The Wonk Room

Will Kent Conrad Be The Champion Of Health Care Reform?

Budget Committee Chairman Kent Conrad (D-ND), who has recently questioned the wisdom of investing more money into the health care system, is now warning the administration that he may confine the budget resolution to five years instead of ten:

“I’m expecting significant change. It is going to require adjustments,” Conrad said after seeing some of the preliminary numbers. “I think all of us have a very good sense that they will be more adverse.” Unlike Obama, who presented a 10-year spending plan, the chairman said he will confine his resolution to just five. Conrad said he made this decision because of the uncertainty of long-range forecasts, but the end result of narrowing the window is significant in itself.

Narrowing the budget window will be unhelpful towards enacting for health care reform. The administration has consistently argued that bending the curve on unsustainable health care spending requires an upfront investment in prevention, health information technology, comparative effectiveness research, and expanding access to the uninsured. Confining the budget resolution to just five years wouldn’t capture the long-term return on the investment and could jeopardize the effort.

During recent Congressional testimony, OMB director Peter Orszag estimated that “health care reform should be deficit neutral even over the medium term [5 to 10 years]” and predicted that “savings will build over time.” Indeed, according to a Commonwealth Fund analysis, an integrated approach to health care reform “could slow the growth in national health spending by a cumulative $3 trillion through 2020, compared with current projections.” The three trillion accrues from incremental savings each year. By 2020, the percent of GDP spent on health care would lower to 18.4 percent from the projected 20.8 percent.

The Blue Dogs have endorsed Obama’s 10-year health allocation, while PhRMA, SEIU, the U.S. Chamber of Commerce, AARP, Aetna, AFL-CIO, and AHIP have all signed-on to a letter urging Congress to suspend pay-go rules when considering health care reform:

While the cost savings from improving the efficiency and quality of health care will be significant, many of the anticipated savings will be realized in the long term, and may thus not be evident in a ten year budget window…Requiring spending or revenue offsets for the entire cost of health reform within a ten year budget window, as required under a traditional pay-as-you-go rule, will significantly reduce the likelihood of enacting legislation to achieve essential reforms for long-term savings.

As Conrad himself has argued, “if we as a society fail to control health care costs, there will be a detrimental effect on our nation’s economy and standard of living.” Obama has allocated $634 billion to begin the process of reforming the system, but comprehensive reform could require as much as $1.5 trillion, a drop in the bucket compared to the projected costs of health care (estimated to reach $5.2 trillion by 2020).