Obama’s Speech Today: A Listeners Guide for Health Care Advocates
Later today when the President speaks about the national debt, what should health care advocates be expecting and hoping to hear? Given that long-term projections of rising public debt rest almost entirely on growth in health spending, we should expect at least some substantial attention will be paid to health care cost containment. However, don’t expect a detailed prescription.
Since the President is addressing the public at large, he is unlikely to get too deep in the policy weeds, but there are a few key things health care advocates should be listening for (even if only “between the lines”):
Does the President address block grants and vouchers? We should expect the administration to reject explicitly or implicitly both a Medicare voucher and a Medicaid block grant. It’s notable that two of the President’s top health policy advisors were leading public opponents of Medicaid block grants during previous efforts to transform the program, and it is very unlikely that the President will move off of this position. This is where we should expect the most clarity as the President works to distinguish his approach from the one laid out by Congressman Ryan in the context of the FY2012 federal budget.
Does the President endorse a global federal health spending cap a la Bowles-Simpson? While the Bowles-Simpson debt reduction plan does not call for either a Medicaid block grant or a Medicare voucher, it does call for limiting the growth of federal health spending to the rate of GDP plus one percent. Such an inflexible spending target would fail to allow for growth in the number of elderly or Americans with disabilities, an economic downturn, an epidemic, or changes in health care delivery that bring substantial benefits but also new costs. While we can expect the President to be somewhat clear in rejecting a block grant or voucher, his position on a global spending cap is truly unknown. Since the spending cap approach has garnered some favorable attention from a bipartisan group of Senators working on a debt reduction plan, a signal of Presidential approval or disapproval of this position could be very important. Silence on this point would also be important and would likely be interpreted on Capitol Hill as a green light to continue to negotiate a global spending cap.
Does the President offer a rational framework for reducing health care spending, consistent with the Affordable Care Act? One of the big lies about the ACA is that it doesn’t tackle health care cost containment. In fact, the ACA approaches cost containment in a very rational way. If you look at the sources of excess health care spending in the U.S. relative to the rest of the world, you see that high prices and high administrative costs, particularly in the private sector, are among the main causes. Within public programs, high administrative costs and high prices are much less of an issue (with prescription drug prices for Medicare beneficiaries being a notable exception). Instead, the sources of low-value public health care spending primarily include preventable hospital and nursing home admissions, preventable complications (such as infections and other medical errors) and improper payments. Finally, any long-term cost containment approach must include improvements in the underlying health of the population.
The ACA already tackles all of these issues with: Exchanges, Minimum Medical Loss Ratios, beefed up rate review, enhanced payment oversight for Medicare and Medicaid, new Medicare and Medicaid payment and delivery models, investments in community care and improving transitions between hospital and community, major investments in public health and more.
Of course more could be done, but generally that would require reopening some of the deals that were negotiated in the context of the ACA debate. It will be instructive to listen for clues as to whether President Obama stands behind the cost containment path chartered by the ACA and whether he indicates a desire to go further down that road, or if he signals a change in direction—one that would involve placing more of a burden on elders, people with disabilities, and low-income children and families.
Stay tuned for follow up analysis tomorrow.
– Michael Miller, Policy Director