Evidence and Ideology in the Medicare Debate
In a New York Times blog post last Friday, former Clinton Administration official Laura D’Andrea Tyson said that “when formulating public policy, evidence should be accorded more weight than ideology, and facts should matter more than shibboleths.” On that count, she’s right. But unfortunately for Tyson, the evidence shows that while liberal, top-down proposals to restructure Medicare – and the health care system – have failed, conservative proposals to introduce market forces into America’s failing entitlements could just succeed.
Tyson dismisses premium support proposals for Medicare, arguing that “the facts do not support” any conclusion that “competition would encourage more cost-sensitive behavior by beneficiaries, providers, and insurers.” Actually, a new study published in the Journal of the American Medical Association just this month found that private plans would “bid an average of 9% below traditional Medicare costs” under a premium support model. That’s a savings of tens of billions of dollars – coming directly from the positive effects of competition.
Conversely, Tyson claims that because competition won’t reduce health costs, “enforceable payment and cost-containment reforms like those in [Obamacare] are necessary.” Those are the same payment reforms that the non-partisan Congressional Budget Office, in a January report analyzing dozens of Medicare demonstration programs over decades, said haven’t worked to contain costs:
The evaluations show that most programs have not reduced Medicare spending: In nearly every program involving disease management and care coordination, spending was either unchanged or increased relative to the spending that would have occurred in the absence of the program, when the fees paid to the participating organizations were considered….Demonstrations aimed at reducing spending and increasing quality of care face significant challenges in overcoming the incentives inherent in Medicare’s fee-for-service payment system, which rewards providers for delivering more care but does not pay them for coordinating with other providers, and in the nation’s decentralized health care delivery system, which does not facilitate communication or coordination among providers.
While the evidence is clear that Obamacare’s focus on payment reform has NOT worked to control costs, the signs for competition as a positive force slowing costs seem promising. Which means that if Tyson wants to be bound by evidence and not ideology, she has every reason to endorse premium support as opposed to an extension of the failed status quo.