Georgia Congressman Tom Price, President-elect Donald Trump’s nominee to run the Department of Health and Human Services, is a bundle of contradictions when it comes to Medicare.
He certainly is not alone. Trump and congressional Republicans have sent their own very mixed signals about Medicare. The House GOP very much wants to turn the program into what it calls premium support, where the federal government gives seniors a fixed amount of money to buy health insurance on the private market. While this idea would not necessarily eliminate fee-for-service Medicare (though it could), it would certainly increase participation in managed care plans, known as Medicare Advantage.
Throughout his campaign, Trump said he would not redesign the program, though he seemed to back away from that promise after his election. On Sunday, Trump’s reticence seemingly was reinforced by Reince Priebus, who will be Trump’s chief of staff. And a handful of Senate Republicans have warned Trump to stay away from Medicare.
Fighting With Himself
But Price played a key role in writing the House GOP’s “Better Way” health blueprint, which is a ringing endorsement of both Medicare premium support and repeal of the Affordable Care Act. And he’ll be Trump’s top health care adviser and the man who will run the Medicare program as head of HHS.
Here is where Price’s views start to fight with themselves. While he’d change Medicare in ways that would increase consumer demand for managed care, he seems to oppose many of the consequences of that change.
For instance, has been an outspoken critic of many of Medicare’s efforts to control health care costs. He’s opposed initiatives to hold down prices of medical devices, as this nice piece from Kaiser Health News reports. He has strenuously opposed efforts by Medicare to shift from fee-for-service medicine to a system that pays for quality, low-cost outcomes rather than volume, as this piece by my Forbes.com colleague Bruce Japsen describes.
One of Price’s primary targets has been a new Medicare program that makes a single “bundled payment” for hip and knee replacements that would cover hospital costs, the surgery itself, and post-surgical rehab for 90 days after discharge. If the team can achieve quality results at a lower cost than the fixed payment (about $25,000), they get a financial reward. If it costs more, they are penalized.
Price, who is himself an orthopedic surgeon, so dislikes programs such as this that he has tried to shut down the federal office that runs them, the Center for Medicare and Medicaid Innovation (CMMI). He is likely to do so again as the head of the agency that run runs that program.
As Bruce notes, Price also opposed the new structure for physician payment (called MACRA) which will be based on quality outcomes rather than volume of procedures.
But Price must understand that the very Medicare changes he advocates will drive managed care organizations (MCOs) to push for the value-based payments he so opposes. Insurance companies—and even some big employers—are already pushing back against providers. Insurance companies will increasingly demand high-quality at low cost as the price of including physicians and other providers in their narrowing networks.
Managed Care and Physician Payments
If Medicare Advantage plans, which already cover 30 percent of seniors, grow their market share, they’ll have more power to further push down prices. And consumers, who would have to pay an increasing share of their health costs in the premium support model Price favors, are likely to gravitate to those low-cost providers.
Many health economists believe that this design will slow the growth of medical costs. And they may be right. Consumer groups fear that cost savings will come at the expense of seniors, who will receive less care. But some of the price is likely to be paid by doctors, imaging centers, drug companies, and device makers—the very interests that Price has worked so hard to help during his congressional career.
Now that Trump and the GOP are about to control all levers of government, they’ll be forced to move beyond mere talk. When they do, it will be interesting to see which Tom Price will be advising President Trump.