I also support the no credit rating for abandoning Public competition
option which is opposed by Republicans.
For all people, the master of free market, the Republicans, are afraid
This is an admission that private enterprise is completely inefficient
and uncompetitive and rely completely on monopolistic practices in
order to survive.
Although full nationalisation, as practised by communist nations are
dangerous and destructive, public companies, run on commercial rules
are good options for competition.
It is clearly evidenced by Singapore and even Malaysia especially
Sabah had experienced this. Supermarkets were viewed as non-profitable
by Sabahan businessmen until the state governments opened up super
Local businessmen may be still too slow to involve themselves in large
supermarkets, multinationals are taking over. Some supermarkets, such
as Sunny Supermarket, managed to survive by offering cheap prices.
Government backed companies are not growing as fast but are prominent
in some places that the private sector refused to get involved, such
as in Kudat.
Health Reform Passes the Cost Test
MORE IN OPINION »
By DAVID M. CUTLER
Many people are worried that the health-care reform proposed by
President Obama and congressional Democrats will fail to bend the
"cost curve." A number of commentators are urging no votes because of
this, and Republicans have asked the president to start health reform
over, focusing squarely on the issue of cost reduction.
These calls overlook the actual legislation. Over the past year of
debate, 10 broad ideas have been offered for bending the health-care
cost curve. The Democrats' proposed legislation incorporates virtually
every one of them. Here they are:
• Form insurance exchanges. These would help curb underwriting and
inefficient marketing practices that raise costs in the small-group
and individual insurance markets. This is addressed in all the House
and Senate bills, and the president's proposal. Grade: Full credit.
• Reduce excessive prices, including those of supplemental plans
enrolling Medicare beneficiaries. The president's proposal reduces
these Medicare Advantage overpayments and others to different
providers, even in the face of Republican claims that reducing such
overpayments is tantamount to rationing care for seniors. Grade: Full
• Moving to value-based payment in Medicare. Both Democrats and
Republicans have called for moving from a system where volume drives
reimbursement to one where value drives reimbursement. The president's
proposal includes virtually every idea offered for doing this. Grade:
• Tax generous insurance plans. Health-insurance benefits are excluded
from income taxation, providing incentives for excessively generous
insurance. Many economists have proposed capping the tax exclusion to
reduce these incentives. The president's proposal taxes some of the
most generous policies, though it has deferred the date by which these
taxes take effect. Grade: Partial credit.
• Empower an independent Medicare advisory board. Interest-group
politics intrudes too deeply within the mechanics of Medicare policy,
raising program costs and hindering efforts to improve care. Despite
powerful opposition, the president proposes this independent board and
a process for fast-tracking such recommendations through Congress.
Grade: Full credit.
• Combat Medicare fraud and abuse. The administration has started an
active task force to combat these problems. Other ideas to reduce
fraud and abuse were presented at the recent health-care summit, and
were incorporated in the president's proposal. Grade: Full credit.
• Malpractice reform. Defensive medicine is a small but important
driver of medical spending. The reform proposal makes some headway,
encouraging states to experiment with alternative mechanisms to reduce
malpractice burdens. More could be done—for example, specialized
malpractice courts and a safe harbor for physicians practicing
evidence-based medicine—but the president's proposal makes a start.
Grade: Partial credit.
• Invest in information technology. Many studies suggest savings in
the tens of billions of dollars from IT investment. The stimulus bill
passed a year ago contains funds to wire the medical system over the
next few years, and the administration is supplementing this with
significant funds to analyze the comparative effectiveness of
different treatments—even in the face of "death panel" claims. Grade:
• Prevention. The president's proposal includes significant public-
health investments, provides new incentives for physicians to focus on
preventive and chronic care, and opens Medicare to finding new ways of
supporting prevention. The only area of weakness is the lack of a junk
food tax or tax on sugar sweetened beverages. Grade: Partial credit.
• Create a public option. A public insurance option would provide
competition for insurers in areas that are nearly a monopoly and
provide a path for reforms in Medicare to expand readily in the
under-65 population. The public option was eliminated because of
Republican opposition, however. Grade: No credit.
So reform gets full credit on six of the 10 ideas, partial credit on
three others, and no credit on one. The area of no credit (a public
option) is because Republicans opposed the idea. One area receives
only partial credit because of Democratic opposition (malpractice
reform) and two other areas reflect general hesitancy to increase
taxes (taxing Cadillac plans and taxing drivers of obesity).
Why is reform viewed so negatively? In part, it may reflect the
perfect being the enemy of the good. If the only passing grade is 10
out of 10, then reform clearly fails. But given where the Republican
Party is on a public option, no reform will get a passing grade. If
both parties were willing to raise taxes and Republicans negotiated
malpractice reform for their overall support, we could probably get a
nine out of 10.
Reform is also viewed negatively because official scorekeepers do not
believe anything on this list other than reducing prices will save
much money. The Congressional Budget Office has consistently estimated
that policies built around changing incentives and thus encouraging
more efficient care will not have any effect on cost trends. My own
calculations, mirrored by other observers and a host of business and
provider groups, suggest that the reforms will save nearly $600
billion over the next decade and even more in the subsequent one.
Of course, no one knows precisely how much medical spending increases
will moderate. But one cannot doubt the commitment to try. What is on
the table is the most significant action on medical spending ever
proposed in the United States. Should we really walk away from that?
Mr. Cutler is a professor of economics at Harvard University.