Yesterday, President Barack Obama nominated Kansas Gov. Kathleen Sebelius to head the Department of Health and Human Services.

Sebelius is fully on board with Obama’s  proposal to raise $634 billion for healthcare reform over 10 years through tax increases on the wealthy and cuts to existing government healthcare spending. These cuts may include reduction of government funding of Medicare Advantage programs (probably a good move), which are Medicare plans that are run by private insurance companies and account for a large proportion of their revenues (e.g.  48% of Humana’s annual revenues) but cost the government more than administering the plans themselves. The cuts may also reduce physician reimbursement (definitely a bad move), who’ve already reached full workload capacity and financially-threatened medical practices.

Unfortunately, there is still not much talk about increasing efficiency at the delivery end, something that if done well can not only reduce costs but also improve quality of care. Paying less for something without trying to find out and correct why it costs too much can not be a viable long-term strategy.

Filed under: Health Policy