Controlling health costs

Atul Gawande says health care reformers lack a master plan for controlling costs. But this is not a criticism, he says. It has to be this way.

Sounding too much like Malcolm Gladwell, he says:

There are, in human affairs, two kinds of problems: those which are amenable to a technical solution and those which are not. Universal health-care coverage belongs to the first category: you can pick one of several possible solutions, pass a bill, and (allowing for some tinkering around the edges) it will happen. Problems of the second kind, by contrast, are never solved, exactly; they are managed.

He then develops at New Yorker length an analogy with farm policy, which he seems to regard as a success. That kind of approach is the best one can do when it comes to controlling health costs, he says: it's an unending process.

Set aside whether farm policy is an encouraging model. In principle, there is surely something to the distinction Gawande draws between the two kinds of problem--but health reform is not an obvious instance. Note that reformers are approaching universal coverage in stages--as a process, not as something you do once and for all. (Look at Massachusetts, the model for this effort: coverage is less than universal.) Equally, if they wanted to, they could adopt a once-and-for-all policy to shift incentives and improve cost control. For instance, single-payer, with a hard budget cap (ie, rationing); or a private system based on health insurance vouchers, financed with an earmarked value added tax (as proposed by Zeke Emanuel). The Medicare cuts in the Senate bill are in this category.

In other words, curbing costs is certainly "amenable" to a "technical solution", unless you decide for some reason to take that kind of solution off the table. In both cases, coverage and cost control, the obstacles are political--a matter of reconciling conflicting preferences. The methodological distinction is blurry at best.

As this WSJ editorial argues, one can think of over-arching innovations within the realm of the politically feasible that would shift the entire system in the direction of better cost control. The simplest one is abolishing the tax exemption for employer-provided health insurance. If you reject systemic reforms like that, then "managing" the problem--with luck, more effectively than farm policy--is all you have left. But shouldn't you discuss them before you reject them?