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.)