Medicare reform


Jumpstarting Entitlement Reform

Replace Obamacare's Flawed Medicare ACOs with a Better Model

If the White House and Congress want to make a serious effort at entitlement reform, they should begin by bringing more consumer choice to Medicare, which could be done by replacing Obamacare's Medicare accountable care organizations (ACOs) with a model that provides more consumer choice, as I explain in a new column at e21.

There are far better ways to encourage the spread of high-quality integrated care networks in Medicare.  The fastest, surest way would be to create a level competitive playing field with Medicare’s dominant FFS insurance system. This is the premise of the “premium support” model of Medicare reform. Under premium support, private insurance options—the MA plans of today, plus whatever new models may emerge—would compete directly with the government-administered FFS option on a regional basis, and the beneficiaries would select their coverage from the competing plans. Importantly, the government’s contribution to coverage would not increase with higher priced insurance.  That means the beneficiaries would have to pay more for expensive plans.  The result would be strong incentives for enrollment in options that offer high value at reasonable cost -- exactly what well-run integrated systems of care could offer.

You can read the rest of the column here, and for more on Medicare ACOs,  you can watch this AEI video where I explain what they are and why they won't work as defenders of the Affordable Care Act expect them to.

posted by James C. Capretta | 2:14 pm
Tags: accountable care organizations, Medicare reform
File As: Health Care

More on Medicare Reform

Yesterday, I was pleased to participate in a panel discussion sponsored by the Brookings Institution, entitled “Reforming Medicare: Fiscal Challenges and Policy Solutions.” The event was moderated by Bill Galston of Brookings and included — in addition to my remarks — presentations from Bob Reischauer of the Urban Institute, Chris Jennings of the Bipartisan Policy Center, Joe Antos of AEI, and Dr. Rhonda Randall of United Health Group.

The event was covered live by C-SPAN and can be viewed in its entirety here.

posted by James C. Capretta | 11:11 am
Tags: Medicare reform
File As: Health Care

Three New Papers on Medicare Reform

Yesterday, I was pleased to participate in a public event at the American Enterprise Institute, focusing on the content of three papers released by AEI this week (generously sponsored by the Robert Wood Johnson Foundation). The first paper, which I wrote, is entitled “The Role of Medicare Fee-for-Service in Inefficient Health Care Delivery.” I argue in it that Medicare fee-for-service is the most important reason that American health care is inefficient, fragmented, disorganized, and costly. It will not be possible to bring about real reform without significant changes in Medicare’s basic financial incentives.

The second paper, written by Robert Coulam of Simmons College and Roger Feldman and Bryan Dowd of the University of Minnesota, examines the benefits of moving toward a competitive bidding approach for the entirety of the Medicare benefit package. Private health plans would submit bids indicating the premium they would require to provide Medicare’s statutory benefits, and those bids would be used, along with the costs of providing Medicare FFS in a region, to determine a fixed government contribution. The authors estimate that this approach would reduce Medicare’s costs by $339 billion over a decade.

The third paper, written by Joe Antos, makes the case for reforming Medicare with a premium support model, including competitive bidding. The paper cites existing models, including the Medicare prescription drug benefit, and other evidence to make the case that harnessing the power of consumer choice and marketplace competition is the only reliable way to discipline costs without harming quality.

The AEI event, which was moderated by Bob Helms, can be viewed in its entirety here. Paul Ginsburg of the Center for Studying Health System Change provided helpful comments.

posted by James C. Capretta | 2:12 pm
Tags: Medicare reform, AEI
File As: Health Care

More on Premium Support

I have a new column up at National Review Online on premium support and controlling health care costs:

There are many reasons to be grateful for the introduction of the Medicare “premium support” plan by Democratic senator Ron Wyden and Republican House Budget Committee chairman Paul Ryan.

In some respects, it represents an improvement over the design of previous versions of premium support. Whereas the original Ryan plan offered seniors a subsidy based on a predetermined formula, the Wyden-Ryan plan relies on competitive bidding for setting the government’s contribution rate. Competitive bidding has the potential to cut costs even more than a predetermined index, because an index tends to lock in today’s wasteful spending. Of course, Wyden-Ryan also very usefully shook up the political debate over premium support, making it much more difficult for Democrats to demonize the concept.

But perhaps the most useful byproduct of the Wyden-Ryan plan has been the clarifying effect it has had on the debate over how to slow the rise of health-care costs.

The full article is available here.

posted by James C. Capretta | 12:45 pm
Tags: Medicare reform, premium support
File As: Health Care

Premium Support in the new Medicare proposal

I have an article up at National Review Online on the new Medicare proposal:

The release of the Medicare-reform proposal cosponsored by Democratic senator Ron Wyden and GOP House Budget Committee Chairman Paul Ryan is a milestone event in the long-running struggle for sensible entitlement reform....

The Wyden-Ryan proposal has ... brought to the surface an important issue of how “premium support” is designed. The version that Ryan released in April 2011, and which passed the House as part of the GOP’s budget plan, would have given seniors a subsidy each year based on a predetermined government formula. The new version would instead set the government contribution based on bids from the competing plans, including the “public option” of traditional “fee for service” Medicare. Setting aside the public option for a moment, moving toward competitive bidding is actually an improvement over the previous version. Most analysts agree that the potential for cost-cutting in Medicare is immense. With a government-set formula for payments, there is a danger that excessive costs get locked into the payment stream. With competitive bidding, there is much greater potential for deep cost-cutting, as plans that find new ways to deliver more for less can attract enrollment with low premiums.

You can read the whole piece here.

posted by James C. Capretta | 4:26 pm
Tags: Medicare reform, premium support
File As: Health Care