A level playing field, ctd.

Reihan Salam injected the notion of a “level playing field” between FFS Medicare and Medicare Advantage in any competitive bidding payment system. About that, Bob Coulam, coauthor of Competitive Pricing for All Medicare Health Plans, e-mailed the following.

This NR blog reflects a rather constant complaint of those who favor private options in Medicare.  They claim that the terms available for plans can’t be level, in that the federal government is incapable of administering a level playing field and instead will favor its own FFS plan in a competitive bidding system. Their arguments would have the effect of shielding private health plans from competitive pricing.

Bob Berenson, in Medicare Disadvantaged and the Search for the Elusive “Level Playing Field,” notes the importance of having a consensus on what constitutes a level playing field–and an agreement that there should be a level playing field–both of which have been lacking.  He argues that MedPAC’s method of leveling [setting payments to FFS costs]–which is now law [in some approximation] and will in due course take effect–is too crude.  His proposal is to use administrative data to adjust FFS payment levels to reflect plan costs and other concerns.  As my co-authors and I said in our recent book, Berenson doesn’t construe a “level playing field” in nearly so simple a way as does MedPAC, and he urges a conversation on what, politically, we actually want to level.

Agreed! There should be more discussion of this, with the aim of a pilot or demo.* I would not welcome ripping out Medicare as we know it to replace it with something that is largely untested for that market. For this reason, FEHBP’s experience does not count. It’s apples to oranges.

Also, keep in mind how this discussion started, with my observations on Rep. Ryan’s Medicare voucher plan, which does not call for competitive bidding. Nor does it call for the establishment of standardized plans upon which to focus bids. Thus, already all participants in this discussion have gone well beyond what Rep. Ryan has proposed to something that has a far better chance of meeting the goal of efficient use of taxpayer funds. It seems, then, there is broad agreement that Rep. Ryan’s formulation could use some improvement.

*Later: In their AEI paper, Coulam, Feldman, and Dowd make a strong case that a competitive pricing demonstration is not necessary–that Medicare should move straight away to a competitive bidding system that includes FFS among the bidders. Since I respect the authors (at one time or another I’ve worked with each of them), I take their argument seriously. Perhaps a demo of the type of system they describe is overly cautious. I would retain my preference for a demo for any idea that deviates considerably from what the authors describe and simulate. Rep. Ryan’s proposal would be one such idea. The only other reason to consider a demo (or a pilot) is politics. Skeptics may not accept that competitive bidding can save money. But they may accept testing the idea with broad implementation contingent on proven results.

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