Reinhardt's lament

Anybody see Uwe Reinhardt's post in the New York Times Economix blog this morning? Reinhardt, a healthcare economist at Princeton, responds to a recent Peggy Noon column, called Common Sense May Doom ObamaCare, with a depressingly dead-on list of what constitutes "common sense" thinking about health reform.

The list basically boils down to: Americans don't want any limitations on what treatments they may have; if their doctor says they should have it, then they should, whatever the cost and however unlikely it is to provide very much relief. On the other hand, people should not have to pay for this themselves. Other people should pay. And yet the government shouldn't spend more money on healthcare or raise anyone's taxes. Got all that?

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He's right, of course. People can't have everything for free. That's why it is so disingenuous of the president to keep telling everyone, "If you like what you have now, you can keep it." He's saying, "Hey Everyone: We're gonna change healthcare, which constitutes one-sixth of our economy, but don't worry -- you won't have to change unless you want to." That's not being honest. And it's not persuading people. What we have now is an unsustainable addiction to unnecessary and expensive care.

The question is: How do we break the addiction? One way is through a government board of medical experts who would decide for everyone what treatments are cost-effective, a la England. I don't think Americans will accept that.

Another is by devising a privately run system that makes real headway in moving people off their employer-subsidized care and into insurance plans in the individual market. People would choose whatever plan they want, getting help, presumably, from some government-run online marketplace that simplifies the choices. They would pay for it with a combination of their own money and government subsidies. The public money would come from taxes on employers (who would no longer have the need to cover their employees). If people want the expensive Cadillac plans, fine, but they have to pay for it, because the subsidy would be based on their income, not the plan they choose. When they see the price tags they might realize the benefits of more cost-effective care, but for those who don't mind digging deeper, I say go for it -- as long as it's their nickel.

You could also give real teeth to the Medicare payment commission's recommendations, which would not only save Medicare money but also provide cover to private insurers looking to cut their own costs. And such a reform would not necessarily preclude, at some future point, the addition of a "public option."