Really, Peter Orszag!?! Your Critics Have No Ideas For Controlling Cost?

During a conference call with reports Peter Orszag defended the Senate health care reform bill's minor cost-control measures:

Orszag suggested that others who have questioned the bill haven't been as thorough as Brownstein. He noted that The Atlantic reporter identified specific pages of the bill while interviewing him for the piece.

"I would say to folks in the looser range, 'What specifically else would you do?'" he added.

This must be a joke. Roland Brownstein's pathetic article was “thorough” because he listed page numbers and he talked to the experts Orszag wanted him to talk to. But an critical reading of the piece reveals that Brownstein knows almost nothing about health care.

It is one thing that the Obama administration decided not to try to pursue many proven cost-cutting solutions because they are too politically difficult. I understand you need to pick your battles, and governing is the art of the possible. But pretending these proven cost-controlling ideas don't even exist is governmental malpractice.

Since Orszag asked, “What specifically else would you do?” I'll give him 13 very specific proven solutions:

1. A minimum medical loss ratio for insurance companies mandating that they spend at least 90 cents of every dollar they take in as premiums on health care. This is based on the crazy idea that health insurance should insure people's health instead of corporate profits.


2. Turn all health insurances companies into non-profits. Most countries that are not single payer (Switzerland, Germany, Belgium) require all basic health insurance plans to be non-profits.


3. On the new exchanges, create a much stronger risk adjustment mechanism, like in the Netherlands, to encourage competition on quality and cost effectiveness, instead of the cherry picking of healthy customers.


4. Allow undocumented immigrants to buy health insurance on the new exchange with their own money. It will increase the size of the risk pool and reduce the cost of uncompensated care in this country.


5. On the new exchanges, use more tightly defined benefit packages, and define plan levels based on deductible and copay size, instead of actuarial value. This will simplify comparison shopping and encourage the selection of more cost-effective HMO's, instead of PPO's


6. Allow for drug re-importation. People in every other first world country pay much less for the same prescription drugs. Let Americans buy these cheaper drugs from Canada or Europe.


7. Allow Medicare to directly negotiate lower drug prices. Medicare Part D was one of the biggest corporate giveaways in American history. Allow Medicare to use its size (as the VA system does) to directly negotiate for lower drug prices for seniors.


8. Eliminate direct-to-consumer drug advertising. It only increases the unnecessary use of medicine.


9. Follow the FTC recommendation by providing shorter exclusivity periods for biosimilars. The current bills create an extremely long 12-year exclusivity period. Going with the FTC recommendations will increase the availability of much cheaper generic versions of life saving biologics.


10. Create a robust public option that can use Medicare rates and Medicare's provider network.


11. Create a single provider reimbursement negotiator like basically every other industrialized nation. The lack of this is the single biggest reason why, as a nation, we pay several times what other countries do for the same procedure.


12. Create a fully integrated, government-run health care HMO, based on the VA health care system, which would be an insurance option for all Americans.


13. Finally, adopt a Medicare-for-all single-payer system for everyone in the country.

These ideas are not radical or untested. All of them (except the exclusionary period for biosimilars) are being used in this country and/or other countries to reduce cost. These are all proven cost control solutions. Implementing all or most of these ideas would save our country trillions on health care over the next decade.

I know the Obama administration is aware of these cost saving ideas because several of them (drug reimportation, direct medicare drug price negotiation, robust public option) where part of his campaign's health care plan. Obama traded away most of these cost saving reforms to PhRMA and other industry lobbies in exchange for campaign ads. If you trade away most of the cost controlling reforms to bring the different industries on board, you have no right to go around complaining when people say your reform plan does not do enough to control cost.