Bending the Cost Curve in the Wrong Direction

Robert Book / December 09, 2009

This week the Commonwealth Fund released a report purporting to explain, as the title says, “Why Health Reform Will Bend the Cost Curve.” It is an exercise in pure, unsubstantiated speculation. They resurrect the long-discredited claim that the bill passed by the House and a somewhat similar but different bill currently before the Senate would not only slow the rate of growth in health care spending, but would reduce average family premiums. Ironically, most of the sources of alleged “cost savings” cited in the report are due to factors that will actually increase health care spending and/or health insurance premiums – and which are counted as such by other studies of the effects of proposed reform.

Even more ironically, they attribute the difference between their conclusions and those of other studies that show an increase in costs and premiums (by groups such as the CBO and the CMS Office of the Actuary) as due to the fact that the other studies “rely largely on peer-reviewed studies utilizing carefully controlled comparison groups,” whereas their own study is based on a “less formal, but no less important literature that sees the world very differently.” They also note that front-line physicians see vast amounts of waste due to misaligned incentives in the current system. However, doing a study less “carefully” and looking at “the world very differently” will not change the fact that the current proposals under consideration in Congress would, in the real world, establish a system with even more drastically misaligned incentives, increasing waste and costs for almost all categories of patients and providers. (more…)