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Misdiagnosis

Posted by Peter Orszag on May 15, 2009 at 08:57 AM EST
A media report this morning makes a mountain out of a molehill – suggesting that the commitment earlier this week by health care providers and insurers to reduce cost growth was overstated.   Here is what the groups stated in a letter they signed: "we will do our part to achieve your Administration’s goal of decreasing by 1.5 percentage points the annual health care spending growth rate—saving $2 trillion or more."  The groups have since clarified that they may need to "ramp up" to the 1.5 percentage point reduction in the growth rate, which is understandable.
 
 
Allowing some time for a ramp-up does not change the fundamental point, which I highlighted in an op-ed in the Wall Street Journal this morning: the groups have committed to significant reductions in the growth rate, thereby recognizing that substantial efficiencies can be captured in the health system.  Some ramp-up time also does not materially affect the long-term impact from reducing the growth rate, on either national health expenditures or the Federal budget.   The sooner we enact fundamental health reform, the sooner we can begin the process of improving quality and reducing cost in the health system.
 
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