On top of the announcement that the drug industry would lower its prices over the next ten years, we now hear of a deal between the government and the hospitals whereby hospitals will accept $155 less in payments over the next decade. This deal assumes that there will be fewer uninsured and thus the hospitals will see less of a loss for uncompensated care than currently is the case. In effect, someone is paying the hospitals more from one pot so that the other pot can claim savings. Now if the pot helping the uninsured become insured is the same pot that is saving the money by lowering its payments to the hospitals then the pot of the first pot is not really saving much at all and the hospital pot is not really giving up anything.
If that is all too convoluted for you, fear not. It is all perfectly clear to the politicians seeking to reform our health care system. The name of the game is simply to make the numbers work. Think of it this way, you have a budget at work and the word goes out that to make the earnings target you must reduce budgets by 10%. However, one person who has a pet project, albeit a worthwhile one, comes up with the brilliant idea of using the savings generated by another department to pay for the project. Is there a total reduction in the budget? Umm, not exactly. Here is another example, you do your five-year plan and project that your company’s health care benefits will increase by 7% a year for the next five years because that is needed to make the numbers work. What are your chances of actually achieving that? Well, they are about the same as the government knowing for sure what is saved in all deals being made. In other words, the chance is zero.
However, in the scheme of things neither matter much and in both cases, nothing much can be done to make either plan work.