6/3/2015

A Smarter Way to Pay Doctors - Bloomberg View

H E A L TH CA R E R EF OR M

ASmarterWaytoPayDoctors

APR14,20158:00AMEDT

ByPeterR.Orszag

aA

Inawelcomebreakfrompoliticalstasis,Congressmaybeonthevergeofpassingimportant
bipartisanlegislationtofixthewayMedicarepaysdoctors.AbillbeforetheSenatethisweek,
whichthepresidentiswillingtosign,wouldshifttowardpayingbasedonhowwelldoctorscare
fortheirpatients,ratherthanonhowmuchcaretheyprovide.Thefixisn'tperfect,butit'sfarbetter
thanmostofusexpectedfromapolarizedCongress.
Yetmuchofthecommentaryaboutthebillisverynegative.Strangerstill,itcomesintheformof
twocontradictoryargumentsbothwrong.
Everyyear,toavoidthesteepdeclinesinMedicarepaymentstodoctorsthatwouldautomatically
kickinundertheexisting"sustainablegrowthrate"formula,Congressprovidesatemporary"doc
fix."Itsuspendsthepaymentcutoneyearatatimeasuresignofadysfunctionalpolitical
system.ThelegislationthathaspassedtheHouseandisnowbeforetheSenatewouldpermanently
endthethreatenedpaymentcutsandshiftdoctorpaymentstoasysteminwhichmoreemphasis
wouldbeplacedonquality,valueandaccountability.Thiswouldreinforcethebroadermovement
inhealthcareawayfromfeeforservicepayments,whichiscrucialtocontinuingtheslowgrowth
incostswe'vebeenenjoying.
Atthesametime,thelegislationwouldimposehigherfeesonsomehighincomeMedicare
beneficiariesandwouldrestrictaspecifictypeofsupplementalinsurancethatallowsbeneficiaries
toescapedeductibles.Suchinsurancehasbeenshowntoraiseoverallcosts,becausewhenpeople
canavoidcostsharing,theytendtoboosttheirconsumptionofhealthcare.
Thebillwouldalsoextendfortwoyearstwoeffectiveprograms:theChildrensHealthInsurance
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A Smarter Way to Pay Doctors - Bloomberg View

Program,whichprovidescrucialbenefitsforlowincomechildrenandtheirparents,andthe
Maternal,InfantandEarlyChildhoodHomeVisitingProgram,whichprovidesforregularhome
visitstoimprovematernalandchildhealth.Empiricalevidenceshowshowsuccessfulthelatter
programhasbeen,andweshouldbedoingmoretopromotesuchstrategies.
Sowhat'snottolikeaboutthepermanentdocfix?Thecritiquescomeintwoforms.
TheCommitteeforaResponsibleFederalBudgetarguesthatbyraisingdoctorpaymentsabove
whattheywouldbeifthesustainablegrowthratewerestrictlyenforced,itwoulddrastically
increasethefederaldeficit.Specifically,thecommitteesaysitwouldaddmorethan$500billionto
thedebtby2035.
Medicareactuaries,ontheotherhand,arguethatdoctorpaymentswouldfallsomuchthatdoctors
wouldleavetheprogramandbeneficiarieswouldloseaccesstomedicalcare.By2048,payments
todoctorsundertheproposedlegislationwouldfallbeneaththoseundercurrentlaw,Paul
Spitalnic,Medicareschiefactuary,projectedinamemoearlierthismonth.
Inotherwords,theCommitteeforaResponsibleFederalBudgetisconcernedthatthedocfixwill
raisepayments(withoutfullyfundingthem)whereastheMedicareactuariesareconcernedthatthe
legislationwillcutpaymentstoomuch.Theyrebothwrong,fordifferentreasons.
TheCommitteesclaimistrueonlycomparedwithanimaginaryworldinwhichCongressdoesn't
patchthesystemyearafteryearorwithasomewhatlessfanciful,butstillpretendworldin
whichthecostofsuchpatchesisalwaysfullypaidforbyotherchangesinthefederalbudget.In
reallife,theannualpatcheswouldprobablynotbepaidfor,sothelegislationtomakeapermanent
fixisroughlybudgetneutral.
Theactuariesconcernmaybesomewhatmorelegitimate,butastheactuariesthemselvesnote,
healthcarespendingprojectionsfarintothefutureareinherentlyuncertain.Iwouldgosofarasto
saythey'realmostuseless.Theactuarieshavealso,inthisanalysisandelsewhere,beenmuchtoo
dismissiveofpolicychangesaimedatshiftingincentivestowardvaluethatsonereasonthey've
largelymissedthedecelerationinMedicarecoststhat'shappenedduringthepastseveralyears.In
anycase,if,decadesfromnow,thelegislationwindsupcreatingaccessproblems,Congresscan
easilyaddressthem.Rightnow,it'sbettertoeliminatethepatchgameandgivedoctorssome
certaintyabouttheirMedicareincome.
ThattheHousehasoverwhelminglypassedthissensiblepieceoflegislationisapoliticalmiracle.
TheSenateshouldnowdothesame.
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Tocontacttheauthoronthisstory:
PeterOrszagatporszag3@bloomberg.net
Tocontacttheeditoronthisstory:
MaryDuenwaldatmduenwald@bloomberg.net

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