Yes, Virginia, There Really Are Cost Controls

What miracle will bring down the price of medical care?

At this point in the health reform debate, press coverage is beginning to sound a lot like 1993-94, when the media—at least the big guys—got behind the managed competition juggernaut. The mantra then was that managed competition and its corollary, managed care, were the nation’s cost-control saviors. I remember discussing this point with several journalists and foundation officials who told me managed care couldn’t lose; it was going to bring down costs. Well, guess what happened?

This time around, there are a wide range of cost-control offerings: increased consumer choice; comparative effectiveness; health IT; preventive care; and taxing generous health plans to slim down benefits and force policyholders to use less medical care. In the last few weeks, stories and columns have looked at these options and more or less concluded that there are savings somewhere in them after all. That is what politicos want the world to believe. “I think we are at a point where the facts matter less than overall impressions,” says blogger Robert Laszewski.

On The Atlantic’s Web site last week, Ronald Brownstein wrote a generally glowing article about the Senate bill’s cost containment measures, noting that the bill was “winning praise” from leading health reformers of varying political stripes. One of them, Len Nichols of the New America Foundation, said: “The bottom line is the legislation is sending a signal that business as usual (in the medical system) is going to end.” Economic columnist David Leonhardt wrote two columns for The New York Times making similar points, although he argued that the centrist senators “don’t suddenly need to turn themselves in health care wonks and rewrite the bill. They just need to improve what’s already there.”

The source of most of the optimism laced through these pieces is MIT economist Jonathan Gruber, who has oft been quoted on these matters—perhaps too often for a thorough and balanced picture of what’s really necessary to bend the proverbial cost curve. Said Gruber in Brownstein’s piece:

My summary is it’s really hard to figure out how to bend the cost curve, but I can’t think of a thing to try that they didn’t try. They really make the best effort anyone has ever made. Everything is in here…I can’t think of anything I’d do that they are not doing on the bill.

Leonhardt quotes Gruber in both of his columns. In one, from mid-November, Leonhardt identifies Gruber as an economist who helped devise the universal coverage plan in Massachusetts. Yes, the plan that faces an uncertain future because it lacks the serious cost containment that might have hurt the bottom lines of the state’s big medical stakeholders. Gruber told the Times that the Senate’s bill does considerably more to control costs than he expected. In the second column, which ran right before Thanksgiving, Leonhardt cites Gruber’s statements in Brownstein’s piece, and opines that it’s the execution of these ideas that can be problematic.

Blogger Laszewski reported that the White House was pleased with Brownstein’s article. Why wouldn’t they be? As the final battles loom, the White House needs validation from mainstream economists that its weak-tea approach to cost containment has some potency after all.

But just as the truth is more complicated than dueling quotes in a garden variety news story, the truth about cost containment is more complicated than the stuff coming from the lips of Jonathan Gruber and other economists who like what Congress has so far produced—bills that don’t control the underlying price of medical services and don’t disturb the special interests’ profit margins.

Kudos to Air Talk, a program on southern California public radio station KPCC, for bringing some balance to the cost containment discussion. Right before Thanksgiving, the show featured Leonhardt, who talked at length about the quality of care improvements made by the Intermountain Healthcare system in Utah, and Yale professor emeritus Theordore Marmor, whom Campaign Desk featured in the first of its Excluded Voices interviews.

Marmor told us that in order to control the costs of medical care, you have to constrain the price of medical services, the number of those services, or a combination. As the KPCC discussion turned toward cost control, Marmor argued that improving medical quality was not a pre-condition for controlling costs. He then attacked the tax on so-called Cadillac plans, the cost containment solution of the moment. If workers want treatments not covered by their trimmed-down plans, they will have to pay on their own or go without. The expectation is that many will go without, thus reducing the number of medical services people use. It doesn’t do much for the price side of the equation.

On KPCC, Marmor pointed out that when medical personnel are paid for each activity performed, all hell breaks loose if there are no budgets to limit spending or in some way “fiscally constrain the amount [of money] available.” What is striking, Marmor said, is that there has been almost nothing said about these cost-control mechanisms. He mentioned Canada, where residents have what would be considered Cadillac plans in the U.S.—no coinsurance, deductibles, or copayments. Yet that country’s medical expenditures are thirty to fifty percent less than ours.

Leonhardt countered that the political reality meant the U.S. was not going to build a health system from scratch, so cost containment strategy centers on throwing “lots and lots of cost reduction ideas on the wall and hope that one of them sticks.” Ah! The spaghetti-on-the-wall approach. Makes perfect sense, except if premiums are unaffordable for your family.

Before more Americans are misled into thinking that affordable, quality health care is around the corner, the press needs to set the record straight and bring some new voices into the mix. Here’s one time where balance is appropriate. I’d even settle for some “he said, she said” on this one.

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Trudy Lieberman is a longtime contributing editor to the Columbia Journalism Review. She is the lead writer for The Second Opinion, CJR's healthcare desk, which is part of our United States Project on the coverage of politics and policy. She also blogs for Health News Review. Follow her on Twitter @Trudy_Lieberman.