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11.21.10

Obama's Best Health-Care Fix

Despite voter support for a rollback of the health-care bill, Republicans won't get a repeal past the president's desk. Douglas E. Schoen on what Obama can do in the meantime to address voters' concerns about reducing costs.

With the midterm elections behind us, the new Congress and the White House now will look to act on voters’ repudiation of President Obama and the Democrats’ spending policies. Americans have loudly and clearly shown that they want to cut federal spending and taxes, reduce the deficit and the debt, and reduce the size and scope of government.

Polling I conducted last week bears this out. Eighty-three percent of the American electorate believes that federal spending should be cut. Almost half, 47 percent, say federal spending should be cut by 20 percent; 21 percent say it should be cut by 10 percent; and 15 percent percent say it should be cut by 5 percent. Just 10 percent say there should be no cuts in federal spending, while 4 percent say federal spending should be increased.

According to a New York Times/CBS News poll released right before the election, one-quarter of voters say health care should be the first priority for reducing federal spending, second only to national security (29 percent).

And with health care at the top of the list of issues that voters are concerned about—79 percent say it is a very important issue, ranking second only behind the economy at 82 percent, according to Rasmussen Reports—it is very likely that reforming and cutting health-care spending will be a priority for Congress.

Rasmussen Reports data show that 58 percent favor repealing the health-care law, while 37 percent oppose repealing it. However, just 46 percent say it is likely the health-care bill will be repealed. A majority, 52 percent, says Congress should review the health-care bill piece by piece and keep the parts it likes, while 39 percent say Congress should scrap the bill and start over.

Despite voter support for repealing the health-care law, as long as Obama remains president, such an action would be almost impossible, as he would veto it if it were to pass in Congress. Thus the most practical approach going forward will be to reform individual pieces of the bill while preserving popular provisions.

It is clear that we must address the need for health-care reform immediately and that the first emphasis must be on addressing and reining in the level of growth in federal health-care spending.

The most practical approach going forward will be to reform individual pieces of the bill while preserving popular provisions.

What then, should be done?

The key to reducing health-care costs is to focus directly on improving chronic disease prevention and management. The majority of spending within Medicare goes to the chronically ill. Three-quarters of overall health-care system spending is chronic disease-related, and 99 percent is within Medicare.

For example, the costs associated with treating individuals who have Type-2 diabetes or Alzheimer’s is tremendous. Last year, the federal government spent $24 billion treating kidney failure, which is directly caused by Type-2 diabetes. As for Alzheimer’s, the cumulative costs of care will exceed $2 trillion in the next decade and $20 trillion from 2010 to 2050, unless a disease-modifying breakthrough is discovered.

Thus, improving our ability to prevent and manage chronic diseases will significantly reduce health-care costs. In order to reduce these costs, we must first advance the coordinated care delivery model.

Coordinated care aims to develop cost-effective strategies to make health-care systems more responsive to people with chronic illnesses by identifying medical, functional, and emotional needs, and meeting those needs by integrating medical services, education, and support of patients and families. Unlike current systems, where care is fragmented, with little communication among those who are providing treatment, and where follow-up and monitoring are poorly planned, coordinated care systems emphasize coordination among providers and more constant monitoring of patients.

Integrated care delivery systems already being tested should be our primary focus, as these systems will bring us closer to a personalized medicine model that will fundamentally transform how health care is administered and incentivize providers for the value, not volume, of care they provide. These systems provide a much more effective way to reduce costs than mindless rate-cutting, which will happen if the Independent Payment Advisory Board created by Obama’s bill is not reformed so that checks on its decisions on where to cut costs are implemented. If IPAB cuts health-care costs in an arbitrary way, it will hurt our country’s efforts to prevent, manage, and cure chronic disease, and ultimately be counterproductive to reducing health-care spending.

Further, reforming our delivery system of health care to emphasize coordination of care is a pro-growth solution, as it will reduce spending while opening new employment opportunities for health-care professionals. Indeed, while most sectors have dropped jobs in the past months, health care has added them. The U.S. Bureau of Labor Statistics estimates that since the beginning of the recession, the health sector has added more than 700,000 jobs. The coordinated care delivery model is a bipartisan solution that will help the Obama administration achieve the consensus it needs.

In addition to promoting coordinated care as a means of reducing costs associated with chronic disease prevention and management, we must prioritize medical innovation as a national agenda item, which is critical to uncovering treatments for chronic diseases such as cancer, Alzheimer’s, and diabetes. Medical innovation saves lives, reduces health-care costs, cuts the deficit, generates quality jobs, increases productivity, and ensures U.S. competitiveness globally.

By investing wisely in medical research and innovation, we will rapidly increase overall cure rates and help drive down skyrocketing health-care costs. It is estimated that a permanent 1 percent reduction in mortality from cancer alone has a present value to current and future generations of Americans of nearly $500 billion. A cure would be worth about $50 trillion.

A recent study by North Carolina State University concluded that health-related innovation is a crucial factor in economic growth. The study found that new innovation and technology generates products that help cure previously untreatable medical conditions, which creates a ripple effect across other economic sectors. It also found that increases in health-care productivity preserve experienced and skilled human capital to later ages for all economic sectors. A study by the University of Chicago reported that from 1970 to 2000, gains in life expectancy added about $3.2 trillion per year to the national wealth.

The White House should announce a national initiative focused on medical innovation, which would not only benefit our health-care system, but would also help our economy. This, combined with advancing the coordinated care delivery model, would constitute a pro-growth agenda that would lead to permanent reductions of health-care costs in the long term.

Douglas Schoen is a political strategist and author of the upcoming book Mad as Hell: How the Tea Party Movement is Fundamentally Remaking Our Two-Party System to be published by Harper, an imprint of HarperCollins on September 14. Schoen has worked on numerous campaigns, including those of Bill Clinton, Hillary Clinton, Michael Bloomberg, Evan Bayh, Tony Blair, and Ed Koch.