Ex-Obama Advisers Seek Health Care Cost Control; Republicans Ridicule New Proposal

Article excerpt

WASHINGTON - Some of President Barack Obama's former advisers are proposing major changes aimed at controlling health care costs as political uncertainty hovers over his health law.

Call it Health Care Overhaul, Version 2.0. Their biggest idea is a budget for the nation's $2.8 trillion health care system, through negotiated limits on public and private spending in each state.

The approach broadly resembles a Massachusetts law signed this summer by Democratic Gov. Deval Patrick that puts pressure on hospitals, insurers, and other major players to keep rising costs within manageable limits. It could become the Democratic counterpoint to private market strategies favored by Republican presidential nominee Mitt Romney and running mate Paul Ryan.

Health costs lie at the heart of budget problems confronting the next president. Health care accounts for 18 percent of the economy and about one-fourth of the federal budget, and many experts believe it can't grow unchecked without harming other priorities. Because the United States spends much more than other advanced countries, there's a consensus that savings from cutting waste and duplication won't harm quality.

"We think of these as the next generation of ideas," said Neera Tanden, who was a senior member of the White House team that helped pass the health law. Tanden is now president of the Center for American Progress, a Washington think tank close to the administration.

Under the proposal, the major public and private players in each state would negotiate payment rates with service providers such as hospitals. The idea is to get away from paying for each individual test and procedure. Negotiated rates could be based on an entire course of treatment. Payments would have to fit within an overall budget that could grow no faster than the average rise in wages.

The spending limits would be enforced by an independent council, but crucial details need to be spelled out. In Massachusetts, for example, budget-busting providers will be required to file plans with the state laying out how they'll amend their spendthrift ways.

The federal government would provide grants to states interested in developing their plans.

Tanden joined a brain trust of former administration officials floating the proposal recently in the New England Journal of Medicine. …