More important than the public option

While everyone is screaming about the public option – nominally because it will reduce the costs of health care – I’ve seen much less discussion of MedPac.  What is MedPac?

The Medicare Payment Advisory Commission (MedPAC) is an independent Congressional agency established by the Balanced Budget Act of 1997 (P.L. 105-33) to advise the U.S. Congress on issues affecting the Medicare program. The Commission’s statutory mandate is quite broad: In addition to advising the Congress on payments to private health plans participating in Medicare and providers in Medicare’s traditional fee-for-service program, MedPAC is also tasked with analyzing access to care, quality of care, and other issues affecting Medicare.

Basically, MedPac is supposed to make recommendations on Medicare.  In the past, Congress has done a good job of ignoring its recommendations.  But under reform, MedPac was supposed to get some teeth.  This is important, not just for reform.  As I’ve said before, Medicare costs WAY more than reform and regardless of whatever reform does, we need to start curbing the increases of Medicare.  Anyone who is serious about the budget, about costs, has to be concerned with the increasing costs of Medicare.  And yet:

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 legislative language with the post-2019 limitation popped up some time after the bill left the Senate Finance Committee. In that bill, the 2015-1018 restriction was there, but the assumption was after the first five years of fully phased-in health care reform and its delivery system experiments, trials and pilot projects, the commission would be able to take that information and begin to enact system-wide reforms that could transform American health care from a “pay-for-quantity” wasteful, fee-for-service system, to a more cost-effective “pay-for-quality” system.

However, in the bill released for debate after the Finance and Health, Education, Labor and Pensions Committee legislation were merged, the new restriction was added. The legislative language is obtuse (page 1,009-1,010):

‘‘(ii) EXCEPTION.—The Board shall not submit a proposal…(III) for proposal year 2019 and subsequent proposal years, a year in which the Chief Actuary of the Centers for Medicare & Medicaid Services makes a determination in the determination year that the growth rate described in paragraph (8) exceeds the growth rate described in paragraph (6)(A)(i).

But, what it basically says is 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%).

Basically since Medicare does a better job at cost control than the private sector (contrary to what you hear), it’s unlikely that MedPac will get to do much at all.

Why does this seem good to people worried about costs?

(h/t Ezra Klein)

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