Skip to main content

Advanced Search

Advanced Search

Current Filters

Filter your query

Publication Types



Newsletter Article


Senators Size Up Health Savings and Search for More

By Rebecca Adams, CQ Staff

March 10, 2009 -- The challenges of paying for a trillion-dollar-plus health care system overhaul like the one that Democrats want to enact this year was never going to be easy. Senators at a Finance Committee hearing on Tuesday made it clear just how hard it would be.

Office of Management and Budget director Peter R. Orszag heard a long list of senatorial complaints about the administration's plans to pay for an overhaul—or, actually, to pay for only a portion of the cost of the overhaul—through changes that would bring in $634 billion over a decade.

Cuts to the Medicare Advantage program run by private insurers and strongly supported by Republicans are again proving controversial.

But senators also voiced complaints about the administration's proposals to cut government payments to home health care and reduce drug company payments. Republicans continued to complain that the White House's plan to compare different treatments in order to determine which offers the most effective treatment would lead to government coverage decisions that amount to rationing. And a moderate Republican whose vote might be crucial to passage of any health care overhaul, Olympia J. Snowe of Maine, raised questions about the fairness of a uniform national limit on tax breaks for employer-sponsored health care which would not account for regional disparities in costs, an idea that some Democrats have floated but which the administration has not proposed.

One GOP senator, Pat Roberts of Kansas, painted previous reduction efforts by the Centers for Medicare and Medicaid Services that Congress has stalled with this label: "Lizzie Borden cuts that CMS was making on virtually every provider in the health care providing world" that would create "a much bigger problem of rationing health care."

At one point during a discussion on savings, Finance Committee Chairman Max Baucus dryly noted, "This ain't easy."

Lawmakers appeared to be reaching for any easy solutions that could provide savings. Top Republican Charles E. Grassley of Iowa argued to Orszag, the former Congressional Budget Office (CBO) director, that the CBO should give Congress credit for savings for proposing changes that could reduce costs such as those generated by fraud or waste.

Orszag, who is now charged with helping the administration hunt for savings, said, "CBO does not recognize those savings even though they are based on hard evidence that they would occur. It struck me when I was CBO director, and it continues to strike me that some revisiting of those rules would be warranted."

Baucus also asked Orszag whether there was a way to get CBO to recognize savings beyond the 10-year budget window that lower long-term health care costs.

Orzsag suggested that many ideas – such as expanding the ability of health providers to communicate electronically and use electronic records, providing incentives for prevention that could stave off costly diseases, and comparing the effectiveness of similar treatments – may well result in long-term savings. However, he said, "One of the frustrations is that has not been enough research done on quantifying the things that we're talking about."

The administration has made reducing health care costs a priority, saying that significant changes to the nation's health care system could result in big savings in future entitlement spending for government health programs such as Medicare, the program for the elderly, and Medicaid, the program for the low-income. Over the past four decades, health care costs have been rising two to 2.5 percentage point faster than per capita income each year. Orszag cited a goal of reducing costs so that health care grows at a pace of about one to 0.5 percentage points faster than income. He emphasized that Congress would have to invest in health reform over the next decade but said that these investments would pay off in the long run.

Orszag repeatedly tried to draw attention to the fact that health care costs vary considerably across the country without an improvement in outcomes for patients in higher-cost areas.

"If you look at outcomes in quality, the higher-cost states, the higher-cost hospitals, the higher-cost doctors do not produce better outcomes than the more efficient providers," he said.

But changing that dynamic would not only take a long time, it also would be politically difficult to achieve because many patients believe that higher-cost procedures do help improve health .
The costs of health care have emerged as a major issue in the mind of the American public. Lowering health care costs is as important to many Americans as expanding coverage access to some of the nearly 47 million people who don't have insurance.

Publication Details