April 16, 2014

Save the Medicare Commission!

As you have read here, here, and here, The Concord Coalition firmly believes that having an independent Medicare commission is one of the most important elements being considered in current health care reform legislation. Without the commission -- which would be empowered to continuously evaluate Medicare costs and propose changes to the delivery of care that might be able to help reduce system-wide health care costs -- it is doubtful that current legislation will succeed in reducing long-term health care inflation. 

Unfortunately, the bill currently being debated in the Senate has effectively neutered the commission's powers (and the House didn't even have a commission in their bill). As pointed out by David Leonhardt in the New York Times, the Senate directs that the commission leave doctors and hospitals untouched by its recommendations for the first four years of its existence (2015-2018). Then, in an even more insidious direction, the permanent commission will likely be prohibited from submitting a proposal beyond 2019. These restrictions are layered on top of the initial restrictions Congress placed on the White House's commission proposal (benefits can't be "restricted," cost sharing can't be increased, eligibility can't be modified, and health care can't be "rationed"). 

The legislative language with the post-2019 limitation popped up some time after the bill left the Senate Finance Committee. In that bill, the 2015-1018 restriction was there, but the assumption was after the first five years of fully phased-in health care reform and its delivery system experiments, trials and pilot projects, the commission would be able to take that information and begin to enact system-wide reforms that could transform American health care from a "pay-for-quantity" wasteful, fee-for-service system, to a more cost-effective "pay-for-quality" system.

However, in the bill released for debate after the Finance and Health, Education, Labor and Pensions Committee legislation were merged, the new restriction was added. The legislative language is obtuse (page 1,009-1,010):

‘‘(ii) EXCEPTION.—The Board shall not submit a proposal...(III) for proposal year 2019 and subsequent proposal years, a year in which the Chief Actuary of the Centers for Medicare & Medicaid Services makes a determination in the determination year that the growth rate described in paragraph (8) exceeds the growth rate described in paragraph (6)(A)(i).

But, what it basically says is that no proposal can be submitted in any year after 2019 if the five-year average of national health care expenditures grows more rapidly than five-year average Medicare expenditures. This makes it unlikely the commission will get many opportunities to submit a proposal. As our Series on Health Care and Medicare points out, expenditures in Medicare tend to rise at slightly lower rates than overall health care expenditures (from 1970-2007 annual per- capita Medicare inflation averaged 9.2% while the private health care average was 10.4%). 

An irony of this provision is that almost the entire cost control structure of current health care legislation is predicated on the idea that reforms in Medicare will have to lead the way towards a broader reform of the private health care system because the government can easily experiment and alter Medicare -- as opposed to trying to dictate systemic transformation in the private sector. Yet, with this restriction, the government's ability to change Medicare will instead be stuck waiting for the private sector to magically restrain costs first.  

That these limitations on the commission are in the bill suggests that despite some member's rhetoric, they are not placing concerns about health care costs at the top of their priority list. Luckily, there is still time to alter the bill in ways that could make cost control more of a priority. While Concord will have more suggestions in the near future, a good place for Senators to start would be to read the letter sent by Concord's leaders to Senate Majority Leader Reid. The stellar sleuth David Leonhardt also has some good suggestions.

December 3rd Late Update: A group of budget experts from diverse perspectives, called the "Fiscal Seminar," today release a Statement on Health Care Reform (PDF) that outlines some more options for cost control. Concord executive director, Robert Bixby, was a signatory.