Former Obama Aide David Cutler Ignores Proven Cost Control Ideas to Inflate Grade on President’s Health Care Plan

It seems that President Obama's former senior health-care adviser, David Cutler, is following in the proud tradition of Jonathan Gruber by conveniently ignoring potentially huge cost-saving ideas to make Obama's health care proposal sound better than it really is.

In a Wall Street Journal op-ed, David Cutler claims there have been 10 broad ideas offered to bend the cost curve over the last decade. They are:

1. Form insurance exchanges.


2. Reduce excessive prices, including those of supplemental plans enrolling Medicare beneficiaries.


3. Move to value-based payment in Medicare.


4. Tax generous insurance plans.


5. Empower an independent Medicare advisory board.


6. Combat Medicare fraud and abuse.


7. Malpractice reform.


8. Invest in information technology.


9. Prevention.


10. Create a public option.

Culter grades all ten ideas in the Senate bill, and not surprisingly, he gives Obama a good grade.

So reform gets full credit on six of the 10 ideas, partial credit on three others, and no credit on one. The area of no credit (a public option) is because Republicans opposed the idea. One area receives only partial credit because of Democratic opposition (malpractice reform) and two other areas reflect general hesitancy to increase taxes (taxing Cadillac plans and taxing drivers of obesity).

Let's ignore the slight falsehood about the public option--which, in reality, is not in the bill because members of the Democratic caucus opposed it--and focus on the many cost controlling ideas that Culter conveniently forgets to mention. By category:

Drugs

There is drug re-importation, which could have saved American consumers roughly $100 billion according to the CBO. There is also direct drug price negotiation for Medicare enrollees, or even direct drug price negotiation on behalf of all Americans by the government. Both ideas used to hold down drug costs in many other countries. Also, creating a very short exclusivity period for biosimilars, like the FTC suggested, would save billions by bringing down the price of the most expensive new classes of drugs.

Provider Payments

The bill not only lacks a central provider reimbursement negotiator, but takes steps to stop one from forming. A central negotiator would negotiate provider reimbursements for all insurers, creating an all-payer system. Almost every industrialized nation without a single payer health care system uses an all-payer system--and it is also partially in use in Maryland. This is a huge part of why many countries pay so much less for health care.

Insurance Companies

Standardizing the basic insurance package reduces administrative waste and allows for true apple-to-apple comparison shopping. It is a feature in almost all other health care systems--and in Hawaii, which has America's second lowest premiums. The bill could also outlaw for-profit health insurance, the way most nations do. Switzerland outlawed for-profit health insurance as part of their reform effort in the 1990s.

Single Payer

Of course, a single payer system would save a huge amount of money. It would simultaneously deal with the issues related to drug price negotiation, provider reimbursement rate negotiations, and reducing administrative waste with insurance standardization.

Honest Debate

It is amazing that David Cutler forgot about drug re-importation and direct drug price negotiations when talking about cost control. They were both part of the Obama campaign’s health care proposal, which I assume Cutler personally helped write. I also can't imagine that Cutler is unaware most other countries with much lower health care costs use an all-payer system or a single payer system.

I think America deserves an honest debate about the current health care reform proposal. I will accept an honest argument that, despite its flaws, the current Senate bill is a cost control improvement over the status quo. Unfortunately, when people like Cutler stack the deck, and conveniently ignore huge cost saving ideas so that they can inflate the cost-control grade of the current health care proposal, it undermines honest discussion about how you actually bring down costs and fix our broken health care system. Real cost control innovation will never happen if "experts" keep pretending proven methods don't exist.