James Pethokoukis

Politics and policy from inside Washington

Can a special commission stanch America’s red ink?

Nov 10, 2009 20:19 UTC

I spent all morning at a Senate Budget Committee hearing looking at how to create a special commission that would devise a plan to fix America’s long-term budget shortfall. This would be like the base-closing commission where a panel — made up mostly of senators and congressman — would submit a plan to Congress that would have to be voted on — up or down, no amendments.

Among the economists and budget experts who testfied — Douglas Holtz-Eakin, Maya MacGuineas, David Walker and Willam Galston — there was widespread agreement that a) commission is a good idea, b) ObamaCare does little to change the long-run fiscal outlook for the better, c) we may be approaching the point where global financial markets rebel as American profligacy, d) Obama will have to break his campaign promise and sharply raise middle-class taxes (in addition to healthcare taxes, of course).

But it would be my guess that Team Obama is more worried today about rising unemployment than rising deficits.


Many Democrats probably would be fine with Carter-era tax rates on top earners and a VAT. Of course, even if those were enacted, it would just lead to more spending and debt. I doubt a commission would be enough cover to get them to vote on really tough things, like the retirement age or really reforming Medicare. At some point, voters just will have to demand that they stop being treated like children, and deal with reality of how to solve these problems. Don’t hold your breath.

Dem healthcare reform fails to bend the curve

Nov 10, 2009 15:08 UTC

If you care about bending the curve of long-term healthcare costs – downward, I should emphasize – then it is tough not to conclude that Democratic efforts at healthcare reform are a failure. The essential money-sucking structure of US healthcare would remain intact. As the NYTimes finally figures out:

Experts — including some who have consulted closely with the White House, like Dr. Denis A. Cortese, chief executive of the Mayo Clinic — say the measures take only baby steps toward revamping the current fee-for-service system, which drives up costs by paying health providers for each visit or procedure performed. …

Among other innovations being considered is a cost-cutting method known as bundling, in which health providers receive a lump sum to care for a patient with a particular medical condition, say, diabetes or heart disease. The House bill calls for the administration to develop a plan for bundling, while the Senate Finance Committee version of the bill gives it until 2013 to create a pilot program.

Some experts would like to see such changes adopted more quickly, and senators of both parties say they will press for more aggressive cost-cutting measures when the bill comes up for debate. But drastic changes in the health care reimbursement system could cost the White House the support of doctors and hospital groups, who have signed onto the legislation and are lobbying hard to keep the current fee-for-service system from being phased out too quickly.

Experts agree that the Senate Finance bill does more to put systemic changes in place. That is because the bill includes two measures that health economists favor: a tax on high-value “Cadillac” health plans, and an independent commission that would make binding recommendations on how to cut Medicare costs.

Dr. Cortese, of the Mayo Clinic, said the bills could do more to reward quality care over quantity. He said he had met with Mr. Orszag and others at the White House and had proposed legislative language that would give Medicare three years to begin rewarding hospitals that are delivering better care at lower cost.


maybe, but if it turns out anything like this public model then we are in very very good shape. http://cli.gs/23yYaM/

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