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Missed Opportunities

November 22, 2011
11:40 am

If hand-wringing and finger-pointing actually generated dollars, Washington, DC would probably be able to solve the federal deficit problem today.  With ‘super committee’ negotiations collapsing and members of the Joint Select Committee on Deficit Reduction formally admitting that they won’t have recommendations to submit by the November 23 deadline, the Beltway blame game is in full swing.  Kaiser Health News has a good summary of the news coverage taking place today – with links.

Worries about whether there will be meaningful spending cuts are premature.  The November 23 date was an artificial deadline anyway.  With the automatic sequestration cuts not taking place until 2013, Congress has an entire year to figure out $1.2 trillion in savings alternatives.

That’s not to say there aren’t serious missed opportunities in the ‘super committee’s’ failure to act.  With the nation’s focus on their deliberations, this was an ideal time to launch a national debate on how to reform Medicare, make the program more cost-efficient and more sustainable for the long run.  That public debate didn’t happen.

Sure, there were some ideas on the table for reforming entitlement programs.  Some, like raising the Medicare eligibility age, warrant serious discussion.   There were also reportedly discussions, though, focused on the tired, old approach of cutting payments to Medicare providers (and pretending this doesn’t affect beneficiaries’ access to quality care and medical innovations.)

What was lacking was a serious conversation about the issue raised by former Clinton budget director Alice Rivlin and former U.S. Senator Pete Domenici in their testimony to the Select Committee.  Structural changes to the Medicare program, which the two experts said is essential in order to address the nation’s debt crisis, didn’t get off the launching pad.

It seems strange to me that there would be such political intransigence in some quarters to the concept of reforming Medicare to give beneficiaries a greater degree of choice in their health coverage.  It’s a structure that has worked well with the Federal Employees Health Benefits Program and the Medicare Part D prescription drug benefit, and it’s going to be utilized in the Affordable Care Act’s state health insurance exchanges.

Yet, when it comes to Medicare, there is a greater willingness by some to simply cut dollars from the program, thus undermining both quality and access, than to create a role for the private sector in driving value and cost-efficiency.

The ‘super committee’s’ failure to take up the cause of Medicare reform was a missed opportunity.  It will come back around again, though.  As Dr. Rivlin and Senator Domenici accurately point out, you can’t fix America’s debt problem without it.

The Rivlin-Domenici Advice, and Why the Supercommittee Should Be Listening

November 02, 2011
8:43 am

Former Clinton Administration Budget Director Alice Rivlin and retired U.S. Senator Pete Domenici (R-NM) testified yesterday before the congressional “supercommittee” charged with identifying $1.5 trillion in federal budget savings.

The members of the Select Committee would do well to listen to the Rivlin-Domenici advice on reforming the Medicare program.

The two experts, both members of the Bipartisan Policy Center’s deficit reduction efforts told the committee members that “simply put, there can be no lasting solution to the U.S. debt crisis without structural changes in the Medicare program to slow its cost growth.”

This structural reform approach contrasts with many of the news reports circulating which suggest committee members are considering straightforward cuts in Medicare payments to providers or requiring increased rebates from pharmaceutical manufacturers to the federal government.  In either case, Medicare beneficiaries are going to pay the price either through reduced access to care or higher drug prices.

Instead, what Rivlin and Domenici have suggested is a bold yet sensible alternative to the idea of saving money from Medicare simply by taking an ax to it.  They recommend providing Medicare beneficiaries with a choice of staying in the conventional fee-for-service program or entering a Medicare Exchange in which private plans would compete on the basis of cost, quality and value.

Some outlets that advocate maintaining the Medicare status quo have already gone on the attack, calling the Rivlin-Domenici concept partial privatization that will burden beneficiaries with higher costs.

The fact is, though, that leaving conventional Medicare as an option will incentivize private plans and providers to innovate new ways to provide high-quality care at lower costs.  That incentive has been absent in traditional fee-for-service Medicare.  As the Rivlin-Domenici testimony explains:

“The new Medicare Exchange will provide strong incentives for plans to manage care delivery efficiently and to offer the public evidence that their plans achieve quality outcomes at comparatively low cost – because low-bidding plans would be rewarded with increased enrollment.”

Giving the option between harming beneficiaries with cuts that will further limit the number of physicians taking Medicare patients and a new direction that will offer beneficiaries more choices and the prospect of improved, cost-effective care delivery, it seems that the supercommittee should be giving strong consideration to Alice Rivlin’s and Pete Domenici’s recommendations.