Economists’ Letter on Fiscal Sustainability Provisions in Manager’s Amendment

Henry Aaron, Stuart Altman, Kenneth Arrow, Gary Burtless, David Cutler, Patricia Danzon, Angus Deaton, Brad DeLong, University of California, Peter Diamond, Victor Fuchs, lan M. Garber, Dana Goldman, Jonathan Gruber, Daniel McFadden, David Meltzer, Joseph Newhouse, Uwe Reinhardt, Alice Rivlin, Meredith Rosenthal, Isabel Sawhill, William Sharpe, John Shoven, Robert M. Solow, and Laura D’Andrea Tyson have a new letter out lauding a number of improvements that the “manager’s amendment” finalizing the text of the Senate health care bill makes, related to the original merged draft, in terms of improving the long-term fiscal situation of the United States.

You’ll find the text of the letter below the fold. Something I would note on this subject is Atul Gawande’s recent New Yorker piece about the need to try a grab-bag of techniques for controlling costs. We know there’s a lot of waste in the system, but we know less about what will work to get rid of it. This legislation contains a lot of promising ideas. For things to work out, some of those ideas need to work out, and then we need to expand upon the precedent they set.

Dear Senator Reid:

We write to thank you again for your leadership in the Senate health reform deliberations. We greatly appreciate the important elements of fiscal sustainability that are included in the Manager’s Amendment.

Among the features that we believe to be critical to a fiscally responsible approach to health reform is a more effective independent Medicare advisory body. The Manager’s Amendment has strengthened the role of the body, now called the Independent Payment Advisory Board. The Amendment gives the Board the authority to produce annual reports beginning in 2014 and to report on privately financed medical care as well as care financed by Medicare. In addition, its recommendations will receive fast-track consideration under a broader set of circumstances than under the Senate Leadership Bill. These are important steps toward assuring that health care reform will significantly reduce health care inflation in both the public and private sectors.

Another feature that has been strengthened is the commitment to delivery system change. The Manager’s Amendment contains several provisions that should stimulate the development of innovative approaches to payment for care. These approaches hold the promise of improving quality and lowering the costs of care. Specifically, the Manager’s Amendment includes an expansion of Medicare pilot programs and provisions for bundled payments for a larger set of conditions. These aspects of the proposed legislation make it far more likely that health care providers will have the tools and incentives to deliver better health outcomes.

As a nation, we will need to do more in the coming decade to promote the efficiency and quality of health care. The Manager’s Amendment includes important features that will move our nation’s health care forward while helping to control health expenditure growth. We are grateful for your ongoing efforts and the improvements in the Manager’s amendment. We urge expeditious enactment of your reform legislation.