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Obama’s Letter

By Matthew Yglesias

"Obama’s Letter"

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There seem to me to be two noteworthy things in the letter to Ted Kennedy and Max Baucus from Barack Obama that the White House just dunked into my inbox. One is that the President continues to push for a public option, writing “I strongly believe that Americans should have the choice of a public health insurance option operating alongside private plans.” A little while back, I think it was generally thought that the public option was largely a kind of kabuki bargaining tactic, but people are now putting serious political muscle behind it. A slightly duller, but in some respects more important, aspect of the letter is this idea:

To identify and achieve additional savings, I am also open to your ideas about giving special consideration to the recommendations of the Medicare Payment Advisory Commission (MedPAC), a commission created by a Republican Congress Under this approach, MedPAC’s recommendations on cost reductions would be adopted unless opposed by a joint resolution of the Congress. This is similar to a process that has been used effectively by a commission charged with closing military bases, and could be a valuable tool to help achieve health care reform in a fiscally responsible way.

Ezra Klein explains some of the import of this. But to make a long story short, this MedPAC idea is part of closing the gap between the cost savings we “could” achieve through reform and actually achieving cost savings. MedPAC is basically an expert committee that comes up with smart recommendations on Medicare payments that it offers to congress. But then Congress doesn’t actually do anything. What they’re looking to do here is to change the decision-process so as to make it much more likely that MedPAC’s ideas would be implemented, by shifting to a BRAC model whereby congress could block the recommendations as a whole but couldn’t modify them or kill the whole process with delay.

As the main characteristic of the American political system is status quo bias, these kind of changes to the default rules can have a big impact. This seems like a very smart ideas.

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