Can Obama Pay For His Health Bill? President Obama said in his speech Wednesday that most of his health care plan "can be paid for by finding savings within the existing health care system." Economists say there are ways to squeeze savings out of the existing health care system, but they might not make people happy.
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Can Obama Pay For His Health Bill?

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Can Obama Pay For His Health Bill?

Can Obama Pay For His Health Bill?

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From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.


And I'm Melissa Block.

President Obama may have answered a lot of questions in his speech last night about its health care overhaul plan, but a lingering question remains: How to pay the bill's estimated cost - somewhere in the neighborhood of $1 trillion over the next 10 years.

We asked NPR's Julie Rovner to investigate the possibilities.

JULIE ROVNER: First of all, the president continues to insist that he won't sign a bill that adds to the nation's budget deficit. That means that whatever the bill costs, it will also have to include savings to offset the new spending. So, here's his main pitch.

President BARACK OBAMA: We've estimated that most of this plan can be paid for by finding savings within the existing health care system - a system that is currently full of waste and abuse.

ROVNER: But a lot of people doubt that all the promises the program, particularly new tax credits and subsidies for small businesses and to help 46 million uninsured people get covered, can be financed out of existing nips and tucks to the system. Tom Miller is an economist with the American Enterprise Institute, a conservative think tank.

Mr. TOM MILLER (Economist, American Enterprise Institute): How do you pay for it? Well, you can't unless you make a lot of people unhappy, or you have to scale back what you're trying to attempt.

ROVNER: Miller says you could theoretically find the money to finance the program, but it would mean a lot of upheaval for the health care system.

Mr. MILLER: We're going to have to find a way to begin to examine what the quality and value of the health care being delivered is. Begin, even though not everything's going to work, to change some incentives and experiment on some things which could perhaps get you better health outcomes at a lower cost. But that's not what sells.

ROVNER: Instead, he says, most of the bills in Congress and President Obama seem to have chosen an easier route.

Mr. MILLER: What sells is telling people you'll never have to worry again about losing any benefits. In fact, you'll get more and your coverage will stay forever and someone else is paying for it. It's total la-la-land.

ROVNER: But David Cutler couldn't disagree more. Cutler's a Harvard economist who was the lead health advisor to presidential candidate Obama. He says the changes the president is proposing can so be paid for.

Professor DAVID CUTLER (Economist, Harvard University): And you do it in two ways: The first way is you reduce the overpayments that we make. So, for example, we're currently paying private health insurance plans that serve Medicare beneficiaries about 10 to 15 percent more than the cost of the services. So we should just eliminate that.

ROVNER: Then, liberal economist Cutler starts to sound a lot like conservative economist Tom Miller. He says it's not so much about waste as about quality and value.

Prof. CUTLER: If you look at the studies, the U.S. spends 40 percent more than other countries without getting much for it. And high-spending areas of the country will spend twice what low-spending areas spend. And, again, they're not getting anything for it.

ROVNER: But unlike Miller, Cutler is convinced that there are concrete steps lawmakers can take, like cutting Medicare payments for repeat hospitalizations. He concedes, however, that it won't be a short-term fix.

Prof. CUTLER: We do know how to do this. Now, that's not, again, that's not saying it's going to be easy. It's going to be a path, not a one leap activity.

ROVNER: Meanwhile, Cutler says new numbers on the uninsured issued by the Census Bureau today should give some pause to those who say they oppose the president's plan because it represents a government takeover of the health care system. The total number of uninsured didn't change much - it remains about 46 million. But that was because several million people lost private coverage and gained public coverage instead. So for those who dislike government-run insurance, Cutler says…

Prof. CUTLER: What I think is true is you'll be really unhappy if we don't do anything. Because if you just wait long enough, that will be where the vast bulk of Americans are.

ROVNER: Those numbers, however, likely understate those who lost their jobs and their health coverage during the height of the economic downturn, which is likely to make the health overhaul bill just that much more expensive to finance.

Julie Rovner, NPR News, Washington.

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