Another Broken Promise

Obamacare Is Driving Costs Up, Not Down

One of the few major promises made by the president about the Affordable Care Act that has not been exposed as empty and false in the wake of the law's disastrous rollout has been that Obamacare will drive overall health care costs down. In a post on The Weekly Standard's blog yesterday, I show why the recent claim by the president's Council of Economic Advisors that Obamacare will drive down health care costs is mistaken.

The CEA paper attempts to make the case for Obamacare by looking at trends from the most recent release of National Health Expenditure (NHE) projections.  The NHE data, compiled by the independent Office of the Actuary in the Department of Health and Human Services (HHS), does show a slowdown in health spending in recent years.  NHE spending growth per capita has averaged 3.1 percent since 2010, down from 5.9 percent in the previous decade. 

But the slowdown did not start abruptly in 2010.  In 2002, NHE spending per capita rose 8.5 percent and then began to slow over the ensuring years.  In 2008, NHE spending per capita rose just 3.7 percent – two years before Obamacare was enacted.

You can read the rest of the piece here.

posted by James C. Capretta | 1:44 pm
Tags: cost curve, Medicare, Obamacare
File As: Health Care

More Good News as the Medicare Drug Benefit Approaches Ten Years

Contrary to the expectations of its early critics, the Medicare prescription drug benefit has been very successful at using market forces and consumer preferences to keep the cost of drug coverage down over the past decade. In a column at e21 I argue that, instead of bringing more government regulation to the drug benefit program, as the Obama administration is planning, the market-based model of the program should be used as a model for how to reform the rest of Medicare.

new paper from Doug Holtz-Eakin and Robert Book of the American Action Forum documents the compelling record of the drug benefit. For starters, the primary objective of those who authored and pushed for the enactment of the program has been met, which is ensuring access to prescription drugs for America’s seniors. About 90 percent of the Medicare population is now enrolled in a drug plan of some sort. Most beneficiaries get their coverage through one of the private plans competing directly for enrollment within Medicare, but a sizeable portion of Medicare enrollees also get good coverage outside of Medicare through retiree benefit plans. The law facilitated the continuation of these plans.

And the beneficiaries like what they are getting. Surveys of beneficiaries since the program was implemented have consistently shown high consumer satisfaction with the drug benefit plans offered through the program. The most recent survey indicates that 92 percent of Medicare beneficiaries enrolled in a drug plan are satisfied with their coverage, with 58 percent indicating they are “very satisfied” with their current plan.

You can read the rest of the column here.

posted by James C. Capretta | 12:18 pm
Tags: Medicare
File As: Health Care

Reforming Medicare Integrated Care

One of the core provisions for “bending the cost curve down” contained in the Patient Protection and Affordable Care Act (PPACA) are the Medicare accountable care organizations (ACO), which are intended to serve as integrated health plans that will be able to deliver health care more efficiently than the current Medicare fee for service model. But, as I argue in a new AEI research paper, these ACOs do not allow for genuine consumer choice, and because they continue to rely on the fee for service payment model, they are unlikely to deliver on the health care savings that they are supposed to provide.

Private-sector efforts to build high-performing health systems around the country are making real progress in some cases and should be given the room they need to succeed. But this is not the same as saying the ACO program under the PPACA is a success or that it will be successful down the road, which is very unlikely to be the case.

Fortunately, the shortcomings of the ACO model in the PPACA need not be the end of the story. It remains important to encourage the development of more integrated and cost-effective care within Medicare. And that goal can be achieved by replacing the flawed ACO model of the PPACA with a more workable approach based on incentivizing the formation of high-quality plans and on allowing the beneficiaries to share in the cost savings such plans would produce.

The rest of the paper can be read online here.

posted by James C. Capretta | 9:53 am
Tags: Medicare, accountable care organizations, managed care
File As: Health Care

The 2013 Medicare Trustees’ Report

Last Friday, the Medicare trustees released their annual report on the state of Medicare’s finances. And, yesterday, the American Enterprise Institute held its annual event on the report, moderated by AEI’s Joe Antos.  The session always features a presentation on the report’s main findings by a representative from the office of the actuary that prepares the report. For many years, that task fell to long-serving chief actuary Richard Foster, but Mr. Foster retired earlier this year after a distinguished career. So, yesterday, Paul Spitalnic, the acting chief actuary for Medicare, performed the duty for the first time, and did so admirably.

The rest of the session featured comments on the state of health care costs and Medicare by Mark Pauly of the University of Pennsylvania, Chapin White of the Center for Studying Health System Change, and myself, followed by a question and answer session with the audience.

Video of the entire AEI event can be viewed here. In addition, the slides that I used for my presentation are available at the bottom of the same event page.

posted by James C. Capretta | 3:30 pm
Tags: Medicare, Medicare trustees
File As: Health Care

Saving Seniors and Our Most Vulnerable Citizens from an Entitlement Crisis

Earlier this week I was invited to give testimony before a House Energy and Commerce Health Subcommittee hearing on “Saving Seniors and Our Most Vulnerable Citizens from an Entitlement Crisis.” A video of the entire hearing is available here (with my testimony beginning around at around 20:30), and you can read my written statement here.

posted by James C. Capretta | 12:30 pm
Tags: medicare, entitlement reform
File As: Health Care

To Save Medicare, Change the Model

 I have a column in USA Today on Paul Ryan’s plan to reform Medicare on the model of the Medicare prescription drug plan.

Without reform, the Medicare Hospital Insurance trust fund will be depleted of reserves in 2024. An insolvent Medicare is unfair to younger Americans who will need the program just as much as their parents and grandparents.

The solution can be found within Medicare itself. The drug benefit, enacted in 2003, is built on consumer choice and competition among private drug plans. This approach has worked well to provide access to drugs at an affordable price.

You can read the rest of the column here.

posted by James C. Capretta | 11:06 am
Tags: Medicare

Raising Medicare Eligibility a First Step Towards Deficit Reduction

I have a post today on the U.S. News and World Report’s Debate Club where I argue that the Medicare eligibility age should, like the Social Security retirement age, be raised by two years to help bring the entitlement program’s long-term costs under control.

The best idea is to bring the cost discipline of a functioning healthcare marketplace to Medicare. Under this model, beneficiaries would choose from among competing health plan offerings. Beneficiaries selecting less-expensive options would reduce both their own costs as well as the government's. This model has worked well to control costs in the Medicare drug benefit.

But pursuing more competition in Medicare does not preclude adopting other reforms too. Among the ideas now being discussed in budget talks between congressional leaders and the president is a rise in the Medicare eligibility age. Social Security's normal retirement age is already moving up from age 65 to 67 over about a two-decade phase-in period, but Medicare's eligibility remains at 65 (where it has been since the program was enacted in 1965).

For those interested, you can read and vote on the post at the Debate Club website here.

posted by James C. Capretta | 12:22 pm
Tags: Medicare
File As: Health Care

Kaiser’s Faux ‘Study’ of Premium Support

I have a column today at National Review Online on the flaws of the latest “studies” of the Ryan-Wyden Medicare plan.

The problem is, under Ryan-Wyden, no current seniors would be placed into a premium-support program. They would all be exempt, as would everyone age 55 and older but not yet on Medicare. So this hypothetical premium jump for current Medicare beneficiaries has no connection to reality.

Moreover, under Ryan-Wyden, future enrollees into the program — those who have not yet enrolled in any Medicare option — would be guaranteed at least two options that would cost no more than what current Medicare would require. So, under Ryan-Wyden, no senior — present or in the future — would ever have to pay more than they do today for Medicare. Period.

You can read the rest of the article here.

posted by James C. Capretta | 10:43 am
Tags: Ryan plan, Medicare
File As: Health Care

The Medicare Distortions

I have a column up at National Review Online about the dishonest attacks over Medicare on the Romney-Ryan campaign by the Obama campaign and its apologists.  

To begin with, those attacking Ryan have resorted to silly name-calling (“VoucherCare,” “CouponCare”) in an attempt to discredit the idea of Medicare premium support. But premium support — which, by the way, has a long bipartisan history, including support from Democratic senator Ron Wyden — cannot be considered a “voucher” program any more than the prescription-drug benefit in Medicare is a voucher program. Under the drug benefit, the federal government accepts bids from private insurers wishing to offer coverage to the beneficiaries. The government’s contribution toward coverage is based on the weighted average of those bids. Every beneficiary in a given market area is entitled to the same level of governmental support. The government provides an organized format to assist the beneficiaries in their choice of plans. And once a beneficiary decides on a plan, the government’s contribution is sent directly to the insurer. No voucher is ever issued. That’s exactly how a Wyden-Ryan premium-support plan would work in the rest of Medicare.

You can read the rest of the article here.

posted by James C. Capretta | 11:25 am
Tags: 2012 election, Medicare
File As: Health Care

Paul Ryan's Medicare Plan Harnesses Consumer Power in Healthcare

Last Friday I contributed to a debate on the Ryan Medicare plan at the U.S. News & World Report “Debate Club.”

There are two basic choices for slowing the pace of rising costs in Medicare. The first option—the one embraced by the Obama administration—is to rely on the federal government to impose price controls and otherwise try to micromanage how healthcare is delivered to patients. This approach has been tried for the past four decades in Medicare, and hasn't worked.

The alternative is to harness the power of consumer choice in Medicare. The proposal would be phased in gradually. Current beneficiaries and those age 55 and older would see no changes in the way the program works for them. Future entrants, however, would be entitled to a premium support payment which they would direct to the plan of their choice.

You can read the rest of my post here.

posted by James C. Capretta | 3:27 pm
Tags: Ryan plan, Medicare
File As: Health Care