There’s a problem at the heart of the fiscal cliff talks between U.S. President Barack Obama and House Speaker John Boehner. Well, many problems, actually, but one is especially apparent.
As they discuss a deal to head off the more than $600 billion in automatic tax increases and spending cuts scheduled for January, Democrats know exactly what they want in higher taxes: $1.6 trillion, achieved mostly through higher tax rates on top earners. Republicans, however, aren’t so sure of what they want from Medicare spending cuts.
That’s why Republicans keep demanding that the White House make a new offer on entitlements rather than providing a detailed proposal of their own: They’re hoping the Democrats will do their work for them, taking on both the technical and political challenge of naming Medicare cuts.
One policy Republicans are pushing is an increase in the Medicare eligibility age. This is not a good sign. Raising the Medicare age is a particularly dumb cut. It’s disconnected from any coherent theory of restraining health spending, such as encouraging competition, ending fee-for-service payments or using Medicare’s bargaining power to wring efficiencies from the system. Worse, according to the Kaiser Family Foundation, it doesn’t even save money. It merely shifts Medicare costs to employers, consumers and other public entities, including Medicaid, the Affordable Care Act and the states.
Political Trophy
But an increase in the eligibility age would be a trophy that Boehner could present to his political base — proof that he had bagged his prey. In the absence of good ideas that Republicans agree on, bad ideas that Democrats hate will do.
Some conservatives, however, are pushing more ambitious approaches. Jim Capretta, who worked on budgets in the George W. Bush administration, has emerged as one of the Republican Party’s most influential voices on health-care policy. His big idea is distilled in two words: “beneficiary engagement.”
One of Capretta’s (many) criticisms of the White House approach to Medicare is that it casts seniors as nothing more than passive bystanders in a push to control costs. Capretta argues that the vast majority of seniors make serious, rational decisions to supplement traditional Medicare with a Medigap policy, an employer policy or Medicaid. Only 10 percent of seniors, he says, are in traditional Medicare without some kind of backup.
The problem, in Capretta’s view, is that seniors pay “zero or very-near zero at the point of service.” In other words, Medicare has turned into “an essentially unmanaged fee-for- service program where the cost-sharing, the only speed bump putting a check on use, is getting wiped out.” That’s a good deal for Medicare beneficiaries, but a bad one for the country.
Capretta’s goal is to make seniors more cost-conscious at the point of service. He even sees an opportunity to build on some Obamacare reforms, despite being an implacable critic of the law. He thinks the Affordable Care Act’s effort to expand accountable care organizations — provider networks that are paid based on the quality, rather than the quantity, of care they deliver — should be encouraged. Trouble is, he says, Democrats are encouraging the spread of such networks mostly by paying them more. In order to hold costs down, he would like to give patients a bigger role and greater financial stake in choosing a network.
Physician’s Ideas
In the Senate, Oklahoma Republican Tom Coburn, a physician himself, has emerged as one of his party’s top thinkers on Medicare. In bipartisan legislation with Senator Joe Lieberman of Connecticut, and a more partisan effort with Senator Richard Burr of North Carolina, he has proposed a bevy of Medicare reforms, including simplifying and raising deductibles, increasing means-testing and transitioning to a defined- contribution, premium support model, similar to that proposed by Wisconsin Representative Paul Ryan.
When I spoke with Coburn this week, he didn’t spend our interview trying to sell me on either bill.
“If I had the magic wand,” he told me, “I’d change how we pay for Medicare.” That’s a common enough sentiment, but the policy Coburn has in mind is a bit more radical than what’s typically offered in Washington.
“I’d change all physicians to time instead of fee-for- service,” he says. “What we’re doing with fee-for-service, and most people don’t realize this, is when you go to the doctor, they have this pressure to see X number of patients a day to meet their numbers.”
If we cut payments to doctors, Coburn says, “they’re going to cut the time they spend per patient. When a patient is in a room and you haven’t used your skills as a physician to really listen, you walk out and cover that absence of time by ordering tests. So if you say here’s all the hours we’ll pay for if you’re a Medicare doctor, and we can actually audit that time, doctors would have to demonstrate proof that they’re spending this time with patients.”
That wasn’t, I noted to Coburn, a policy that appeared in any of the bills he had sponsored, a fact he acknowledged with a laugh. “I didn’t put that in there,” he said, admitting the idea has little political support. “It’s just something I’ve thought about a long time. Nobody should be seen for less than 20 or 30 minutes if you’re doing this properly. And if I knew I was going to get paid for my time I wouldn’t be in a hurry to see the next patient.”
I’m not sold on all of Capretta’s or Coburn’s ideas. At least they’re attempts to address the central issue, which is changing the way we deliver health care so that it costs less and does more. That, and not crude cuts, is what the budget debate ultimately should be about.
For budget negotiators, though, the problem with such ambitious attempts to reform the health-care system is that they require time to be implemented, and additional time for the health-care system to adapt to them. They don’t necessarily help politicians hit a big savings target in a short-term budget. That’s why, in negotiations in which the goal is, say, $450 billion in health savings over a decade, there’s a tendency to rely on spreadsheet gimmickry and dumb cuts.
