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Game Changers, Curve Benders…and Teeth Pullers

December 2nd, 2009 . by economistmom
One version of a toothless, continuous-feedback loop - “Precious” the dog
precious talking for her soft food @ Yahoo! Video

Continuing on what gives me (and other fiscal hawkish types) “loosey-goosey” anxiety about health reform, OMB director Peter Orszag had explained in the Monday story by Lori Montgomery that (emphasis added):

“The legislation is reflecting all the ideas that have been put forward in health policy circles for years and creating a feedback-and-continuous-improvement loop that will allow us to learn as we go,” Orszag said. “When someone says it’s not guaranteed to work, my response is: Doing nothing is guaranteed to fail.”

The good ideas are what Peter often refers to as “game changers”–health policy changes that actually have promise to “bend the cost curve” in the right direction (downward).  But by Peter and the Administration’s own admission, these “game changers” largely take the form of pilot and demonstration projections in current bills, because we still have to learn about how to play the game intelligently.  So we’re really talking about studying and practicing these game-changing “plays”–and not yet actually playing the game.  That’s why Peter acknowledges that it’s going to take “decades” to see the fruits of the “game changing” policies the Administration seeks in the health reform package–to see those “game changers” turn into true “curve benders.”

One feature of the legislation that Peter and the Administration see as critical to curve-bending success is the establishment of a Medicare commission that would be an essential part of the “feedback-and-continuous-improvement loop” that Peter talks about.  As Peter explained on the OMB blog this summer (emphasis added):

There are a number of steps that can be taken to bend the curve – health IT, investing in research into what works and what doesn’t, and changing incentives so that doctors and hospitals give you better care not just more care. But one of the most potent reforms is a change in the process of health care policymaking: empowering an independent, non-partisan body of doctors and other health experts to make recommendation about Medicare payment rates and other reforms.

But as Concord’s policy director, Josh Gordon, explained this morning on Concord’s “Tabulation” blog:

The Concord Coalition firmly believes that having an independent Medicare commission is one of the most important elements being considered in current health care reform legislation. Without the commission — which would be empowered to continuously evaluate Medicare costs and propose changes to the delivery of care that might be able to help reduce system-wide health care costs — it is doubtful that current legislation will succeed in reducing long-term health care inflation.

Unfortunately, the bill currently being debated in the Senate has effectively neutered the commission’s powers (and the House didn’t even have a commission in their bill). As pointed out by David Leonhardt in the New York Times, the Senate directs that the commission leave doctors and hospitals untouched by its recommendations for the first four years of its existence (2015-2018). Then, in an even more insidious direction, the permanent commission will likely be prohibited from submitting a proposal beyond 2019. These restrictions are layered on top of the initial restrictions Congress placed on the White House’s commission proposal (benefits can’t be “restricted,” cost sharing can’t be increased, eligibility can’t be modified, and health care can’t be “rationed”)…

[The current Senate bill] basically says…that no proposal can be submitted in any year after 2019 if the five-year average of national health care expenditures grows more rapidly than five-year average Medicare expenditures. This makes it unlikely the commission will get many opportunities to submit a proposal. As our Series on Health Care and Medicare points out, expenditures in Medicare tend to rise at slightly lower rates than overall health care expenditures (from 1970-2007 annual per- capita Medicare inflation averaged 9.2% while the private health care average was 10.4%).

An irony of this provision is that almost the entire cost control structure of current health care legislation is predicated on the idea that reforms in Medicare will have to lead the way towards a broader reform of the private health care system because the government can easily experiment and alter Medicare — as opposed to trying to dictate systemic transformation in the private sector. Yet, with this restriction, the government’s ability to change Medicare will instead be stuck waiting for the private sector to magically restrain costs first.

This is Concord’s “loosey-goosey” worry:  not that a Medicare commission along the Administration’s specification won’t work–but that a “toothless” Medicare commission won’t work.  And why do we worry about the “toothlessness” of its congressional specification?  Because Congress is “pulling teeth” on the health care bill as we speak. I mean when “maverick” fiscal conservative John McCain has this to offer and argue:

The second amendment, authored by Sen. John McCain (R-Ariz.), would strip out the bill’s primary revenue source, nearly $500 billion in Medicare cost savings. Although AARP and other seniors groups have said otherwise, Republicans are attacking the cuts as a threat that could eventually shorten lives.

“They’ve paid all their working lives into the Medicare trust fund, and now they’re in danger of having $483 billion cut out of it, which would eventually lead to rationing of health care for seniors in order to fund a new, government-run health-care system in America,” McCain told reporters.

…then I think there’s not much hope of Congress producing a bill with a continuous-feedback loop that will truly “change the game” and truly “bend the curve.”  Unless the President and the few courageous members of Congress who are around insist on getting a Medicare commission with real “teeth” into the bill, the only continuous-feedback loop will be a toothless (and blabbering) one…like “Precious.”

6 Responses to “Game Changers, Curve Benders…and Teeth Pullers”

  1. comment number 1 by: AMTbuff

    There is only one feedback loop that Congress will ever respond to: the bond market. When lenders stop buying Treasury debt and stop rolling over the existing debt, all these spending programs will crash. So will the financial security of all government employees and retirees. The safety net may remain, but the hammock will break.

    History will look at 2009’s health care debate just as it looks at the early 2000 dreams of dot-com CEOs choosing which corporate jet they were going to buy after the IPO. The Congress of 2009, and Obama himself, will appear pathetically amusing in their childlike faith that the government debt bubble could never burst.

    Concord has been sounding the alarm for years, but now it’s far too late even if Congress were to listen. Which it won’t. Congress needs a slap upside the head, and the bond market is sure to deliver it. Probably even sooner than we here expect.

  2. comment number 2 by: Brooks

    AMT and All,

    One thing we should do is urge our members of Congress to form the SAFE Commission, which could potentially move us to (or substantially closer to) fiscal responsibility before a crisis hits. Obviously no guarantee the commission’s recommendation would be adopted and implemented, but it’s possible, and there would be other benefits (increasing importance of the issue among voters, correcting misperceptions and partisan myths that currently obstruct progress, creating a process that can be utilized at later points in time), so it’s worth trying. See my quick & dirty compilation of expressions of support for the SAFE Commission or comparable commission at http://brooksstuff.blogspot.com/2009/12/support-for-safe-commission-or.html

  3. comment number 3 by: Brooks

    Oh, also: Less Precious, more Roscoe.

  4. comment number 4 by: economistmom

    Brooks: I guess I didn’t blog about Roscoe passing away in September. It was too rough to write about… :(
    Just for the record, Precious is not my dog. But I did adopt another dog in October who’ll probably have his debut on this blog before too long. His name (given to him by the rescue group) is Taco, but he is really “precious” too.

  5. comment number 5 by: Brooks

    Diane,

    Very sorry to hear about Roscoe. It was great of you to adopt him. He had at least a couple of good years thanks to you.

    “Taco” is a great name. Kudos for getting a rescue dog.

    The cat I rescued (and decided to keep) this year is “Pancho”. The name was given by his original owner, who was Mexican, and kept for a couple of years by the owner/staff at a Dominican restaurant who kept him in their extremely dirty basement (where he was starting to look sick) as some restaurants and delis do here just to keep mice/rats away. Pancho is very healthy now, enjoys playing with my other cat (Buddy), and appreciates affection like no animal I’ve ever seen.

  6. comment number 6 by: Dave Schuler

    There was never any realistic prospect for a Medicare commission with teeth. Picture the scene. A constituent comes whining to his or her Congressman that he/she/his mother/her father was denied such and such a procedure. What’s more likely to get the Congressman re-elected? Siding with the constituent or siding with the commission?