"Something’s Got to Give in Medicare Spending"

Tyler Cowen is not a fan of Obama's health care reform plan. He thinks we should use comparative effectiveness studies to "cut areas of Medicare spending." (Update: In comments, Tyler says, "I don't quite agree with your opening sentence characterizing my piece.  I think Obama would like to do something along the lines of what Cutler proposes and along the lines of what I defend.  I think it is Congress that will not let him."):

Something’s Got to Give in Medicare Spending, by Tyler Cowen, Commentary, NY Times: Medicare expenditures threaten to crush the federal budget... It’s not the profits of the drug companies or the overhead of the insurance companies that make American health care so expensive, but the financial incentives for doctors and medical institutions to recommend more procedures, whether or not they are effective. So far, the American people have been unwilling to say no.

Drawing upon the ideas of the Harvard economist David Cutler, the Obama administration talks of empowering an independent board of experts to judge the comparative effectiveness of health care expenditures; the goal is to limit or withdraw Medicare support for ineffective ones. This idea is long overdue ...

Scholars have been applying comparative-effectiveness research to Medicare for years... If we are willing to take comparative-effectiveness studies seriously, we could make significant cuts in Medicare costs right now. We could cut some reimbursement rates, limit coverage for some of the more speculative treatments, like some forms of knee and back surgery, and place more limits on end-of-life-care. ...

Of course, we have not made such Medicare spending cuts yet, and there are few signs that we will. A Kaiser Family Foundation poll found that 67 percent of Americans believe that they do not receive enough treatment... If the Obama administration covers more people with government-supplied or government-subsidized insurance, the political support will broaden for generous benefits...

Suggested ways to lower costs include an emphasis on preventive care, the use of electronic medical records and increased competition among insurers. But even if these are likely to improve the quality of care, they are speculative and uncertain as cost-saving measures. ...

One idea ... is to finance new health care programs by taxing health insurance benefits. This makes sense in principle... But employer-supplied insurance is a mainstay of the current health care system, and there is no adequate replacement immediately in sight. It’s also hard to convince the American public that the solution to insufficient health insurance is to tax health insurance. ...

It sounds harsh to suggest that the Obama administration cut areas of Medicare spending, but, too often, increased expenditures and coverage are confused with good health care outcomes. The reality is that our daily environment, our social status and our behavior — including diet and exercise — have more to do with good health than does health care...

The demand for universal coverage sounds like a moral imperative to “take care of everybody,” but in reality it would make only a marginal difference... The sober reality is that universal coverage is another way to spend money... Mr. Obama has pledged to be a fiscally responsible president. This is the biggest chance so far to see whether he means it.