Two-thirds of what is what? Piecing together the healthcare reform numbers.

The big question in our house last evening was whether to watch the re-run of the day’s stage in the Tour de France (amazing drama at incredibly fast speeds up and down twisting roads) or President Obama’s live speech on healthcare reform (also amazing drama but at incredibly slow speeds up and down its own twisting roads).  If the Tour has 21 stages over about a month, healthcare reform has at least 21 stages over some yet-to-be-determined number of months if not years.  Still, they are both fun to watch in a certain masochistic way.

The question of which to watch, however, was quickly put to rest by Willie D, my nine year old, who said “Dad, what’s the big deal?  You know you can watch either one of them on the web anytime you want, so who cares which we watch now?”

He’s absolutely right of course.  Technology has indeed solved the problem.  So we watched the day’s rerun of the Tour.

But this morning as I watch the on-line replay of President Obama’s speech, I’m trying to piece together the numbers.   For me at least, a few pieces are missing.

The first numbers that stood out during President Obama’s speech were $1.3 trillion annual deficit, and a $7.1 trillion ten year deficit, which, he says, is about a $2 trillion reduction in the ten year deficit which he inherited.  It’s very hard to call a $7.1 trillion deficit a good thing, but it is certainly better than a $9 trillion deficit.

President Obama also said that any healthcare reform package would have to be deficit neutral even as we re-structure the healthcare system generally and expand coverage to most of the 47 million people who are uninsured today.  He said that 2/3 of that cost should come from a shift in focus to preventive care and the elimination of waste.

Hmmmm.  How much?  Two-thirds of what amount?  When he says we’ll pay for two thirds of this through preventive care and the elimination of waste, how much in absolute dollars does he hope to extract?  Exactly how?  Exactly where?

After that, he threw out a bunch of numbers and examples that I had a hard time fitting into the larger context.   He talked about $100 million in subsidies to insurers through Medicare and $80 billion on the table from pharmaceutical companies.  He used all of the right phrases—paying for quality not quantity of service, avoiding unnecessary tests, providing the best information for what works and giving up paying for things that don’t.   He talked about coordinated care and the importance of health information exchange.  All good stuff.

So how much will this cost? How will it be recovered to keep it deficit neutral?

It doesn’t take even a quick search to realize that estimating the total cost of such a healthcare reform package is a tremendously contentious matter regardless of the detail, so picking any number is equally contentious.  One interesting study produced a few months ago noted that of the $2 trillion spent per year on healthcare in the United States, about $600 billion appears to be not in alignment with the cost of healthcare in other advanced (I hate that word, but you know what I mean) nations.  That’s not a bad starting point, but it does not factor in the increase in cost of insuring most of the 47 million who are uninsured today.  According to one estimate, extending coverage to most of those who are uninsured today could cost another $1 trillion over ten years.

So, again, I’m at a loss.  Two thirds of what amount do we expect to recover from prevention and waste reduction, following what specific strategies and policies?

Overlaying this with the discussion of Meaningful Use particularly in the last two weeks, it is clear that a hallmark of these savings will be derived from a huge shift in the way consumers and families interact with the health system.  That leads to the notion of Personal Health Records, and the underlying debate between tethered PHR systems and not-tethered PHR systems.  We’ll comment on that in our next post in a day or two.

In the meantime, I’m off to watch the sprint in today’s stage of the Tour de France, and look forward to a day when consumer-directed online health information technology is as easy and ubiquitous as Utube.

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