There is a lot of speculation about how health care reform will affect health care costs. Some think it will reduce them, others fear it will increase them, and still others see little or no effect at all. The Health Care Cost Monitor invited several of its contributors to give their views in answers to four questions. This is the first of a series of responses. —The Editors

1. In terms of curbing health care costs, is the health care reform legislation a win, a loss, or neutral?

If the goal is to curb health care costs (i.e., expenditures), health care reform is potentially a loss, but only if someone ponies up the money. Since nobody will, it will be neutral.

While the legislation will assuredly increase pressures for more health care, the states won’t be able to afford the added costs of Medicaid (which will cover half of the newly insured), so they will have to cut reimbursement. Health care reform legislation already decreases disproportionate share payments to hospitals for the added costs of Medicaid and other poor patients and reduces payment to hospitals with “excess” readmissions (principally of poor patients). The umbrella covering the poor looks broader but leakier to me.

Meanwhile, private insurers will be reluctant to raise premiums, so they will negotiate lower payments to providers, and Medicare will cut payments wherever it can. All of these are animated by the notion that health care providers can do more for less, and besides, too much care is being provided anyway, and primary care could reduce demand even further. So if providers eliminate waste, everything will work out. As the Queen told Alice, “Sometimes I’ve believed as many as six impossible things before breakfast.”

2. Are the claims that the legislation will significantly control costs plausible?

There is no legislation that can reduce the rate of overall spending. The amount spent in the U.S. (and in every other developed country) is a reflection of its economic capacity. The recession slowed health care spending, just as the boom in the 1990s accelerated it, both unrelated to “need.” Over time, the nation does not spend more on health care than it can afford, at least for very long, nor does it spend less. The simple truth is that the reservoir of unmet need already exceeds our economic capacity, even if inefficiencies didn’t exist. The addition of still more beneficial services in the future, the products of science and technology, will further expand the potential for care.

The real question is, Who will get the care? The new legislation could make more of it available to low-income patients, but a variety of dynamics conspire to close the doors to those at the bottom of the income scale. What is most likely is more poor people will be on Medicaid, taxes will be higher, premiums will be lower, and there will be no net change in spending.

But what about the legislation’s “cost-savers?” Any savings from electronic medical records and administrative simplification will be more than matched by the added costs of new regulations. Prevention will improve lives, but it won’t save money, and the same applies to primary care. And while support for comparative effectiveness research is welcomed, effectiveness has been compared for decades (e.g. Cancer Cooperative Groups). The resulting increment in knowledge from a new federal initiative is likely to be small, while the accompanying bureaucracy is likely to be large. Tort reform is not even on the horizon. And while “waste and inefficiency” surely exist, history shows that, as yesterday’s inefficiencies are dealt with, tomorrow’s technologies produce new ones.

This is not to say that the efforts alluded to above are not important. Most will improve care. I simply do not believe that they will decrease aggregate spending.

3. Proponents of the reform legislation say that it is just the beginning. What other cost control measures should the president and Congress pursue?

The biggest cost driver is poverty. The added utilization of health care by low-income patients accounts for more than one-third of all health care in the U.S., double the added costs in Britain where poverty is less prevalent. The U.S. cannot pour health care dollars into both its scientific successes and its social failures. We can only do more of the former if we can do less of the latter. In that respect, real health care reform is social reform – education, housing, nutrition, social support networks, and jobs.

The major tool of health care reform is regulation. Traditionally, health care reform has been “insurance reform,” through instruments such as Medicare, Medicaid, prescription drugs coverage, catastrophic insurance, etc., as well as through insurance regulations, such as ERISA, COBRA, and coverage of pre-existing conditions. “Reform” of the delivery system through legislation and regulation is not new – MedPAC, ProPAC and its predecessors have tried, as have private insurers. But the massive build-up, first in the Clinton health plan and now in more exaggerated form, is a creature of post-modern ethical revisionism, which sees physicians as the greatest obstacles to quality and regulators as the instruments improvement. Regulators point to new regulations, ignoring past failures. Indeed, failure is never considered. Like the “steroid argument” of 50 years ago (after the development of prednisone), regulation either works or you didn’t use enough. This perspective ignores the historic process through which, by groping with imperfection, physicians have found more perfect solutions. We risk sacrificing the latter on the alter of the former.

4. How likely is it that Congress or future presidents will undo or modify the cost control provisions in the legislation, particularly since some of them will not be politically popular?

Although various provisions in the legislation have been justified in terms of “cost controls,” few are likely to control spending. Accountable health care, medical homes, bundled payments, prevention, primary care, etc., all have merit, but they are unlikely to decrease aggregate spending. Any savings would be plowed into care for patients not previously treated or diseases not previously treatable.

Changes affecting insurance may decrease costs for particular groups of beneficiaries, but not for the system overall – what one group saves, another will spend (e.g., savings on premiums will be reflected in higher taxes, savings on Medicare will increase the costs of Medigap). Indeed, the politics are not about overall savings but about who will spend. Measures in the current legislation that shift wealth from rich to poor and shift payments from premiums to taxes will assuredly be the focus of intense debate as the political balance changes. In the end, spending more and sharing more are the dual demands that we as a nation must confront. It won’t be easy.

It is important to note that there is virtually nothing in  the legislation that will assure an adequate supply of physicians to provide the needed care. Even without health care reform, the nation was headed for serious physician shortages, and reform has only made it worse. Without an adequate supply of qualified physicians, the fundamental goals of health care reform cannot be achieved.

Richard A. Cooper, M.D., is a professor of medicine in the School of Medicine and senior fellow at the Leonard Davis Institute of Health Economics, University of Pennsylvania. He was formerly director of Penn’s Cancer Center and dean of the Medical College of Wisconsin. cooperra@wharton.upenn.edu; 215-667-9806; http://buzcooper.com