Friday, February 15, 2013

Morning in, ah, Medicare?

Well, it's a sunny pre-holiday Friday morning, and I am cheered by Ezekiel Emanuel in today's Times heralding the bending of the healthcare cost curve, as it now seems over the past ten years. On the cost control front, perhaps the ACA will look in retrospect something like the surge in Iraq, giving a jolt of indeterminate magnitude to a st of processes already in motion.

In any case, perhaps superficially, I am riffling through my mind the hopeful signs that have emerged on the healthcare front in recent weeks. If I want to go head over heels in caffeinated optimism, I might imagine that Atul Gawande's vision of a kind of venture capital process of reform stimulated by the ACA -- dozens of simultaneous experiments, a handful of which will yield dramatic results -- may actually occur over the next ten-odd years.

Hopeful signs include the fact that, for all the GOP's caterwauling about "bureaucrat-controlled" and "government-controlled" healthcare, beneath the radar some Republicans are looking at cost control measures that are indeed government-imposed, and likely to be effective.  For example, as I noted recently, two long-term "doc fix" bills are currently circulating in Congress, one bipartisan (but mainly Democrat), one Republican. While the GOP bill accords far more input to healthcare providers, both purport to either end or radically curtail fee-for-service payments.

A second sign of some nonideological thinking on the Republican side emanates from a bipartisan initiative, the Partnership for the Future of Medicare, co-chaired by former CBO head Douglas Holtz-Eakin and Ken Thorpe, a professor at Emory. The pair this week distilled a  PFM report in a post on the Health Affairs blog. I think of Holtz-Eakin, former economic adviser to the McCain campaign, as an intensely partisan critic of Obamanomics and the ACA, an impression gleaned mainly from quotes in news articles.  I was therefore somewhat surprised to learn that he is preaching the futility of simple cuts to benefit formulas, and calling for more systemic reform that does not simply rely on the Competition Fairy:

The future of Medicare is fundamentally about changing behavior and outcomes — the behavior of medical technology firms (drugs, device, diagnostics, etc.), providers, and patients, and then by extension improving health outcomes.  This is a much more complex undertaking than anything ever contemplated in Social Security, and if policymakers want to get serious they need to move beyond simply talking about “cutting entitlements” and actually move to talking about making them smarter.
The PFM "guard rail" principles laid down in this post include ending fee-for-service and improving transparency and availability of data, with this nod to the ACA to illustrate the latter point:
 For example, the Affordable Care Act (ACA) continues to implement Medicare Advantage rating systems and reward plans for achieving high-quality standards, using over fifty scoring measures, providing consumers with the tools they need to choose their health care options.
Perhaps Holtz-Eakin, and in some utopian future Republicans, could get behind empowering PCORI, the Patient-Centered Outcomes Research Institute, an advisory board created by the ACA to support comparative effectiveness research -- that is, to determine which treatments for any given ailment are most effective or most cost-effective. At present, thanks to the hysteria about "death panels" and "rationing," the Independent Payment Advisory Board cannot use PCORI findings to shape coverage for rival treatments. PCORI, in other words, has no teeth. Perhaps that can change at some future date.

My third bright-morning sign is from the nut graf of Emanuel's op ed, spotlighting the kind of reform that in Awande's vision could yield a hundredfold:
So what more can be done? Here is another piece of good news: there are many common sense reforms that should appeal to both Democrats and Republicans.

One example is competitive bidding. Historically, the government has effectively set prices through Medicare for wheelchairs, hospital beds and other medical equipment. But a demonstration project begun in 2011 introduced competitive bidding in roughly 100 metropolitan areas to see if market forces could bring down prices. The results have been dramatic. Prices for oxygen equipment went down 41 percent; wheelchairs, 36 percent; hospital beds, 44 percent; and the cost of diabetic testing equipment, like glucose strips, dropped by a whopping 72 percent. And research has shown no adverse effects on beneficiaries.

The Affordable Care Act will expand competitive bidding for these items to the rest of the country in 2016. But why wait? We should roll it out nationwide next year. And it shouldn’t just be for medical equipment. In his last budget, President George W. Bush recommended expanding competitive bidding for blood tests and other lab procedures. It could also work for X-rays, CT scans, pacemakers — for all medical commodities. This would drive health care spending growth closer to the increase in G.D.P.

Spurring competition amongst providers is probably more promising than framing up competition amongst the private insurers who pay them, since the payers' leverage is fragmented and therefore limited.

Note that competitive bidding was first a Republican initiative  -- as was the concept behind the ACA's Independent Payment Advisory Board, now demonized by Republicans (Paul Ryan proposed a twin his 2009 health care bill).

It's a long way from a Holtz-Eakin byline to Republican action in Congress. But on a sunny Friday morning, a way past current impasses looms larger than usual.

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