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Monday, March 15, 2010

Health Reform Passes the Cost Test

The WSJ ran this on its op-ed page 3/13/10

"The Obama plan will cut costs—$600 billion over the next decade. Why walk away from it?'
By David Cutler, Harvard University'... Why is reform viewed so negatively? In part, it may reflect the perfect being the enemy of the good. If the only passing grade is 10 out of 10, then reform clearly fails. But given where the Republican Party is on a public option, no reform will get a passing grade. If both parties were willing to raise taxes and Republicans negotiated malpractice reform for their overall support, we could probably get a nine out of 10. 'Reform is also viewed negatively because official scorekeepers do not believe anything on this list other than reducing prices will save much money. The Congressional Budget Office has consistently estimated that policies built around changing incentives and thus encouraging more efficient care will not have any effect on cost trends. My own calculations, mirrored by other observers and a host of business and provider groups, suggest that the reforms will save nearly $600 billion over the next decade and even more in the subsequent one. 'Of course, no one knows precisely how much medical spending increases will moderate. But one cannot doubt the commitment to try. What is on the table is the most significant action on medical spending ever proposed in the United States. Should we really walk away from that?' '

Mr. Cutler is a professor of economics at Harvard University. He was senior health-care adviser to the Obama presidential campaign.'

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