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Writing at The New York Times, Jacob Hacker says, "the Lewin Group, a health consulting company, recently determined that a proposal I’ve developed that is quite similar to the candidates’ plans would cost the federal government just $50 billion to cover everyone, and save our health system serious money over time."That seems half right. Jacob's plan -- which was evaluated by the Lewin Group -- would save our health system serious money over time. But the part that saves money is absent from the candidate's plans. As I explain in my latest piece for The Prospect:
The Lewin Group, currently the gold standard in health-care consulting, has analyzed the Hacker plan and estimated that it will save about $1.04 trillion over 10 years. Some of these savings will come through basic efficiencies, both administrative and technological. But the savings depend heavily on the quiet cost controls built into the HCA. There, spending per enrollee will only be allowed to increase at a fixed rate of that year's GDP growth plus a half percent. Basically, the government mandates spending growth at a far slower rate than that of the private marketplace.If it works, this has two effects: First, it saves money by mandating that a portion of the system -- the HCA -- spends less money. This, in effect, is the same way single-payer saves money. It simply caps spending and induces providers to use available funds more cost-effectively. But it also makes the most cost-effective HCA a progressively better deal for businesses to buy into, thus expanding it. Over time, more Americans end up within the cost-controlled structure. According to Lewin's estimates, the HCA would have an initial enrollment of 128.6 million enrollees (mostly individuals and small businesses), while 122 million Americans would remain in private, mostly employer-provided insurance. By 2017, the HCA would have 177.4 million members, while private insurance would be down to 93.5 million. Under these assumptions, the slower spending in the HCA alone would result in $1 trillion in savings.Neither Clinton nor Obama's plan includes this spending control. So both efforts delete the provision responsible for about a trillion of the $1.04 trillion in savings. That's understandable, as the provision is politically risky. But it also means that neither plan saves money in quite the way Hacker suggests. Rather, they try to extract savings through what health policy types call a "modernization" agenda -- better chronic care management, better effectiveness data, health IT systems, and so forth. All of those proposals are good, but in the short-term, they won't save very much money. So in this way, Obama and Clinton are not, sadly, all that similar to Hacker.
