The left is in a tizzy about what happens to health-care policy under Rep. Tom Price (R-Ga.), Donald Trump’s pick for health and human services secretary. Price’s wish list, after all, reads like a liberal nightmare.
He wants to privatize Medicare! Block-grant Medicaid! Loosen the ban on refusing insurance to patients with preexisting conditions! Dismantle the income-based insurance subsidies for poor people!
Whatever the merits of these ideas, they’re relatively unlikely to materialize. They’re all extremely unpopular and have very vocal stakeholders standing in the way. Imagine the cries of bloody murder that would result if Congress actually tried to privatize Medicare.
That’s why the possible policy change you should be more worried about — whether you’re a Republican or Democrat — is a different one. It’s the bee in Price’s bonnet that few Americans have heard of: Medicare’s efforts to move away from fee-for-service-based care, and toward more value-based care.
That is, to pay for results, not just volume.
Tucked into Obamacare was a little-noticed provision that was, in a way, a stealth attempt at entitlement reform. I say “stealth” because it didn’t involve cutting seniors’ benefits or raising their premiums or taxes, the more visible and painful tools that fiscal hawks sometimes offer.
Instead, it created a sort of internal R&D shop for government health-care payment reform, called the Center for Medicare & Medicaid Innovation.
The Innovation Center runs experiments to find ways to eliminate waste in government health spending.
These are generally not experiments in what kinds of drugs work, or in telling doctors what kinds of treatments or clinical interventions to give their patients. (That is, they’re not the much-hyperbolized “death panels.”) Rather, they’re experiments in whether paying health-care providers differently can give those providers room to figure out how to treat patients more effectively, and more cheaply, on their own.
“The government can’t order folks to be more efficient. It can only incent folks to be more efficient,” said David Cutler, a Harvard health economist and health-care adviser to President Obama during his 2008 campaign.
This means, for example, looking at what happens if you pay providers a flat per-patient fee for a hip replacement, rather than shelling out more money every time they dispense an aspirin or fluff a pillow.
Or carefully measuring whether a YMCA program designed to prevent diabetes works, and whether it will save the government money in the long run.
Or determining whether paying for home-based doctor visits improves seniors’ health and lowers costs.
Or examining whether paying doctors 6 percent of the cost of every drug they administer leads them to select more expensive (but not necessarily more effective) drugs.
Then, if these experiments either improve health outcomes without increasing costs, or produce the same outcomes at lower cost, Medicare can opt to scale them up and implement them systemwide.
The upshot is this: There’s often a false choice between saving taxpayers money on the one hand (something conservatives especially like), and helping poor little old ladies on the other (something liberals especially like). Delivery-system reform is about finding ways to do both.
The Innovation Center is still new, of course. So far, the cost savings that its trials have revealed are modest, but measurable. Given experiments still in the pipeline, the Congressional Budget Office has estimated that the Innovation Center will reduce net federal health spending by $34 billion over the next decade.
Another benefit of this government R&D shop is that some of its findings have been adopted by private insurers. There is certainly room for reducing waste systemwide, given that an estimated one-third to nearly one-half of all U.S. health spending could be eliminated without harming consumers or reducing the quality of care.
All of this is why reforms that move health payments toward value-based care have generally been supported by Republican and Democratic health policy wonks alike.
Price, however, has vocally expressed his displeasure with the Innovation Center, as well as other recent policy measures designed to move toward Medicare value-based payments. (The powerful pharmaceutical lobby has as well.) In a letter sent in September, Price accused the Innovation Center of overreach and said that it needed to “stop experimenting with Americans’ health.”
It’s unclear what he’d do with the Innovation Center as health secretary — keep it around with modest changes or kill it altogether. But as fruit of the poisonous Obamacare tree, the center’s valuable work was already vulnerable under a Republican administration, and given Price’s past criticisms, it seems especially so now.
Republicans have been complaining for years that Obamacare has led to health-care costs spiraling out of control (which, to be clear, they’re not). It would be a shame if they now targeted one of the few fiscally responsible things in the law.