## RomneyCare Final Passage Aftermath: Mark McClellan vs. Doug Holtz-Eakin

Douglas Holtz-Eakin:

ON Thursday, the Congressional Budget Office reported that, if enacted, the latest health care reform legislation would, over the next 10 years... lower federal deficits by $138 billion. In other words, a bill that would set up two new entitlement spending programs.... Could this really be true?... The answer, unfortunately, is that the budget office is required to take written legislation at face value and not second-guess the plausibility of what it is handed. So fantasy in, fantasy out. In reality, if you strip out all the gimmicks and budgetary games and rework the calculus, a wholly different picture emerges: The health care reform legislation would raise, not lower, federal deficits... What do I think? I already wrote it down. The Medicare cuts dominate. Over the first ten years the net effects of the bill on the deficit are not a big deal. Thereafter, the swings in Medicare spending overwhelm the net impact of everything else. If any appreciable fraction of the Medicare spending growth rate reductions written into the bill come to pass, it is a huge present-value deficit reducer. I think that they will. So I view this bill as a severe long-run reduction in Medicare spending growth--through cutbacks to provider incomes, administrative changes that will hopefully get more care for the money, and increased cost-sharing--made palatable to a Democratic majority by the insurance reforms and the exchanges. Doug... soft-pedals his argument on that point--spending almost all of it on irrelevancies.... What does deserve attention is [Doug's]: [T]the legislation proposes to trim$463 billion from Medicare spending and use it to finance insurance subsidies. But Medicare is already bleeding red ink, and the health care bill has no reforms that would enable the program to operate more cheaply in the future. Instead, Congress is likely to continue to regularly override scheduled cuts in payments to Medicare doctors and other providers...

As somebody-or-other said, this is budget nihilism: if we assume that congress will reverse all actions it takes to reduce the deficit and yet require that congress only pass bills that reduce the deficit nevertheless, we are asking that congress pass nothing at all. Perhaps that's what Douglas Holtz-Eakin thinks: that because we live in the Sewer of Romulus the best congress is the one that passes nothing at all. But if that is his argument, he should make it--and back it up. If that isn't his argument, he should explain why he believes that "congress is likely to continue to regularly override" the reductions in Medicare spending growth in the bill.

Mark McClellan on the Affordable Care Act: The provisions related to changing provider payments are significant in terms of their potential for reducing spending growth, though I'd have liked to see more of those steps.... [S]ince we don't know exactly which of those reforms work, we'll have to find out quickly. And that will require doing a fundamentally better job of running the pilot and demonstration programs in Medicare.... Many of the ideas relate to pay for performance, paying more when doctors do particular things. I think those are important, but they're unlikely to transform health care by themselves. And they do run the risk of getting doctors and hospitals to teach to the test.... More important, I think, are the reforms that pay doctors and hospitals more when they get better outcomes for people at a lower overall cost. That would be steps to encourage using nurse practitioners to help patients with chronic diseases manage their illness, changing where care is delivered from an inpatient to outpatient setting, paying for reducing the complication rate. The most important reforms on the payment side don't tell doctors and hospitals what they need to do or but support them when they figure out how to do things better....

[N]ot included in full in the bill was reform of the medical liability system... [or] consumer side reforms. If people could take steps to stay healthier and reduce their complications, we could provide support for them as well. Under our current insurance arrangement, if you have a serious chronic disease where you need to go to the hospital for major surgery, you're probably going to be paying your out-of-pocket maximum no matter what. It shouldn't be like that. If people use providers who have demonstrated that they can get better outcomes with fewer complications, we should support them....

[I]t's frustrating for everyone in the system right now. When I was at CMS, providers came to me and said we can show we're delivering better care at lower results, but we don't get paid for this. In fact, we lose money because we're doing less of the traditional billing: We've got fewer lab tests and doctor visits. I think this will help us get to where we can support those steps, but it's not a sure thing...