Healthcare Reform: Easy as One, Two, Minus Three

Who knew finding twelve digits of savings in the healthcare industry would be this easy?

The administration expects to achieve the lowered hospital payments in two major ways. First, said Obama’s budget director, Peter Orszag, payments to hospitals will be reduced to try to encourage them to work more productively and efficiently.
Orszag said hospitals could figure out ways of treating patients “more effectively, through health information technology, a nurse coordinator instead of an unnecessary specialist,” for example. These “productivity adjustments” would account for $110 billion in savings.

If you cut it, they will innovate! Or maybe cease to provide, but we won’t dwell on that. We also won’t consider why price controls on hospitals will spur desirable efficiencies, but reducing the burden on patients to pay more directly for the services that they use won’t exacerbate waste on their part. (The key, we can imagine, is in the consumption controls that are visible a few more steps along the process.)

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11 years ago

“payments to hospitals will be reduced to try to encourage them to work more productively and efficiently.”
Oh, good. When do the cuts to government begin?

11 years ago

I’m more interested in why the government needs piles of new money in order to realize these savings. This seems like something they could be doing right now with the 30% or so of healthcare spending they already control through federal spending. If these savings are available, we could get them now; if this is too politically difficult, I don’t see how removing the budgetary incentive would make it more likely.
To put it another way, this article says that the Obama administration thinks that Medicare and Medicaid are currently wasting about $313 billion in unnecessary spending and inefficiencies. This they use as evidence that the government should take a larger role.

Curious Resident
Curious Resident
11 years ago

Any cuts or improvement in efficiencies which would make the health care system better have already been implemented by the natural flow of a free market enterprise. Healthcare providers are no different than any other business looking to maximize profits. They cut costs and optimize service to the extent most appealing to their cusotmers.
To think the government can mandate the elimination of waste is stupidity at its finest. All the government’s interference will do is force consumers to purchase an inferior healthcare product. Why are liberals so dumb?

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