September 13, 2012

The Medicare Debate: An Expert's View

These days, it's tough to find links from unbiased experts when you're searching for political topics on Google. I thought I'd hit paydirt on one particular piece about Medicare reform, until I saw that two colorful -- and controversial -- celebrities had given the author their endorsements: C. Everett Koop, Reagan's Surgeon General, and John McLaughlin, the bombastic host of his own TV talk show, The McLaughlin Group. Hmmmm.

Nevertheless, the author of the promising link-- Robert Laszewski -- is regarded as a leading authority on health care reform. His analysis of the two parties' Medicare proposals is thought-provoking and balanced. See what you think.

But first, bear with me a moment.

A Personal Note and Plea: I've been getting some good comments and e-mails after saying I'm so fed up with politics today that I may not vote this year, and that I'm not donating any money. Believe it or not, I recognize that I've spent a lifetime careening back and forth on issues from one side of the road to the other, and it can take me a long time (or never) to find that ever-elusive middle of the road. One reason I'm writing this blog is that I need others to offer occasional course corrections. So, please keep the critical comments coming!

If you're tiring of my political commentary, ALERT: I've got a couple more I want to put up (and see if they get shot down). I promise we'll return to the real world next week.

The Medicare Expert
Bob Laszewski's blog --Health Care Policy and Marketplace Review -- struck me as clear and balanced. shows him among the top five speakers on health care reform. Here's their blurb:

Robert Laszewski is president of Health Policy and Strategy Associates and national advisor on health policy issues for Ernst & Young. He is widely regarded as one of the most influential independent consultants on health care reform. As an executive of Liberty Mutual Insurance Group, Laszewski participated as a member of the non-partisan Alliance for Health Reform chaired by Senator Jay Rockefeller. USA Today called him "one of the boldest advocates for reform." In his current role, he is an advisor to an impressive list of organizations concerned about the changing marketplace environment for health care.
I checked several of his speeches and op-ed pieces, and he seemed to present a balanced, expert perspective. And, heck, as a lifelong liberal, I'm trying to keep this blog balanced. In my earlier political post featuring columnist Stephen Pearlstein, I didn't worry about his having worked for Senator Durkin (D-IL). So here we go.

Romney-Ryan Medicare Plan vs. Obama Medicare Plans 
Laszeweski's blog post is worth reading in full, but here's a summary. He first asks the question: Who's telling the truth on Medicare?  His answer: "They both are and they both aren't." Then he addresses these questions:

Will current seniors suffer under the Romney-Ryan Medicare Plan?
Aware of senior voting power, both parties see similar futures for seniors. "If you are over age 70, there is virtually no chance there will be any significant changes in Medicare benefits in your lifetime," Laszewski says. "Even if you are over 6o, the chances that there will be any major structural changes to Medicare benefits as long as you are around are quite small."

Can Medicare as we know it be preserved for the next generation?
"Absolutely not," is Laszewski's quick answer. But here Laszewski gives Romney/Ryan better marks than he does Obama.

On Romney/Ryan he says:
I will tell you that Romney and Ryan have taken the more courageous political stand -- they say Medicare can't be preserved and big fixes have to happen. Now, that doesn't mean necessarily they have the right policy answer, only that they are willing to face the problem.
As for Obama:
Obama and the Democrats are being disingenuous by trying to use the Romney-Ryan plan to scare voters without facing this tough issue in a direct way themselves.
The Republicans have been harping since the 2010 elections on the $700 billion cuts in Medicare that Obama and the Democrats used to help pay for the Affordable Care Act, but doesn't Ryan have the same Medicare cuts in his budget plan?
Short answer: Yes. Laszewski provides a detailed review of the claims being made by both sides on this $700 billion and concludes:
Both sides are making the same cuts and have really been playing games with this one.
Republicans are using the success of the Medicare Prescription Drug Plan as evidence that the market can control health care costs. Is this evidence on their side?
Short answer: "Not in any kind of clear cut way."

It's clear that Medicare drug costs are coming in way below what the Congressional Budget Office predicted when the new drug benefit was added to Medicare in 2003. However, all drug costs are coming in lower than predicted. In 2003, drug costs were exploding. Since then, the greatly increased use of generic drugs and fewer new expensive drugs in the pipeline have helped reduce drug spending. Also Medicare Part D (the drug benefit) enrollment has cost less than originally projected.

Romney and Ryan say their plan will include the traditional Medicare plan as one of the options. But critics say there is a good chance Medicare will end up with the sickest seniors, while rich people are able to buy the private plans, thereby destroying the Medicare program everyone has enjoyed. Is this true?
Short answer: Probably not.

Ryan has sponsored several different Medicare plans. Under the more detailed Wyden-Ryan Medicare Plan (which Ryan co-sponsored with Democratic Senator Wyden of Oregon), if one of the health insurance options attracts a disproportionate number of sick people, it gets more money to offset the resulting higher costs. This provision would protect Medicare or any other plan, Laszewski says, adding, "So, it is not clear to me how, if the traditional Medicare plan got sicker people, it would make it more expensive for consumers after these inter-plan adjustments."

The Romney/Ryan plan relies on the marketplace to control costs but there is no evidence that the market does a better job than government-run plans?
"That is right," Laszewski says, "but Romney and Ryan are calling for a different kind of health market." While there's no proof based on past practices that the market has controlled costs, we have never tried a market like the one Romney and Ryan propose.

They are proposing a very different system where health plans have to bid their price in each market. They argue that competitive bidding will result in real competition in the market and, with seniors being given limited  support in the government's vouchers, they will have a greater incentive to shop for plans that cost less. All of which, they argue, will result in controlling costs.

Most health policy experts believe that we must fundamentally change the health care delivery system from the current fee-for-service system that largely pays for quantity, to one that pays for quality and cost control. The Democratic health care reform law has lots of pilot programs to test these new ideas. It is also likely, Laszewski says, that the new Medicare cost board enacted as part of the Affordable Care Act will end up requiring providers to get their payments through these new payment programs in order to control costs.

The Republicans also embrace these same ideas for new programs that pay providers a fixed amount for health care. These new payment systems, he says, also would take better advantage of electronic payment management systems and administrative simplification.

All of these ideas, generally accepted by Democrats and Republicans, have yet to be proven, he cautions.

What do Obama and the Democrats propose as an alternative to Romney and Ryan?
Laszewski faults the Democrats for taking "the safer political path" by letting the other guys make controversial proposals and saying little about how they see Medicare operating differently in ten years.

But he says he is optimistic that the Medicare cost control board called for under the Obama Affordable Care Act "could do a lot of good toward pushing the Medicare program to more sustainable payment models." That board begins its work in 2015 under the ACA, but not until 2020 for the largest category of costs -- the hospitals. And, he adds, if the ACA board is successful in remaking Medicare, it will not be the "Medicare as we have known it" that the Democrats claim they can preserve.

Republicans criticize the Medicare cost board for being a "non-elected bunch of bureaucrats." But Laszewski says that our elected members of Congress -- Republicans and Democratics -- have not shown the political courage to make the tough decisions to reform Medicare.

He says he also is optimistic that the system of competitive bidding and consumer choice envisioned in the Romney/Ryan Medicare plan "could push the Medicare system toward more sustainability."

Both parties' reform plans "are untried solutions and controversial among the experts," he cautions.

Obama says that Paul Ryan's Medicare plan will increase a senior's health costs by $6,400 a year. Is this accurate?
No. That estimate is based upon a Congressional Budget Office (CBO) estimate of an earlier version of Ryan's plan, Laszewski says.

In his latest plan, Ryan increased the rate at which the federal premium support (the "vouchers") would grow as medical costs increase. He opened up the plan by allowing Medicare to be offered as one of the coverage choices. All seniors would be assured that they could afford at least the two least costly plans on the same basis as Medicare subsidizes them today. There is no way to tell which two plans they would be or whether traditional Medicare would be one of them. But these plans would have to offer at least the traditional Medicare benefits.

The CBO has not yet provided estimates on the revised Ryan plan. But Obama and the Democrats should be doing comparisons using this plan, which is a big change from the 2011 Ryan plan.

Bottom Line Question: Whose Medicare Plan Will Work?
"My sense is that either could work," Laszewski says. "It all depends how they are implemented."

Put a conservative and a liberal in the same room and give them all the facts about Medicare and health care spending, what has and hasn't worked in government and in the market, and then ask them to come to a conclusion. The liberal would like the Democratic approach that relies on the government, and the conservative would come out on the side of consumer choice and markets.

My Take on This 
So after all that, we end up where we started.  But I was struck by one thing in reading Laszewski's analysis.
Both sides are proposing $700 billion cuts in Medicare.  Both have the same idea that Medicare needs to be shifted away from fee-for-service to a system that puts more emphasis on quality of service rather than quantity and on cost control.  Obama's ACA uses insurance exchange programs for those not covered by Medicare and Romney/Ryan proposes them for Medicare reform

If we had a normal functioning democracy, you'd think a compromise resolution of the issue should be easy. But we don't have a normal function democracy.

1 comment:

gleesonjohn said...

Following is an e-mail comment from my friend Neil. I got his permission to post it here. He makes some good points:

Here's my own take on Medicare and Obamacare:

Many politicians appear to be talking as if the whole idea of assuring decent health care for everyone is some sort of socialist pipe dream. Medicare and Obamacare, they suggest, represent a ideal that we just cannot afford.

All other developed nations manage to provide universal health care and generally better results (life expectancy, infant mortiality, etc.) than we do at lower cost. To say that they can do this but we can't is an insult to this country.

There is a very fine Frontline documentary that gives a sense of what is like to live in countries that do, in one way or another, provide universal health care:

There are clearly problems everywhere, but all of the systems seem to manage to struggle along and provide good results, even though doctors and insurance company executives don't drive such nice cars.

In particular, it's interesting to look at the Swiss example (the last country in the above documentary). They adopted a system very much like Obamacare, relying on regulated private insurance with a universal mandate. Even though they chose that solution to placate conservatives and powerful Swiss insurance and pharmaceutical interests, there was fierce opposition, and the final referendum vote was barely 50%. Having chosen this solution, the Swiss now have the second most expensive system in the world, though still much less expensive than ours.

Nevertheless, the Swiss system now has overwhelming popular support from both liberal and conservative factions. This is why I am desperate to see Obama reelected. Even if he accomplishes nothing else in the next four years, he will at least be able to keep the new health care rules in place long enough for the plan really to go into effect in 2014 and gain some familiarity and popularity. Maybe, by 2016, our health care system will be a little less of a national disgrace.