Progressive Options in the Medicare Wars

As Sahil Kapur reports at TPM today, Republicans are repackaging their plans to radically transform Medicare to avoid the most obvious political pitfalls:

Republicans want to turn Medicare into a subsidized private insurance structure and cut costs on the beneficiary side. This concept — dubbed “premium support” by backers and “vouchers” by critics — would end the coverage guarantee and give seniors a fixed amount to shop for insurance on a private exchange. If the subsidy is too small, tough luck; they’re on their own.

The Ryan budget aimed to replace traditional Medicare with this concept. But after voting overwhelmingly for it last year, Republicans have grown conscious of the political reality that it’s too radical to pass, and are offering up gentler versions of its core components.

The new Coburn-Burr proposal is the latest example of this recalibration: it would “transition Medicare to a subsidized private insurance system while giving seniors the option to remain in the traditional government-run program — think ‘Obamacare’ exchanges with a public option.”

The Democratic response to such proposals has largely been to just say no to any significant change in Medicare’s structure. But, given the irrefutable cost spiral in Medicare (and in health care costs generally), Democrats have also been gradually driven to embrace a mix of less fundamental but still painful benefit reductions (e.g., raising the eligibility age for Medicare) and cuts in provider reimbursements (especially via the Independent Payment Advisory Board or IPAB).

The IPAB could potentially be the source of revolutionary changes in how medicine is practiced under Medicare–and what it costs–leading to prevention and disease-management innovations that would improve health outcomes as well as improving Medicare’s bottom line. But it’s already under attack from know-nothings in both parties who view it as the prototype for imaginary “death panels” and other “rationing” devices. It is almost certain to have its powers restricted, and is in general a rather slender reed for progressive health policy aspirations. With conservatives probing for better marketing devices and slower implementation of their privatization schemes, something more basic is in order that in no way compromises the commitment to publicly-financed Medicare services.

One avenue explored at the Washington Monthly in its November/December 2011 issue was Phillip Longman’s proposal for greater reliance on non-profit accountable health organizations (ACOs). The idea is to leave behind the fee-for-service system typically used by Medicare in favor of a total-care approach that combines the best features of managed care without the profit-seeking, benefit-cutting abuses associated with so many HMOs. As Longman said:

We only have to look at the big exceptions to the often poor performance of managed care organizations over the last several decades. These are institutions with high levels of patient satisfaction that are also lauded by health care quality researchers for their patient safety, adherence to evidence-based protocols of care, and general cost-effectiveness. They include integrated providers like Intermountain Health Care, the Cleveland Clinic, the Mayo Clinic, Geisinger Health System, Kaiser Permanente, and the VA, the last of which ranks highest of all on most cost and quality metrics and is in effect the largest, and purest, nonprofit, staff-model HMO in the land (though, of course, government run and open only to veterans).

Longman acknowledged that current Medicare beneficiaries will resist any move away from fee-for-service medicine, and suggested reforms in the direction of ACOs be introduced for those just now approaching retirement age. Indeed, Republicans determined to privatize financing of health care for retirees–and everyone else–are more than willing to “grandfather” current beneficiaries, many of whom happen to be Republican “base” voters.

But perpetual defense of the status quo–or more accurately, a status-quo-minus in which traditional Medicare constantly bleeds benefits, beneficiaries and providers–is not a good progressive option:

Do they [reforms to phase out fee-for-service] sound all that onerous when compared to the competing policy proposals already on the table, such as turning Medicare into a voucher program that leaves all of us responsible in old age for paying 70 percent of our own health care costs, or seeing Medicare reimbursement rates reduced to the point that we can’t find a doctor who will treat us, or having to wait until age sixty-seven before being eligible for Medicare at all?

We can certainly expect lots of opposition from wellheeled practitioners of for-profit medicine—all those cardiologists making a killing doing unnecessary stent operations, for example. And we’ll hear from many prestigious academic medical centers, an unfortunate number of which engage in massive amounts of overtreatment because they are dominated by specialists who look down their nose at doctors engaged in “mere” primary care.

Yet as difficult as these challenges will be, reformers are now armed with abundant, peer-reviewed proof of just how dangerous and wasteful fee-for-service medicine has become, and the public has begun to catch on as well. Ten years ago, for example, researchers were just beginning to document how the death toll of medical errors, hospital infections, and inappropriate treatment had conspired to make contact with the health care system the third leading cause of death in the United States. Today, these facts are widely accepted by heath care experts and generally understood by policy makers at the highest levels of government.

Longman doesn’t quite get into this, but his proposed Medicare system would seem like a virtual paradise for people outside the Medicare/VA universe, including those under Medicaid or S-CHIP, or the millions hoping for coverage under the ACA. A general shift to better medical practices focused on health outcomes equitably financed for all Americans would represent a major step towards the universal access to health care progressives have long favored. Those who consider this an impure compromise need to take a good honest look at where we are heading otherwise.

Ed Kilgore

Ed Kilgore, a Monthly contributing editor, is a columnist for the Daily Intelligencer, New York magazine’s politics blog, and the managing editor for the Democratic Strategist.