what it will do or when, but it won't be good.

Also, he notes that tax on high cost plans not perfect, but is a start. It seems to me that there is increasing agreement that the unlimited tax exclusion on employer paid health insurance needs to go. That is good. It would be preferable to deal directly with the exclusion as opposed to a tax on high cost insurance, to help focus attention on patient choices, decisions as McClellan notes.

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