By Robert E. MoffitDirector, Center for Health Policy Studies, The Heritage Foundation

Think about this for a moment: President Barack Obama says that we spend too much on health care (about $2.4 trillion annually) and that it's hurting our economy. He also says we need to bend the curve (downward) on health care spending. So ... we need to spend even more on health care to save money and "bend the curve." Huh?


Big savings through higher spending? If you're wondering how this will all work out, then you need to just think happy thoughts. After all, this isn't about hard-nosed budgeting, or even economics. Nor is it about access or even quality. It's about power and control -- who has it, and who exercises it, especially over the flow of health care dollars.

The president outlined an ambitious health policy agenda. The Congress has already enacted a large portion of it, largely through the stimulus bill and other legislation, totaling about $200 billion over 10 years in public-program expansions (SCHIP and Medicaid), including the creation of Federal Council on Comparative Effectiveness Research, and a multi-billion taxpayer "investment" in information technology.

If Congress enacts the rest of Obama's agenda, Washington will exercise an unprecedented centralization of power and control over the health care sector of the economy. Already, government controls almost half of all health care spending. The debate now is about how the government will control the rest of it.

Now the captains of the giant health industry -- the lobbyists for the doctors, hospitals, pharmaceuticals, the insurance industry, medical technology, along with the Service Employees International Union -- have pledged to knock off 1.5 percent annually from the nation's health care bill, accumulating roughly $2 trillion in savings over the next 10 years.

How? Through a series of fashionable initiatives, such as "administrative simplification" and "standardization" of insurance claim forms, electronic medical records, and the greater use of health information technology. (In other words, ensure that all the transactions driven by today's perverse health care incentives can be executed more quickly.)

Most of these "savings" initiatives are already embodied in the Obama budget. But as The Washington Post recently noted, Obama's health care savings are "phony" and would only cover "a fraction" of the real cost of his health reform agenda. Without details of how exactly these changes would be implemented, no reliable estimate of savings is possible.

The joint PR offensive conducted by the Obama administration and health industry chiefs highlights a troubling feature of health care debates, past and present. Health care is one of the most highly regulated sectors of our economy. That's why an army of lawyers, lobbyists and consultants routinely descend on Washington and the state capitols, trying to manipulate the rules and regulations to micromanage their competitive position at the expense of other players.

The result: billions of dollars in cost shifting and a giant national game of "tag" where ordinary Americans are "it." It is households, not government officials, managed care executives or employers, who ultimately pay 100 percent of the nation's health care costs. And if President Obama and his allies in Congress have their way, ordinary Americans, not just the hated "rich," will be paying more for less in the form of higher taxation. Sooner or later.

For prominent liberals, this industry homage to the White House on health care is good news. New York Times columnist Paul Krugman, for example, is suspicious of the intentions of the health care industry, but he considers their pledge to help the president real progress. Obama and his congressional allies, after all, want to expand federal control over health care. Krugman likes that.

Perhaps health care industry chiefs think that greater federal control is inevitable; by playing ball, so to speak, maybe Congress won't "hurt" them. Or they realize that official Washington is going to pursue little more than an expansion of the status quo, public and employment-based third-party payment, with some version of a new public health plan and another thick layer of federal regulation.

The president is asking Congress to budget an additional $634 billion over 10 years in a reserve fund for reform -- without any details of what that reform would be. But many experts expect the real 10-year costs would exceed $1 trillion. That presents an irresistible temptation for Congress and Washington lobbyists to forgo any heavy health policy lifting, and to figure out how to divvy up another big chunk of taxpayer money.

In short, taxpayers and households will get what Washington gives them -- and pay the bills. Forget "bending" the spending curve.

Real health reform would mean real change, a transfer of direct control over health care dollars to individuals and families in both public and private health programs. Making plans and providers directly accountable to individuals and families would ignite a health care revolution. That, of course, could be dangerous.


Robert Moffit is the Director of the Center for Health Policy Studies at The Heritage Foundation (www.heritage.org).