The Washington Post editorial board takes the Democrats to task for their scare-mongering on Medicare:
Democrats may be feeling smug about their campaign against the House Republican budget plan, and as a matter of politics, they’re no doubt right. If the goal is to deal with the long-term fiscal challenge, though, the Democrats’ political success is apt only to prolong the gridlock and make the eventual solution that much more painful. . . . Society is aging and health-care costs are rising so fast that, absent some change, Medicare will gobble up the biggest share of federal spending.
[Rep. Paul] Ryan’s solution is to change Medicare from a fee-for-service system, under which it pays most of the cost of whatever is deemed medically appropriate, to a system in which the government pays a set amount toward seniors’ purchase of health insurance coverage from among competing providers. Older, sicker and poorer people would receive larger subsidies.
This, as the editorial board notes, isn’t “beyond the pale”; in fact, it resembles the one entitlement that has kept costs down, Medicare Part D.
The editorial board describes President Obama’s plan as relying “more heavily on streamlining and improving the delivery of medical services and on an expert panel with fast-track authority to come up with further measures if cost growth remains excessive.” That’s a very delicate way of putting it.
Writing in the National Review James Capretta explains how this works:
The 15-member Independent Payment Advisory Board, or IPAB, is charged with coming up with ways to hold Medicare spending below the annual caps. To hit its budgetary targets, IPAB is strictly limited in what it can recommend and implement. It can’t change cost-sharing for covered Medicare services. Indeed, it can’t change the nature of the Medicare entitlement at all, or any aspect of the beneficiary’s relationship to the program. The only thing it can do is cut Medicare payment rates for those providing services to the beneficiaries.
Obamacare’s apologists argue that this cap will spur innovative “delivery system” reforms that will cut costs with no pain to the program’s participants by steering patients to higher-quality, lower-cost providers of care. But this is wishful thinking in the extreme. The federal government has never shown any capacity to build and maintain what might be called a high-quality delivery system in Medicare. Indeed, the whole point of the Medicare FFS [fee-for-service] model is that beneficiaries get to see any licensed provider they choose, to whom Medicare pays a fixed reimbursement rate. When attempts have been made to steer patients toward preferred physicians or hospitals, they have failed miserably. Politicians and regulators have found it impossible to choose among hospitals and physician groups, because the available quality measures are disputed.
Instead, Congress and Medicare’s regulators have cut costs the old-fashioned way: with across-the-board payment-rate reductions that apply to every licensed provider, without regard to any measures of quality or efficiency. Tellingly, that’s exactly how Obamacare cuts Medicare spending, by nearly $500 billion, over the coming decade, and that’s exactly how IPAB will meet the new Medicare cap under the law in the future. The risks to Medicare’s participants from this approach to cost-cutting are very real. The chief actuary for the Medicare program has warned repeatedly over the past year that Obamacare’s cuts will drive scores of providers from the program because payments will be too low to cover their costs. He expects 15 percent of the nation’s hospitals to drop out of the program by the end of the decade. At that point, Obamacare’s cuts would have driven average Medicare payments below those paid by Medicaid, which are notoriously low.
It’s rationing, plain and simple. Or in more stark terms: The Ryan plan asks wealthier Medicare recipients to pay more; Obama’s plan denies care. Imagine if a Republican proposed a plan that, without any realistic reform element, simply said we’d pay much less for seniors’ care.
The Obama plan supposes that the 15 bureaucrats on the IPAB will unlock the wonders of cost control that have eluded us all. But it boils down to a confusion between costs and expenditures. The Obama plan will have us paying less but leave the underlying costs of medical care untouched.
Recall that cost-control was, after all, the basis for Obama’s health-care reform. In a white paper for the Galen Institute, Capretta wrote: “So the crucial question was always what to do about cost escalation. Or, more precisely, what changes in Medicare have the best chance of bringing about continual improvement in the productivity and quality of patient care?”
The choice is between two cost-cutting approaches is not complicated. One has been tried and failed for decades; the other has only been tested in limited fashion in the Medicare Part D plan, where it has actually worked:
The Obama administration believes that a top-down, governmental process is the answer, and that the government can use Medicare’s market dominance to leverage a more efficient health sector nationwide.
But there is nearly half a century of experience with the Medicare program indicating that confidence in “government-engineered” efficiency improvement is entirely misplaced. Efforts to control costs from the top down have always devolved into price setting and across-the-board payment-rate reductions, which is detrimental to the quality of American medicine. Price controls drive out willing suppliers of services, after which the only way to balance supply and demand is with waiting lists.
The alternative is a bottom-up approach, in which cost-conscious consumers choose between competing insurers and delivery systems based on price and quality. That’s the basis for Congressman Paul Ryan’s reforms to the Medicare program
Ryan’s plan might not work, but we know Obama’s does not. The scare tactics by the Democrats therefore boil down to the old adage: “The best defense is a good offense.” By attacking Ryan’s plan as one that have seniors “die sooner,” the Obama team is demagoguing and deflecting attention from its own top-down rationing plan. Why aren’t the liberal pundits, who are so concerned about seniors’ health care, hollering about that?