Real Health Care Reform vs. Bullet Points

David Brooks has just published a column modestly titled “where wisdom lives,” which evenhandedly considers both parties’ approaches to health reform. In his usual lighthearted fashion, Brooks ultimately concludes that Republicans are basically right about the big stuff, and that Democrats are overly wedded to technocratic, big-government solutions.

Read the column. Then read Jonathan’s Cohn’s fair but devastating response wonderfully titled “The imaginary debate in David Brooks’ brain.” As Jon puts things:

Brooks writes as if the key distinction between Democratic and Republican plans for Medicare is the way they would manage the program, with Democrats entrusting experts to make key decisions about where to spend money and Republicans entrusting consumers. But that’s not the most salient difference between the two approaches. The most salient difference is that Democrats would preserve Medicare’s fundamental guarantee of health benefits at affordable prices. Republicans would not.

Jon is too polite to comment on the most striking aspect of Brooks’s piece: the Powerpoint-like reduction of complicated health policy matters to superficial bullet points.

Consider Brooks’ key passage:

Democrats tend to be skeptical that dispersed consumers can get enough information to make smart decisions. Health care is phenomenally complicated. Providers have much more information than consumers. Insurance companies are rapacious and are not in the business of optimizing care.

Given these limitations, Democrats generally seek to concentrate decision-making and cost-control power in the hands of centralized experts. Under the Obama health care law, a team of 15 officials will be created to discover best practices and come up with cost-cutting measures. There will also be a Center for Medicare and Medicaid Innovation in Washington to organize medical innovation. Centralized officials will decide how to set national reimbursement rates.

Republicans at their best are skeptical about top-down decision-making. They are skeptical that centralized experts can accurately predict costs. In 1967, the House Ways and Means Committee projected that Medicare would cost $12 billion by 1990. It actually cost $110 billion. They are skeptical that centralized experts can predict human behavior accurately enough to socially engineer new programs. Medicare’s chief actuary predicted that 400,000 people would sign up for the new health care law’s high-risk pools. In fact, only 18,000 have.

They are skeptical that political authorities can, in the long run, resist pressure to hand out free goodies. They are also skeptical that planners can control the unintended effects of their decisions.

Republicans point out that Medicare has tried to control costs centrally for decades with terrible results. They argue that a decentralized process of trial and error will work better, as long as the underlying incentives are right. They suggest replacing the fee-for-service with a premium support system. Seniors would select from a menu of insurance plans. Their consumer choices would drive a continual, bottom-up process of innovation. Providers could use local knowledge to meet specific circumstances.

From 50,000 feet, that seems persuasive. When one gets down to policy specifics, this is much less plausible. Indeed Brooks’ piece reminds me of many glib Powerpoint presentations I’ve endured over many years.

I’ve seen many such presentations that contrast “top-down” vs. “bottom-up” decision-making. Oddly enough, the “top-down” strategy never fares well in the “Conclusions and recommendation” slide. I’ve also seen many consultant presentations that contrast “fragmented” vs. “integrated” approaches. Oddly enough, “fragmented” has never fared well, either.

The particulars of health policy just don’t fit these boxes. Global budget constraints or prospective payment systems might allow physicians greater practice autonomy than a fee-for-service system with less powerful centralized budget controls that is then driven to implement greater micro-management. Centralized financing is not the same as centralized practice guidelines which is not the same as centralized risk-adjustment which is not the same as…. You get the picture.

I’m also puzzled by Brooks’ suggestion that “Medicare has tried to control costs centrally for decades with terrible results.” Medicare has controlled cost growth more effectively than private insurers have been able to do. Pretty much every health policy commentator notes that other wealthy democracies have controlled costs even more effectively than we have. They’ve done this by deploying government market power in precisely the way Brooks deplores. Reading Mr. Brooks’ piece, one might also forget that market-oriented state health insurance exchanges, the very model of a “decentralized process of trial and error” are at the center of President Obama’s health reform.

Cracks in Brooks’ argument become clear when one considers other particulars, too. The proposed Independent Payment Advisory Board (IPAB) will use a highly decentralized evidence base of comparative effectiveness research to inform Medicare reimbursement and coverage policies. That’s pretty “bottom-up.” A second virtue of IPAB is to help Congress solve its obvious collective action problem by replacing fragmented policymaking with a more centralized model. That’s “top-down.”

CMS’s Center for Innovation will largely support a range of local initiatives and demonstration projects. One might debate whether efforts to implement and evaluate Medicaid medical homes or the new Accountable Care Organizations are “top-down” or “bottom-up” approaches to innovation. Pretty quickly, though, one realizes that this is just the wrong question to be asking.

I won’t bore people with my continued criticisms of the Affordable Care Act’s high-risk pools, which I strongly opposed. I’ll just say that fragmentation is one of this program’s basic problems. It’s hard to effectively implement a network of state-federal partnerships, particularly given political and budgetary uncertainty, and given the ideological/political differences between many governors and the Obama administration. Expanding Medicare coverage for the medically uninsurable disabled would have addressed this problem much more effectively and humanely, through this is a “top-down” appproach.

Many of us in public policy spend so much time making faux-sophisticated Powerpoint arguments. We easily forget how empty these arguments often are.

[Cross-posted at Same Facts]

Harold Pollack

Harold Pollack is the Helen Ross Professor at the School of Social Service Administration at the University of Chicago.