Health care spending like a balloon… Squeeze it here, a bulge appears there — MedCity Morning Read, June 18, 2009

U.S. Capitol Building

WASHINGTON, D.C. — Over the years,U.S. health care spending has been like a balloon — squeeze it here, and a bulge appears there. That’s what could happenwith President Obama’s proposed federal health spending cuts, according to the Washington Post.

Unless doctors and hospitals are able to respond to the president’s proposed Medicare and Medicaid spending cuts with greater efficiency, the bulge that appears this time could be greater costs for insurers, employers and people who have private medical insurance, a group of economists told the Post.

“I think there’s definitely risk that a portion of the reduction in hospital payments from Medicare will wind up as increased payments by private insurers,” Paul B. Ginsberg, president of the Center for Studying Health System Change, told the Post.

Depending on the circumstances, hospitals may have the motive and means to “transfer those charges to somebody else,” and “we’ll see costs increasing on the private side and not necessarily falling everywhere,” said Harold S.Luft, director of the Palo Alto Medical Foundation Research Institute, according to the Post.

The biggest health care proposal made by President Obama last weekend likely would move cost to the private sector, the Post said. That proposal would cut Medicare payments without giving hospitals the tools todeliver care more cost effectively, Luft said. It could save the government $110 billion over that time.

Squeezing from the government’s end could make health care more efficient for everybody, the Post said. However, a report issued by the Congressional Budget Office this week said there is no guarantee that this squeezing would cause greater efficiency.

Meanwhile, congressional Democratsacknowledged Wednesday that their aggressive timetable to get health care reform done this summer and a bill on the president’s desk by October may be slipping, according to the Los Angeles Times. Lawmakers are struggling to find ways to control the cost of reform cost that could hit $1.6 trillion over a decade, according to one estimate, the L.A. Times said.

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