The Flawed Logic of Brute Force
Today’s recommended reading is a column, if you haven’t seen it already, is a column in the Washington Post by Geoff Colvin, a senior editor-at-large for Fortune Magazine, headlined, “Why Can’t We Fix Medicare – Once and For All?”
In Colvin’s take, there are essentially two policy directions for addressing Medicare’s well-documented fiscal problems. One is the Brute Force concept – forcing Medicare spending downward by simply paying healthcare providers less money. The other is the People Aren’t Dummies approach, which involves giving Medicare beneficiaries a greater degree of consumer choice to select between competing private health plans, thus forcing those plans to compete on the basis of both cost and quality.
The problem with Medicare policymaking today is that People Aren’t Dummies, even though it has worked quite well in the Medicare Part D program, hasn’t been applied to Medicare as a whole, which means Brute Force has been the default reform mechanism despite the fact that it’s simply a bad idea.
I always have to laugh when those who advocate the government command-and-control approach to healthcare say that Medicare is more “efficient” than private plans, with efficiency defined as spending less money for care. Of course, Medicare can spend less money because the program pays health providers less than private health insurance plans, thus forcing a significant shifting of costs over to consumers of those private plans. What some call “efficiency” is really just squeezing the toothpaste from one end of the tube to the other.
And now along comes the newest concept in Medicare reform, the Independent Payment Advisory Board (IPAB), which is just Brute Force in different packaging. IPAB gives 15 presidential appointees the mandate to slash Medicare budgets whenever spending exceeds an arbitrary level. With the restrictions upon which IPAB can aim its ax, the inevitable result will be – you guessed it – sharply reduced provider payments.
This isn’t the right way to make Medicare a better, more sustainable program. Making it more difficult for seniors to find a doctor, because fewer physicians will be seeing Medicare patients when those payments are reduced, is not a noble policy goal.
But what if we explored Colvin’s People Aren’t Dummies approach? Colvin espouses the plan offered by Congressman Paul Ryan (R-WI), which has aroused sharp criticism over its stringent subsidy levels for seniors. But there are other ideas out there. Former Clinton budget director Alice Rivlin, former Senate Budget Committee chairman Pete Domenici and others have recommended Medicare reform that would give seniors the ability to choose between private plans or stick with conventional fee-for-service Medicare if they so choose (but those private plans would be able to offer better benefits and greater value) and would tie increases in subsidies to healthcare inflation.
We’ve learned from extensive polling that seniors have no difficulty with making the right choices under the Medicare Part D program. With proper information available to them, they select from among a number of private plans and successfully pick the offering that provides the best coverage for their medications. And they don’t hesitate to change plans if there’s a better option in the market. The end result has been high consumer satisfaction ratings and a Part D program with spending levels well below original budget projections.
We’ve learned from experience that Brute Force doesn’t make for a better Medicare program or put the program on a sustainable path. Maybe it’s time to try something different.
