Here’s how President Obama handled the two health-care worries I raised earlier — high costs and concerns about a government-run public plan — in his AMA speech earlier today.
With respect to the public plan, he asserted, quite clearly and multiple times, that no one would lose their current coverage or have to change their current doctor. He may be right that no one would immediately have to make these changes, but that misses the larger point of what would happen over time. The notion of crowd out, where privately-insured people move to publicly subsidized plans when they become available, is not an overnight phenomenon so much as over time migration. The more important point is that the president issued his clearest endorsement yet of a public plan, giving us an indication of what the White House thinking is on this flashpoint issue.
As for the cost issue, it is clear that the administration senses some vulnerability in this area, and so the president laid out a long list of specific-sounding cuts in a host of areas: Medicare Advantage cuts — $177 billion; “incentives for more effective care” — $109 billion; more efficient drug purchasing — $75 billion; and that old standby, reducing “waste, fraud, and abuse” — $1 billion. Some of these are inarguably good ideas — no one is opposed to stopping fraud or waste, for example — but it is not clear if these ideas will lead to the necessary savings or will join the long list of promised health-care savings that never seem to materialize. If that is the case, then the unmaterialized savings turn into bigger deficits and ultimately into higher taxes.
It was also interesting to see that the president did raise malpractice costs, one of the AMA’s biggest concerns. After doing so, he quickly said that he would be opposed to judgment caps, indicating that the trial bar does not need to worry about significant efforts to reign in that particular form of abuse.
—Tevi Troy is the former deputy secretary of health and human services, and author of Intellectuals and the American Presidency.