My health reform plan

On the one hand, I’m surprised nobody has asked me what my preferred version of health reform would look like. On the other hand, I’ve already conveyed it in my posts on Medicare and competitive bidding. Also, it is likely many readers think I think the ACA or some other off-the-shelf proposal is ideal (e.g., single payer). Nope. Yet, I supported passage of the ACA (while recognizing it falls far short of “perfect”). I can reconcile all this and do so below. Read to the end where I discuss some important limitations and disclaimers. Also, to keep this post “short” (I know, it is long, actually), I refer to many prior posts. If you want the full story, you’ve got to follow the links.

The simplest way to explain where I’d like to see the health system go is to describe what I’d like to see happen to Medicare. I’ve covered this before (and more than once), so I’ll be brief. Medicare is the combination of a guaranteed benefit and a payment system (more than one if you count Medicare Advantage (MA), fee for service (FFS) Medicare, and the prescription drug program (Part D), among others at more refined levels). One can argue until the cows come home what the guaranteed benefit should be and even whether or not there should be one. About that, I think Peter Orszag and David Leonhardt had a smart way of limiting Medicare to proven, effective treatments (more here and here). To the extent that the ACA supports comparative effectiveness and empowers an apolitical body, the Independent Payment Advisory Board (IPAB), to propose ways to rein in costs via an up-or-down vote in Congress, I think it has taken some steps in the right direction and consistent with the Orszag-Leonhardt ideas. (Yes, I know the IPAB has limitations that will prevent it from doing many things that could reduce health care costs significantly. My point is that it is a step in the right direction, not that it is a full solution. Get used to that justification for my support of the ACA. I’ll repeat it.)

So, that’s a flavor of my view on Medicare benefits. Beyond that, it’s a “national dialog” or a “political” thing. I don’t think one can get away from that. Proposals that would, if implemented as designed, dramatically reduce benefits or move the program out from a defined benefit paradigm just do not seem politically credible to me. (If I’m wrong and such a thing occurs in my lifetime, I will eat the most disgusting “fruit” I have ever tasted.)

On to the payment system(s). They’re flawed in so many ways I could write dozens of posts about just that. (I have, actually.) I’ll just say here that taxpayers can get better value if the program adopted a competitive bidding approach, one that included FFS among the bidders. I have written about how this differs from other voucherization schemes. I doubt I need to repeat the argument. The ACA did include a version of competitive bidding when the House passed the Senate health reform bill. It wasn’t the version I prefer, but it was a step toward it. So, I was very excited and encouraged. Then, a week later, competitive bidding was written out of the law by the budget reconciliation amendment.  I was disappointed.

Anyway, if you put the above together, I’ve spelled out at a very high level what I’d like to see happen in Medicare. Note that Medicare includes income-sensitive, risk-adjusted subsidies in the form of Part B and D premiums and payments to MA plans and Part D plans. The ACA’s exchanges would have those too, though they are based on competitive bidding (as are Part D payments), which is a strength. Hence, some elements of the exchange model is laudable, another reason to view the ACA favorably. But, back to the main line: I do not see why what I prefer for Medicare should not be considered system-wide. If it makes sense for one sub-population, why not for everyone?

What this would mean is scrapping the employer-sponsored tax subsidy (the source of many problems) and Medicaid and extending the version of Medicare just described to all. Now, the ACA does none of those things. But it will gradually erode the employer-sponsored tax subsidy, which is, again, a step in the right direction. It puts in place an alternative to employer-sponsored insurance (exchanges), which would increase choice and, thereby, consumer value. It’s a start, but only that.

Now, having said all that, I am not so naive or arrogant to suggest my view how the health system should evolve is “correct.” To draw anything like that conclusion would require a detailed analysis of costs, incentives, impact on quality, and its effects on various stakeholders. Just as my preference for competitive bidding is informed and motivated by research (as are all good things on this blog), my final conclusion about the idea I have just sketched would be as well. I do not presume what is in my head makes sense from all perspectives. Moreover, it may not be viable, in which case I would not push it, not all at once. Political viability along with the fact that it does take some important steps toward improvement (in my view), is why I supported the ACA. But, as I and others have pointed out, it is flawed in other respects. One big way being discussed now is that it does not sufficiently address the problems in Medicaid.

I do think that the ACA can be viewed as the first step toward a vastly improved system. Exactly what the second or third steps will be is unclear. I do think viewing it as a step backwards is not only incorrect but self-defeating. There are components of the ACA that could be leveraged and strengthened to drive the system in a variety of directions, consistent with thinking either on the left or right. It all depends on what is emphasized, protected, and implemented and what is attacked, watered down, and delayed.

One thing is certain: the ACA is not the end. For many reasons, including the fact that it is not exactly what I prefer even within Medicare but also system-wide, I am not satisfied with it. I do have a vision for something I think might be better. But I could be wrong, and I’m open to that.

There. You didn’t ask, but I’ve given you my plan anyway. Attack at will. I’m certain it is flawed. All reform proposals are in some way. Every single one.

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