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The belated revenge of the health care Grinches

By Edward Zelinsky

It hasn’t been fun being a health care Grinch. Until recently, we health care Grinches have been the objects of bi-partisan scorn.

We have been warning that health care cost control will be painful and will entail reduced medical services and lower payments to health care providers. “Nonsense,” retorted President Obama. Taking a page from the Republican book of bromides as he plugged his health care reforms, Mr. Obama assured the nation that health care costs can be controlled painlessly, by purging “waste” and “fraud.”

The Republican approach to health care cost control has been equally vacuous. Many Tea Party adherents demand reduced government spending – their Medicare excepted. Other Republicans denounce “death panels,” though curtailing end-of-life outlays is indispensable to curbing U.S. medical costs.

In light of the bi-partisan unwillingness to confront the economic realities of health care, the message of the Grinches has been unwelcome: Controlling medical costs will involve pain. Health care expenses can be curtailed only by reducing medical services, lowering payments to providers, or both. Expanding access to medical care increases costs. If waste and fraud (and there is plenty of both) were easily eliminated, they would already have been. Medical cost control will involve difficult and disruptive choices.

It turns out, we Grinches have been right all along.

President Obama now touts the new Medicare Independent Payment Advisory Board, carefully designed to take effect only after the 2012 election. The Board, it is increasingly clear, will be required to reduce payments to Medicare providers to obtain the financial savings necessary to fund the President’s health care plans. The Republicans claim that the Board is a form of rationing. The Republicans are correct.

The Republican budget crafted by Rep. Paul Ryan would control Medicare costs by requiring Medicare participants to purchase their own medical policies with federal assistance. Medicare participants would pay personally for unreimbursed care when their purchased policies do not pay for such care. The Democrats denounce Rep. Ryan’s proposal as a voucher system. The Democrats are correct.

We Grinches are surprised by none of this and, indeed, are vindicated by it. The relentless logic of economics is belatedly edging into our discussion of health care costs. Defending the Independent Payment Advisory Board, Paul Krugman, in his New York Times column, recently declared that, as to health care outlays, “we have to find a way to start saying no.” This was not a prominent theme in Professor Krugman’s promotion of Obamacare when it was being debated in Congress.

Nevertheless, late is better than never. The Republicans who now embrace Rep. Ryan’s prescriptions for consumer-driven Medicare have also been unwilling until now to confront the harsh realities of health care cost control.

We still have far to go. The Republican proposal preserves current Medicare for individuals currently 55 and older. This may be good politics but it is poor economics, effectively giving the Baby Boomers a free pass on medical cost control for the remainder of their lives. Neither party confronts the need to increase the eligibility age for Medicare (now 65) to parallel the scheduled increases in the eligibility age for full Social Security (now planned to rise to 67).

And the Democrats and Republicans disagree as to the method of controlling health costs, Medicare in particular. Mushy moderate than I am, I think we will need both government-imposed and consumer-driven cost control to curtail Medicare outlays.

But, for now, at least I am no longer embarrassed to be a health care Grinch. Indeed, I welcome the Chief Executive to the club. But I do wish that President Obama were willing for the Medicare Independent Payment Advisory Board to start its work before the 2012 election.

Edward A. Zelinsky is the Morris and Annie Trachman Professor of Law at the Benjamin N. Cardozo School of Law of Yeshiva University. He is the author of The Origins of the Ownership Society: How The Defined Contribution Paradigm Changed America. His monthly column appears here.

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