CALPIRG Blog

This week, President Obama took the first steps in his effort to reform the country's health care system. 

In a major speech Tuesday night, he said that "we can no longer afford to put health care on hold," and committed to signing legislation this year.

Just as important, he made good on that commitment in the budget proposal he released yesterday, which contained the first details on how he proposes paying for the reform. 

For a quick summary, the L.A. Times has a good writeup.

Or, you can read the full details of the President's proposal here (the health care section runs through pages 25-30 of the pdf). 

Most of the coverage has focused on the tax changes President Obama's proposed.  But moving past those, what's really exciting about this proposal is that half of the funding comes from changes that will reduce the price of health care.

For example, Obama takes aim at drug prices, speeding up the pact at which affordable generic drugs can come onto the market and leveraging bargaining power to help the states get a better price for the drugs they buy.

The plan would also create incentives for hospitals to avoid re-admitting patients right after they've been discharged -- re-admissions that are often caused by hospital-acquired symptoms and other preventable causes.  Fewer re-admissions means healthier patients and more affordable care.

There's also a broad commitment to rewarding physicians for providing high-quality, evidence-proven treatments to Medicare patients, which will help patients get higher-quality care and also save over $12 billion dollars over the next decade.

Finally, inefficient government overpayments to the insurers running the Medicare Advantage, which currently amounts to an insurance company boondoggle, will be reduced.  Instead, a new bidding program will let the market set those rates while simultaneously bringing down costs.

This is exactly the way we need to do health care reform -- cut costs while improving care.  Of course, these are just the first steps.  We will need to invest money up front, since there are a number of changes, including focusing on preventive care and disease management, that will bring down costs long-term but will take a little while to make their impact felt. 

In the days to come, the powerful interests that oppose reform will claim that we can't afford health care reform, as if it's a zero-sum game where we just pour money into a black hole.  But as the President's budget proposal shows, the truth is exactly the opposite -- reform will help patients and help the economy.