Why not just fix Medicare first?
Examiner Editorial
June 19, 2009
As Congress and the White House began to discuss health care reform, author and journalist Virginia Postrel offered a modest suggestion: If simple and decisive government action can curb costs in health care, as Obamacare advocates claim, why not begin by fixing Medicare before rushing in with sweeping changes to the entire system? The government already runs half of America's health care system. According to federal statistics, federal and state governments together spent virtually the same amounts on health care in 2007 as did all private insurers and patients combined -- $1.036 trillion and $1.045 trillion, respectively. Medicare, which serves the elderly, is the largest public program, accounting for 19 percent of all health care spending in the U.S.
President Barack Obama's Council of Economic Advisers issued a report earlier this month estimating that as much as 30 percent of Medicare spending is unnecessary for improving health outcomes. Given such opportunities for easy savings within government, and Medicare's weighty influence in the broader system (many private insurers set payments by adding a percentage to Medicare's rates), it would make sense to reform Medicare first, see what works and what doesn't, and then apply the lessons of that process later to any system-wide fix. Unfortunately, Obama and Democratic congressional leaders are hellbent on turning the system upside down with radical reforms that are sure to have vast and unexpected consequences.
The president's savings plan for Medicare offers one example of how an overly simplistic system-wide fix could go awry. Although it laudably seeks to improve efficiency, much of his savings plan involves simply tweaking the formulas that determine the reimbursements Medicare will pay doctors and hospitals. Medicare already underpays for most services (although it overpays for a few). This does not lower the cost of treatment - something that only efficiency and technology can do in the long run - but it does squeeze doctors and leave private patients and insurers to pick up the slack in the form of higher prices for other products and services.
Patrick Cobb, president of the Community Oncology Alliance, argues that Medicare's low reimbursement rate for cancer treatments "negatively impacts the quality of care provided to seniors... [I]f Medicare rates become the standard, clinics would have to close their doors." If Obama's broader plans involve "bending the cost curve" for health care on the backs of medical professionals, it will lead straight to rationing health care. And the public option being discussed will undercut private insurers, which will put them out of business. Better to proceed carefully by fixing Medicare first and put the hasty risks on the shelf.
