If turning Medicare into a voucher program isn’t the answer to controlling the program’s growth, what is? This is the essential question about the federal budget.
Already, health care consumes 25 percent of federal spending, of which Medicare accounts for two-thirds. On the current trajectory, health care’s share of the federal budget will rise to 40 percent by 2037. Recent slowdowns in spending are encouraging, but they can’t be counted on to continue.
So what’s a responsible Democrat to do? As it turns out, 23 responsible Democrats — some of the left’s leading thinkers in the health-care field — have just come up with a set of answers.
The group includes ex-government types such as former White House chief of staff John Podesta; former budget director Peter Orszag; former Obama health-care adviser Neera Tanden; Donald Berwick, who oversaw the Medicare and Medicaid programs; and former Senate majority leader Tom Daschle.
The chief author of the proposal, developed under the auspices of the Center for American Progress and published recently in the New England Journal of Medicine, is Ezekiel Emanuel, another key Obama health-care adviser. Former, of course.
These are not necessarily proposals that incumbent presidents or sitting members of Congress leap to embrace.
Another crucial point is that these are some of the people who helped give birth to Obamacare. They acknowledge that the health-care law, while making an important down payment on reducing costs, is just that: a start.
During the health-care debate, proponents argued that helping control the growth of Medicare costs could have positive ripple effects because its reimbursement policies influence the behavior of private insurers. If Medicare chooses to cover a certain medication or procedure, private insurers tend to follow suit.
Emanuel et al. now make a mirror image, although not inconsistent, argument: that no matter how hard federal officials work to slow the rising trajectory of federal spending, their efforts will fail if overall health-care costs continue to rise.
“Health costs throughout the system drive federal health spending,” they write. “Reforms that shift federal spending to individuals, employers, and states fail to address the problem. The only sustainable solution is to control overall growth in health costs.”
How? The most far-reaching proposal is to have states, with the encouragement of federal grants, put in place a mechanism to set overall health-cost caps, covering both public and private spending.
Massachusetts, having discovered that its Romney-instituted, Obamacare-like version of reform has been great at extending coverage, less good at controlling costs, has recently adopted such limits. Maryland has capped hospital spending.
The argument for these caps is that otherwise costs are not lowered but merely shifted around in a health-care version of hot potato. If Medicare squeezes providers, they charge more to private insurers. If large insurers squeeze providers, they hike costs to smaller insurers.
But to read the proposal is to understand its political perils. “We recommend that an independent council composed of providers, payers, businesses, consumers, and economists set and enforce the spending target,” the authors write. You can already hear the ads warning of “death panels.”
The other proposals involve changes designed both to lower prices and reduce cost growth, building on and accelerating changes in Obamacare.
Medicare and private insurance, the authors argue, should be prodded to change quickly from a fee-for-service system that pays doctors, hospitals and other providers per procedure, thereby encouraging consumption and fracturing care. Instead, it should reward quality and care, paying doctors and hospitals a fixed amount for services. “Within 10 years,” they suggest, “Medicare and Medicaid should base at least 75 percent of payments in every region on alternatives to fee-for-service payment.”
Competitive bidding for medical equipment such as wheelchairs has lowered costs by more than 40 percent, the authors note; this bidding system, rather than having the government fix reimbursement levels, should be expanded, instituted immediately and used by private insurance exchanges as well.
The federal government should give bonus payments to states that ease laws restricting non-physician providers, such as highly skilled nurses, from providing services. Doctors should be shielded from malpractice suits if they adhere to best-practice guidelines.
In other words, the authors do not shrink from ox-goring, and of a rather substantial herd: hospitals, doctors, medical manufacturers and trial lawyers.
This is a valuable addition to an otherwise noisy and unenlightening debate — or it could be, if the candidates would stop practicing bumper-sticker politics and engage on the policy front.
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