Addendum to “memo to the super committee”

As I anticipated, the comments on my memo are good. Here are three points inspired by them. I’m putting these cryptically for brevity. Believe me, they do a lot of work. Unpacking them would take several long posts.

Would-be Medicare reformers should:

  1. Beware the cost shift!  “Cost shift” here is in two senses: shifting to beneficiaries and shifting to other payers. The former relates to ideas such as increasing the age of Medicare eligibility. The latter pertains to the consequences of reduced Medicare payments in a climate of increasing provider market power. Only here I am also deliberately confusing it with price discrimination, which is a chief barrier to reduced Medicare payments hidden in plain sight. This circles back to all-payer rate setting.
  2. Focus on managing chronic disease.
  3. Related, pay attention to the small proportion of beneficiaries that incur the majority of cost.
I assert focusing on these would go a long way to more sensible Medicare policy. But it isn’t exactly easy to see how to get from here to there.

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