As they explore possible fiscal deals, President Obama and Congressional Republicans have quietly raised the idea of broad systemic changes to Medicare that could produce significant savings and end the polarizing debate over Republican plans to privatize the insurance program for older Americans.
Finding economically feasible and politically safe options for cutting costs in Medicare has proven to be no easy task. A variety of government organizations, including the Congressional Budget Office and Medicare Payment Advisory Commission, and health policy researchers, such as MIT economist Jonathan Gruber, have put forth plans to improve the program, but they often diminish potential savings by playing it too safe. The best option for sustainable reform appears to be a major-risk approach toward restructuring cost-sharing requirements. This involves a higher coinsurance rate and an income-related stop-loss cap on participants’ annual cost-sharing liabilities. An additional key to subsidizing high-income seniors less is by restricting their use of supplemental insurance such as Medigap for early-dollar spending, rather than taxing the coverage itself.
Health care spending in three states – Maine, West Virginia and Mississippi – accounts for one out of every five dollars of state GDP. Conversely, Wyoming spends less one in ten, according to a new study by the National Center for Policy Analysis (NCPA).
“If every state could be like Wyoming, which they cannot, the country as a whole would be spending less of its income on health care than about three-fourths of the other developed countries,” said former Medicare Trustee and NCPA Senior Fellow Thomas R. Saving.
Daniel Sutter Discusses Welfare Block Grants as a Model for Medicaid Reform on Inside State and Local Policy | MercatusMarch 28, 2013
Dr. Daniel Sutter discusses his recent Mercatus working paper, “Welfare Block Grants as a Guide for Medicaid Reform.” Sutter reviews the history of the 1996 federal welfare reform, which was controversial at the time but has since been considered a bipartisan success that has empowered states to design welfare programs best suited to their populations. He explains how the waiver and block granting mechanisms in welfare reform could provide a model for a similar reform of Medicaid that reduces spending and transfers more control from Washington to the states.
“We were prepared to do that had we had the votes to do it after the election. Well, the election didn’t turn out the way we wanted it to,” McConnell told National Journal in an interview. “The monstrosity has … begun to be implemented and we’re not giving up the fight.”
Indeed, when it comes to legislative strategy, McConnell plays long ball. Beginning in 2009, the Republican leader led the push to unify his colleagues against Democrats’ health care plans, an effort that almost derailed Obamacare. In 2010, Republicans, helped in part by public opposition to the law, won back the House and picked up seats in the Senate. Last year, GOP presidential nominee Mitt Romney’s embrace of the individual mandate while Massachusetts governor largely neutralized what had been a potent political issue.
Notwithstanding its obvious importance, Medicare is almost invisible in the legal literature. Part of the reason is that administrative law scholars typically train their attention on the sources of external control over agencies’ exercise of the vast discretion that Congress so often delegates to them. Medicare’s administrators, however, wield considerably less policy discretion than the agencies that feature prominently in the legal commentary. Traditional administrative law thus yields slim insight into Medicare’s operation.
But questions about external control do not – or at least they should not – exhaust the field. An old and often-disregarded tradition in administrative law focuses not on external constraints, but on the internal control measures that agencies employ to shape the behavior of the bureaucrats who implement government programs on the ground. A robust set of internal controls is necessary whenever central administrators seek to align the actions of line officers with programmatic goals. And they are all the more necessary when, as is so often the case in the modern administrative state, implementation authority is vested in private actors, not government officers.
So it is with Medicare, whose street-level bureaucrats are hundreds of thousands of private physicians with strong professional commitments and no particular allegiance to governmental priorities. Yet Congress’s persistent failure to address weaknesses in Medicare’s administrative structure has stymied a series of major reform efforts that have sought to make the program’s physicians more attentive to the cost and quality of the medical care for which it pays. This dismal history suggests that crafting an effective internal law for Medicare will require Congress to refashion the program around private organizations with the capacity, incentives, and legitimacy to align the practice patterns of private physicians – its bedside bureaucrats – with federal priorities. Measured against that baseline, the set of Medicare reforms included in the Affordable Care Act is a disappointment. A more muscular, thoughtful, and sustained effort is needed.
Hope or Hype?: Why the Affordable Care Act’s New External Review Rules for Denied ERISA Healthcare Claims Need More Reform by Katherine Vukadin :: SSRNMarch 28, 2013
The Affordable Care Act requires that now, after an insurance company has denied a healthcare claim, the company must provide an opportunity for external review of the denial. Both the Department of Labor and the press have heralded this change as a boon to consumers that will ease the healthcare claims appeal process. But will the average consumer benefit from this new level of review? As a practical matter, is a further level of review — usually available only after two internal levels of review — the kind of reform that will make a difference to most consumers? Or is this new level of review just one more barrier, set up to thwart the consumer’s efforts to be reimbursed for healthcare?
This article posits that the new external review rules are an imperfect substitute for more extensive ERISA claims reform. The external review rules should be revised so that payors rather than consumers suffer the negative effects of incorrect claims decisions. That is, the rules should internalize the real costs of incorrect denials by imposing a penalty on payors when claims are reversed on external appeal. In addition, to be useful to the average consumer, external review should also be more available, understandable, and independent.