June 16, 2009

June 16, 2009 | Commentary on Health Care

Many 'Savings' Will Boost Spending

In today's economic climate, everyone is looking for places to save money. Health care now consumes one-sixth of America's economy. So it only makes sense that leaders of the U.S. health care sector want to do their part.

But these savings are even more important to the Obama administration. It needs these savings to help pay for its massive health care reform proposal. Estimates of the president's plan put the total cost of the reforms at $1.6 trillion.

That's why earlier this year President Barack Obama called a group of health care and labor union executives to the White House to discuss the need for sweeping reforms. From that meeting, the group -- made up of health insurance, pharmaceutical, hospital and physician groups along with a large labor union -- told the president they would "offer concrete initiatives that will transform the health care system" that would "save" $2 trillion in spending and growth over the next 10 years.

The group recently provided the Obama administration with $1.7 trillion in prospective savings based on broad concepts, many of which reflect initiatives put forth by the president himself.

Many of these efforts are focused on squeezing savings through better quality and efficiency.

Ideas such as expanding the use of electronic medical records and health information technology, greater investment in preventive and care management tools, and establishing best practice models are all commonly touted examples of delivery reforms.

Unfortunately, most of these savings proposals are unproven and, ironically, some of them actually require more spending. Even the Congressional Budget Office, the score-keeper for Congress, cautioned against depending too heavily on these types of promised savings.

If the administration and Congress are serious about reforming the health care system by rooting out waste and inefficiencies, their policies should be focused on empowering individuals and families.

So what would happen if the health providers sector can't make these savings come true? The administration and Congress could step in and raise taxes on an already shrinking number of taxpaying Americans or cut payments to health care providers -- thus jeopardizing the access of all Americans to care and services. Or the federal government could simply ignore the cost altogether and pass the tab on to future generations.

At a time of such economic uncertainly, it would probably be wise for the administration and Congress to take a lesson from family financing -- by saving the money before spending it.

Nina Owcharenko is a senior policy analyst for health care at The Heritage Foundation's Center for Health Policy Studies.

About the Author

Nina Owcharenko Director, Center for Health Policy Studies and Preston A. Wells, Jr. Fellow
Center for Health Policy Studies

This commentary was distributed nationally by McClatchy-Tribune Information Services