Reining in Healthcare Costs

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Ezra Klein does a good job of describing why healthcare reform not only should pass, but probably will pass:

If you’re a liberal House Democrat, here’s what you’d be voting against: Legislation that covers 32 million people. A world in which 95 percent of all non-elderly, legal residents have health-care coverage. An end to insurers rescinding coverage for the sick, or discriminating based on preexisting conditions, or spending 30 cents of each premium dollar on things that aren’t medical care. Exchanges where insurers who want to jack up premiums will have to publicly explain their reason, where regulators will be able to toss them out based on bad behavior, and where consumers will be able to publicly rate them. Hundreds of billions of dollars in subsidies to help lower-income Americans afford health-care insurance. The final closure of the Medicare Prescription Drug Benefit’s “doughnut hole.”

If you’re a conservative House Democrat, then probably you support many of those policies, too. But you also get the single most ambitious effort the government has ever made to control costs in the health-care sector. According to the Congressional Budget Office, the bill cuts deficits by $130 billion in the first 10 years, and up to $1.2 trillion in the second 10 years. The excise tax is now indexed to inflation, rather than inflation plus one percentage point, and the subsidies grow more slowly over time. So one of the strongest cost controls just got stronger, and the automatic spending growth slowed. And then there are all the other cost controls in the bill: The Medicare Commission, which makes entitlement reform much more possible. The programs to begin paying doctors and hospitals for care rather than volume. The competitive insurance market.

The cost controls in the bill are a good start. But they’re going to have to get better over time to have any chance of seriously reining in healthcare inflation, and it would be nice to think that once the partisan warfare is over and Republicans give up their fantasy of repealing the bill after a November triumph, they’ll finally get serious about cost controls too. Because one way or another, it’s going to take both parties giving cover to each other to get the job done.

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