Moreover, this isn’t the first time we’ve tried to let private insurers into Medicare to work their magic. The Medicare Advantage program, which invited private insurers to offer managed-care options to Medicare beneficiaries, was expected to save money, but it ended up costing about 120 percent of what Medicare costs.
The Democratic plan, conversely, quietly recognizes that government-run health-care systems that are willing to throw their weight around can control costs. So the plan is to have Medicare try to pay for quality, not volume.
Ezra Klein is the editor of Wonkblog and a columnist at the Washington Post, as well as a contributor to MSNBC and Bloomberg. His work focuses on domestic and economic policymaking, as well as the political system that’s constantly screwing it up. He really likes graphs, and is on Twitter, Google+ and Facebook. E-mail him here.
The first step is figuring out what quality is. So Medicare has been collecting vast amounts of hospital data on patients’ experiences, the delivery of pre-operative antibiotics, the prevalence of medical imaging and other topics. Come October, the hospitals posting good numbers will get a bonus from the Affordable Care Act; those posting bad numbers will face a penalty. Next year, the bonus and penalty will get bigger. Democrats have also created and funded a center to start testing the effectiveness of various drug, device and surgical treatments.
As for the inevitable political blowback, Democrats created the Independent Payment Advisory Board, a panel of 15 Senate-confirmed health-care experts who can make tough, cost-cutting reforms to Medicare in Congress’s stead. To be stopped, Congress needs to vote the board down, and the president needs to sign off on lawmakers’ opposition. That creates ample room for Congress to hand the IPAB the decisions it doesn’t want to make on its own.
Could it work? Sure. But it’s a gamble. It’s easy to imagine that strategy improving quality without cutting costs. That’d leave us with a better health-care system than we have now but the same budget problems. Another danger is that Congress could override the IPAB, rendering it useless as a tool for cost control.
But that’s the choice we’ve been left with: a plan that has never worked or a plan that’s never been tried. As for the approach that’s helped every other industrialized country achieve universal coverage at about half our costs? Well, we’re still not ready to talk about that.