Stuart Butler

The Democrats’ new public option proposal underscores the point I made recently that the “health reform wars have only just begun.” Issues like the public option; who will ultimately run the exchanges; and how we will actually control health spending all remain in play and will have to be resolved. The public option would “resolve” the spending problem by simply forcing down payments and prices until spending declines. In an accounting sense that will work, as CBO shows, but only by hollowing out health benefits as doctors leave, quality suffers and waiting lists increase.

Will it pass? No time soon. But the real story is that public option proponents have likely already achieved their objective through the “OPM alternative” included in the enacted legislation. Far from being an alternative, it is the fast road to a public plan – as I warned before the legislation passed. Why? B

Uwe is quite right: I do support a transition to individually owned and portable coverage within an exchange system -- particularly for those currently in the small business sector -- with employers handling the paperwork but not organizing insurance. I wrote about this before Obama was elected.

But it just needs to be noted that this is not what the reform plan promised to do. I seem to remember: "If you are happy with what you have, nothing will change.' Moreover, while I proposed an orderly transition, for the reasons I mentioend below this is going to be a collapse rather than a transition. As Uwe recommends, the White House should fess up to what this bill will actually do to small business coverage.

The health legislation will accelerate the erosion of employer-based coverage, especially among small business. In particular, the huge differential in subsidies available for employees in exchange plans (up to around $10,000 for family coverage) compared with help for similar employees with employer plans (a few hundred dollars in tax benefits) will make it increasingly irrational for employers to offer coverage and employees to request it. Modest tax credits to smaller employers are fiscally inefficient and will do little or nothing to encourage coverage.

The President and congressional leaders pledged to pay for "every dime" of new health spending during these days of soaring deficits. But ever since it was signed the game has been to point in horror to devices in the bill to satisfy that pledge (eg cutting Medicare doc fees by one-fifth) and tthen to try to"fix" them by hiding items in other bills. No wonder Americans have lost trust in government.

Jennifer Luray and Pete Stark point to items they say need to be added back to health programs or added to the legislation. Many would agree, though others might not. But there is surely a bottom line we can all agree on: If something is so vital that it must now be added, then something less vital should be removed. I'm sure both can offer a list of savings and then Mr Stark will gain the support of the Blue Dogs.

It's a bit hard to shed tears for AMA members when the AMA endorsed the legislation James Rohack is now upset about. It would have been helpful if the AMA had demanded in return for it's backing real, measurable and enforceable savings to offset the drastic impact of reversing the physician cuts -- and he and everyone knows those cuts remained in the bill to make sure CBO would come up with the "right" number. Everyone also knows that ultimately the cuts will be reversed in some other peice of legislation, and Congress will, with a straight face, claim that doesn't add to the cost of the health legislation.

As for the Board, the legislation assures that it can't come up with any serious reforms of Medicare, just proposals to control payments to providers.

So if the we follow the letter of the law Medicare patients will be treated by fewer but more disgruntled docs. But if experience is any guide, the payment cuts will be less severe or non-existant, and the cost-curve and deficits will continue to turn upwards. This is reform? This is good for Medicar

There can be no glide path to financial stability unless Congress creates one -- ie a real and enforceable budget for Medicare as a bipartisan group of budget experts proposed.

The legislation adds to Part D rather than focusing it on those who really need it.

And the legilsation's "savings" come from payment controls on providers (including the 21% cut for docs that will never happen). If the savings do happen there will be shortages. If -- more likely -- they don't there will be more debt for our kids. There is no reform to speak of.

A televised summit is hardly the best way to build bipartisanship. A competent marriage counselor would never advise a separated couple to discuss their differences on national TV (with their legal and political advisers feeding them soundbytes). President Obama would have invited the GOP leaders to a private "beer summit" at the White House or Camp David if he were really serious. That said, he could still work across the aisle to achieve compromise in several areas. Among them:

A firm Republican commitment to achieving affordable coverage for all Americans in annual stages, starting now, in return for a WH agreement to scale the current bills way back. A package of insurance reforms, such as extending HIPAA, designed to deal with pre-existing conditions. An agreement to provide states funding to address high-risk and chronically ill Americans through high-risk pools. In addtion, giving states legislative waivers for left or right ideas to expand coverage -- eg through the bipartisan

Not only would it be unwise to relax because of the recent slower growth numbers, but there are many reasons to expect the health bill, if passed, will trigger a surge in future health spending. In part that's because key expected savings are illusory and also because there are pent-up pressures in the bill that will increase health spending.

Former OMB official James Capretta has recently indicated some of these problems. For one thing the idea that Medicare fees will actually be cut 20% and held down is politically delusional. For another, the vastly different subsidies for many equivalent families inside and outside the exchanges will fuel pressure down the road to increase subsidies for ESI coverage, leading to more spending.

So this is not the time to celebrate. This is just a period of calm before the tsunami.

Updated at 11:11 a.m. on Dec. 21.

On the face of it, the reform proposals would help ease the $37 trillion unfunded obligations of Medicare, making it a tad more viable for current and future seniors. But the savings on one credit card just become new liabilities on another. Moreover, if the key cuts actually went into place it would be a disaster for seniors. In the Reid bill, physician fees are to be cut more than 20 percent in 2011 and kept there indefinitely. That would cause docs to leave in droves and mean care cutbacks from those who remain. And Medicare’s chief actuary says payment rate cuts will cause up to 20 percent of Medicare hospitals to become unprofitable. Medicare Advantage, it’s true, would not cut to the bone, but there will be a significant erosion of benefits and far fewer plans available.

But the “good” news for seniors is that much of this will not actually happen. For instance, AARP and the AMA will as usual make sure those meat axe p

There are several reasons why many of us who for years have supported health reform and coverage expansion are now so concerned about the direction the bills are taking. Here are just a few: Congress is taking a “big bang” approach rather than reforming in stages. The US health care economy is larger than the entire economy of Britain. Trying to fix something that large in one bill is impossible to get right. The bills bend total spending up, not down, and America already spends far too much. And since little will be spent in the first three years, the enormous price tag for 10 years is just the tip of the iceberg. The Medicare program is $37 trillion out of long-term balance and that must be addressed if we are to avoid financial disaster for our kids. Yet the bills would cut Medicare spending to partly finance a new health entitlement, not to move the existing one towards long-term solvency. But can anyone who has spent time in Washington really believe there will actually be serious future cuts in Medicare – especially if the savings are not ploughed ba