Premium support proposal and critique: Conclusion

This post is part of a series. If you haven’t read the prior posts in the series, you really should. The introduction explains what I’m doing and links to all posts to date. I’m assuming you’ve read them all.

After introducing and defending the merits of a particular premium support proposal, I then critiqued it. I stand by all I’ve written, but it begs the question, taking into consideration all the merits and critiques, should we look favorably on the premium support plan or not? I feel I owe you an answer to that question. I will provide one in this post, but do not expect it to be a simple one, and don’t expect it to be very satisfying.

I claim that how you should view premium support depends on how much you feel traditional Medicare (TM) needs to remain strong and viable. I make that claim because I think the odds are high that premium support will lead to an erosion of TM and possibly its demise. Sure, in principle that plan type could do just fine if the playing field is level. I think that all but the political threat to TM is technically surmountable, at least sufficiently to prevent TM from certain death. But I am not confident the political realities can be any different than I described. In that domain, the playing field cannot be level. It will favor private plans. TM is likely to suffer, at least somewhat, under premium support.

So, let us consider the extreme case of TM’s demise and ask, do we need it? That’s the natural question, but it isn’t quite the right one. It’s not the heart of the matter. What is needed in Medicare and system-wide is a way make sensible coverage decisions, to stop paying for health technologies that do not improve health. Comparative effectiveness research can reveal what those wasteful technologies are.* To date, private plans generally don’t make the hard coverage choices such research suggests, not unless Medicare takes the lead. In cases in which they have tried, and patients have sued, courts have been reluctant to make rulings based on science and often interpret insurance contracts broadly so as to favor the insured.**

Thus, provided it can make those tough choices and serve as cover for private plans, it would seem that TM is needed. Unfortunately, TM doesn’t make those choices either, at least not enough of them. To deny or circumscribe coverage for a health technology is too easily subject to demagoguery by politicians or pressure by medical interest groups. So, though TM is in a leadership position, it doesn’t lead. There is hope in the IPAB, though it is legally prohibited from “rationing.” Whether it could survive the political and/or legal challenges to its use of comparative effectiveness research in adjusting how Medicare pays for procedures remains to be seen, if indeed it even attempts such a thing. If it does and can survive challenge, then TM might lead an efficiency revolution. If the IPAB will not or cannot, it is not clear that TM has a vital role to play.

At the same time, it’s not clear that private plans would fill the void. As described, they follow TM’s lead. There’s no compelling reason to expect them to take up a leadership role if TM fades away. For them to do so probably would require changes in the law to provide safe harbor for use of scientific evidence in coverage decisions. Thus, any premium support proposal that does not include ways of enhancing and protecting private plans’ role in making the tough decisions our system needs is incomplete.

What this suggests is that whether or not we adopt premium support is not the most important question we face. Contrary to what some may claim, competition among private (and public) plans alone is not going to bend the cost curve. However, neither is TM guaranteed to do so, or not by enough anyway. What matters is whether public and private insurers can serve as more than pass-through entities. What matters is whether we are going to continue to use public or collective funds to pay for any and every medical technology that clever minds can invent, whether more effective than cheaper alternatives or not. If TM can broadly apply the results of scientific scrutiny of treatment types, we ought to embrace it and be thankful. We ought to preserve and protect it if it will actually lead us where we need to go. If it cannot, then it is not evident it deserves special treatment. But it is also not clear how private plans will perform any better. Either way, there is more work to be done.

In this sense, premium support is a red herring. It’s something reasonable to wrestle with in the near term, but shouldn’t distract us from the longer term challenge we face: either we dramatically reduce the rate of growth in Medicare and the broader health system by being smarter about what public and private plans cover or we ratchet up taxes and premiums (or some of both). Premium support or not, this challenge will likely be with us for a long time to come. It’s reasonable to believe that either private or public plans could meet this challenge, but not without substantial changes to law, culture, and politics. Until those are addressed, nobody on either side of the debate can stand up and credibly claim they have a complete solution.

In short, I don’t believe premium support is necessary or sufficient. By the same token, neither is the status quo or even “Medicare for all.” I told you my answer would not be very satisfying. If about nothing else, I’m probably right about that.

* Consideration of cost-effectiveness may ultimately be needed too, but comparative effectiveness is challenging enough and a good start. So, I’ll focus only on that.

** Here I am referring to decisions to deny coverage for a particular technology either entirely or for a sub-population for whom it does not improve health, not to deny coverage to treat a condition at all.


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