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Saturday, July 25, 2009

CBO: IMAC Only Marginal Savings

For the last week, the president has been touting the Independent Medical Advisory Council as a means of saving significant money in Medicare. According the the Congressional Budget Office, those savings will be anything but significant. The CBO estimates that the savings would be $2 billion over the next ten years.

According to the President's plan, IMAC would be a committee of five industry experts like doctors. They would be appointed by the President and face approval by the Senate. IMAC would be put into place in 2015 and savings recommendations wouldn't go into effect until 2016 at the earliest.

The CBO's main reasoning for the modest reduction in savings is because the House bill already calls for serious cuts in Medicare. As such, the CBO doesn't see IMAC as presenting anything substantial above and beyond the savings the plan already calls for. The CBO only does estimates for ten years out. The CBO did say that it believes there would be increased but "modest" savings in Medicare costs ten years out and further.

Politically, this of course another haymaker in any plans of health care reform. It's especially damaging because the president has referenced IMAC repeatedly in the last week or so as a major compromise toward the eventual passage of sweeping reform. The CBO has determined that this compromise is little more than a marginal idea.

Now, while the numbers determined by the CBO will make the headlines, the CBO also gave ideas for serious and substantial savings in health care costs: moving away from fee for service and moving toward and moving toward one that pays for value, penalties for substandard care, bonuses for performances, higher co pays, and tighter management of bonuses.

I'm already convinced that health care near its current form will NOT pass and this just puts another nail in the coffin. The CBO ideas have some merit but most are easy to put on paper and much more difficult to execute.

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