Medicare, which will celebrate its 50th anniversary next year, needs to be fixed. But if backers of reform frame that change primarily as a way to reduce federal spending, they are doomed to fail.
The other day, former Republican senator Judd Gregg wrote a guest column in The Hill newspaper about a gathering of policy wonks at Dartmouth College aimed at reforming the health care program for seniors. Gregg, co-chair of Fix the Debt, a nonpartisan group that wants to slow the flow of federal red ink, tried to thread the needle. The Dartmouth group, he wrote, was looking “both to improve the delivery of Medicare to seniors and to reduce its unsustainable cost path, which is a large driver of the nation’s debt.”
Gregg added that Medicare “is not viable in its present structure unless we want to bankrupt future generations to pay for it.”
Gregg isn’t wrong. The problem is we still don’t know enough about how to achieve better care at lower cost.
We do know how to slow the future growth of Medicare spending without improving care: Congress can reduce the program’s benefits or increase the amount seniors pay out of pocket. And that’s the problem. When Judd Gregg—a long time deficit hawk—says the nation needs to reduce projected Medicare spending, liberals hear: He wants to slash the program.
He can talk all he wants about better care, but progressives don’t believe him. They only hear echoes of lawmakers such as House Budget Committee Chair Paul Ryan (R-WI), who uses much of the same rhetoric but whose solution has included dramatically shifting the cost of care from government to older Americans. Today, government pays for about 70 percent of Medicare costs and consumers pay for about 30 percent. In past budget plans, Ryan would have had seniors pay about 70 percent and government pay about 30 percent.
And the left won’t let him forget it.
With the possibility that Republicans will take full control of Congress in the November elections, liberals are prepared to go to the mattresses over Medicare (and Social Security). They don’t even trust President Obama to hold the line—after all, a couple of years ago he was willing to make cuts to future spending in both programs to get a budget deal with House Speaker John Boehner. That effort collapsed, but liberals have never felt the same about Obama since.
We could cut this Gordian knot if we knew more about how to get long-term cost savings by improving delivery of care. Thanks to the folks at Dartmouth, among others, we’ve learned a great deal about what’s wrong with our health system. Researchers there (in a project known as The Dartmouth Atlas) have carefully measured wide variation in quality and costs in Medicare around the country. And they found that more expensive care in Florida results in outcomes that are no better, and often worse, than lower-cost care in Minnesota.
And many policy analysts (I am among them) are increasingly convinced that better coordinating care can save money and improve quality. They believe that medical teams, better electronic ordering and records systems, and new delivery partnerships such as Accountable Care Organizations can improve outcomes while reducing costs. And they think that shifting financial risk to providers while demanding quality improvement will encourage them to seek the most cost-effective care for their patients.
Like much well-intended health care policy, this sounds like it ought to work. And the evidence that these reforms do improve quality is growing stronger. The trouble is, solid evidence they also save money just isn’t there—at least not yet. For every study that shows cost savings from one of these innovations, there is another that finds little benefit.
Will these reforms achieve what Gregg wants, and save money without compromising care? Truth is, nobody is sure. This is a particular problem for Congress because, without that evidence, the official scorekeepers at the Congressional Budget Office will not credit any cost savings from these reforms. And without official savings, lawmakers won’t act.
We are left, then, with a toxic combination of uncertainty, mistrust, and political gamesmanship. I believe Gregg is well-meaning and serious when he calls for cost savings through delivery reform. But without solid evidence that new care models can permanently bend Medicare’s cost curve and specific agreement on proposals to adopt them, the chances of a bipartisan solution are almost non-existent.
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