Wessel: With Health Care It's About How, Not How Much

We have talked before about the long run unsustainable growth of our health care spending. But when it comes to controlling Medicare and Medicaid costs, there will inevitably be plenty of room for political attacks. In a video and an accompanying article in The Wall Street Journal, David Wessel explains that health care spending deserves reasoning, not rhetoric.

Because both President Obama and Vice Presidential candidate Paul Ryan want to limit the growth of Medicare spending to the same rate, Wessel argues that it is more important to discuss how each plan proposes to make sure these cuts result in a sustainable program with sufficient access and quality of care. He sums up the two approaches as follows:

President Obama in the Affordable Care Act and some of what he proposed in his budget wants to put the squeeze on health care providers, give them incentives to provide health care more efficiently, with the threat that if they don't the government will pay them less or ratchet down spending on Medicare. 

Rep. Ryan, who has written a pretty detailed Medicare plan that Gov. Romney has basically embraced, says he wants to set up a competitive market where people will shop for Medicare insurance the same way they shop for Medicare drug insurance right now and we will give them a voucher or a subsidy. If they want to buy something more expensive, they will have to pay out of pocket. He hopes that competition among insurance companies, and in the case of his current plan, among insurance companies plus the current Medicare program will serve as the pressure to bring down the cost of health care.

Both plans rely on incentives to push down the cost of health care. In President Obama's plan, there are incentives for providers to treat patients as efficiently as possible without affecting quality of care. In Rep. Ryan's plan, beneficiaries are incentivized to choose more cost effective health insurance plans since they are given a fixed amount of money with which to purchase insurance.

Discussing the pros and cons of each approach would be much preferable to unproductive finger-pointing. As Wessel succinctly states:

Both of these are unproven approaches. Both of them raise a lot of questions. But it would be nice if the debate was about these competing approaches instead of accusing the other side of hurting the elderly.

The full Wessel video is below.