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The F-22 Model for Medicare

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By Ruth Marcus
Wednesday, July 22, 2009

If you're interested in how to get health-care costs under control, the case of the F-22 offers an instructive example.

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Huh, you say? What does a fighter jet have to do with health care? Nothing, of course, but it has everything to do with politics, which has, in our current system, a good deal to do with health-care costs.

As I began writing, the Senate on Tuesday was debating an amendment to the defense authorization bill that would stop production of the stealth fighter. President Obama wants to end the program. So does his opponent in the presidential election, Arizona Republican Sen. John McCain. So did President Bush. So do the defense secretary and the chairman of the Joint Chiefs of Staff.

In 2004, the Pentagon concluded that 183 of the aircraft would be sufficient to meet defense needs. If the amendment passed and the program ends, there would be 187 -- at a cost of $65 billion.

And yet, in the face of Obama's first veto threat, the Senate Armed Services Committee voted to authorize $1.75 billion to purchase seven more planes. The House, in its version of the measure, inserted a $369 million down payment for a dozen more.

"If we can't bring ourselves to make this tough but straightforward decision . . . where do we draw the line?" Defense Secretary Robert Gates asked in a recent speech. "And if not now, when? If we can't get this right -- what on earth can we get right?"

Good question. The answer, as the unfolding Senate debate made clear, is that the F-22 just happens to be built in 44 states. Connecticut Democrat Chris Dodd was on the floor to argue against the amendment; Connecticut-based Pratt & Whitney makes F-22 engines. Just before him was Georgia Republican Saxby Chambliss; Lockheed Martin, the F-22's manufacturer, does the plane's final assembly in Marietta.

Which brings me to health care, and one of the most promising ideas for constraining rising costs: Get politics out of the decision making about how much to pay and what to pay for.

The Obama administration, which has been ostentatiously hands-off in the drafting of health-care reform, has a detailed proposal to create an Independent Medicare Advisory Council to determine payment rates and other policy changes in the health-care program for seniors. The president would have to approve or reject its recommendations as a package, after which Congress would have 30 days to reject them.

Democratic Sen. Jay Rockefeller of West Virginia and Rep. Jim Cooper of Tennessee have a similar -- and, in important ways, stronger -- proposal that the administration also supports. The biggest difference between the two is the number of votes it would take for Congress to block the recommendations: a simple majority, in the administration's proposal; three-fifths, in the Rockefeller-Cooper plan.

The smart idea behind both is to create a kind of MedPAC on steroids. MedPAC is the Medicare Payment Advisory Commission, and the reason it needs boosting lies in its name: advisory. MedPAC routinely offers good recommendations about how to rein in costs; these are just as routinely ignored.

In the world according to MedPAC, Medicare would change policies that encourage the purchase of expensive imaging machines. It would increase reimbursements to primary-care physicians and reduce payments to specialists. It would cut overpayments to private Medicare plans that cost, on average, 14 percent more than regular fee-for-service Medicare -- not that regular fee-for-service Medicare is a model of cost-effectiveness.

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