Hogan Knows

   I’ve attached a new and excellent piece on healthcare reform and the need to realign financial incentives.  For those of you trying to be relevant to plan sponsors….you are obviously talking about the need to reduce health care costs and to look for opportunities to change the incentives that employers and others use within the healthcare financing system.  This is a great piece that just came out from the Cato Institute on the subject.  I hope that you find it useful.   Jeff

“To summarize, money matters — meaning that if you get the

incentives right, most of the big problems will take care of themselves,

leaving a far smaller and more tractable set of problems to

be addressed through regulation, litigation, and benign neglect.

But if you do not get the incentives right, no amount of speeches,

op-eds, law review articles, whining and hectoring, moral preening,

regulatory oversight, legislation, lawsuits, or lectures about

fairness and justice can take their place. Reformers should

accordingly focus on getting the incentives right — and legislation

that does not address the underlying incentive problem is not, in

fact, “reform,” no matter what else it may accomplish.

Equally importantly, clever institutional design can mitigate

the effect of politics, but politics never goes away. Congress and

state legislatures will not permanently alienate their ability to

deliver subsidies to favored groups and the temptations of rent

seeking and rent selling are such that any mitigation is likely to

be quickly eroded. Reform of the health care system is unlikely to

prove an exception to this rule.”