Tag: Medicare

Thursday Links

  • There is a growing gap between Washington policymakers, and the taxpayers and troops who fund and carry out those policies.
  • Why do budget and deficit hawks keep sidestepping growing entitlements?
  • Don’t forget to join us on Monday, March 28 at 1pm ET for a live video chat with Julian Sanchez on the growing surveillance state.
  • The individual mandate in Obamacare is another example of the growing congressional power under the Commerce Clause:

How Dare Conservatives Stand athwart ObamaCare Yelling, Stop!

In a column for Kaiser Health News, Michael L. Millenson, President of Health Quality Advisors LLC, laments that conservatives in the U.S. House are approaching ObamaCare like, well, conservatives.  He cites comments by unnamed House GOP staffers at a recent conference:

The Innovation Center at the Centers for Medicare & Medicaid Services? “An innovation center at CMS is an oxymoron,” responded a  Republican aide…”Though it’s great for PhDs who come to Washington on the government tab.”

There was also no reason the government should pay for “so-called comparative effectiveness research,” another said.

“Everything’s on the chopping block,” said yet another.

No government-funded comparative-effectiveness research?  The horror!  For my money, those staffers (and whoever hired them) should get a medal.

Millenson thinks conservative Republicans have just become a bunch of cynics and longs for the days when Republicans would go along with the left-wing impulse to have the federal government micromanage health care:

After all, the McCain-Palin health policy platform in the 2008 presidential election called for coordinated care, greater use of health information technology and a focus on Medicare payment for value, not volume. Once-and-future Republican presidential candidates such as former governors Mike Huckabee (Ark.), Mitt Romney (Mass.) and Tim Pawlenty (Minn.), as well as ex-Speaker of the House Newt Gingrich, have long promoted disease prevention, a more innovative federal government and increased use of information technology. Indeed, federal health IT “meaningful use” requirements can even be seen as a direct consequence of Gingrich’s popularization of the phrase, “Paper kills.”

He even invokes the father of modern conservatism, William F. Buckley, as if Buckley would disapprove of conservatives standing athwart ObamaCare yelling, Stop!

Millenson’s tell comes toward the end of the column, when he writes:

traditional GOP conservatives… [have] eschewed ideas in favor of ideological declarations.

Eschewed ideas in favor of…ideas?  My guess is that what’s really troubling Millenson is that congressional Republicans are eschewing left-wing health care ideas in favor of freedom.

Better late than never.  Now if only GOP governors would do the same.

‘Medicare Loses Nearly Four Times as Much Money as Health Insurers Make’

The latest from Jeffrey H. Anderson, which I’ll file under I-Wish-I’d-Said-That:

In a newly released report, the Government Accountability Office (GAO) estimates that, in fiscal year 2010, $48 billion in taxpayer money was squandered on fraudulent or improper Medicare claims. Meanwhile, the nation’s ten largest health insurance companies made combined profits of $12.7 billion in 2010 (according to Fortune 500). In other words, for every $1 made by the nation’s ten largest insurers, Medicare lost nearly $4…

Actually, it may have been even worse than that: The GAO writes that this $48 billion in taxpayer money that went down the drain doesn’t even represent Medicare’s full tally of lost revenue, since it “did not include improper payments in its Part D prescription drug benefit, for which the agency has not yet estimated a total amount.”

Courtesy of The Weekly Standard.

Why Hospital Price Quotes Are So Often Useless

A colleague forwarded me a letter his friend received from their local hospital.  The friend needs surgery.  His health insurance has a very high deductible, so he figured he would do some comparison shopping.  He asked the local hospital to quote him a price. Here’s how the hospital responded:

[This] hospital typically charges between $2,360.45 and $22,290.74 for this procedure or service.  This is an estimate only…

Our goal is to provide you with the most informed and accurate estimate of the cost of your treatment.  If circumstances result in a final bill that exceeds this estimate by more than 20%, we will work together with you to resolve the balance.

For surgical services, the price quote does not include any physicians’ charges.  The surgeon and/or anesthesiologist will bill you separately for his or her time.

That price range varies nine fold, or 11 fold if you count the additional 20 percent.  Translated from Hospitalese into English, the letter essentially said:

Our hospital faces so little competitive pressure, we’re just going to blow you off.

If you do have your surgery here, don’t even think about complaining about the bill unless it exceeds $27,000.

Or even then.

The hospital noted – correctly – that “people react in their own individual way to surgery.”   Those individuated reactions could easily lead to an 11-fold cost variation for the same procedure.  That information is useful to a hospital.  It is not useful to a patient who is trying to find the lowest-cost hospital.

One would expect hospitals (or ambulatory surgery centers) to find some way to cope with the uncertainty about costs and provide useful price information to patients.  For example, hospitals could offer the same flat price for each procedure; the flat price would cover the higher costs of patients who experience complications.  Or they could quote higher prices to patients who have risk factors associated with complications.  While they’re at it, they could also include the physicians’ charges.  In a competitive market, hospitals that didn’t do these things would lose customers to hospitals that do.

The problem is that most hospitals do not operate in a competitive market.  Many states pass regulations that block entry by new hospitals.  Government interventions from Medicare to the tax exclusion for employer-sponsored health insurance block the creation of health systems that face greater incentives to offer a single “package” price and to reduce the uncertainty associated with surgical complications.  Those same interventions also encourage excessive health insurance, which reduces the share of patients who pay out of pocket for surgeries in this price range.  That reduces the demand for useful price information.

Price transparency is not a problem for government, private insurance companies, or employers.  They control the money, so they get all the price information they demand.  If we want to give patients useful price information, we need to let patients control the money.

Why Ryan-Rivlin Beats ObamaCare on Costs — and Spending

Washington Post blogger Ezra Klein asks of Rep. Paul Ryan’s (R-Wisc.) Medicare voucher proposal (co-authored with former Congressional Budget Office director Alice Rivlin):

Why are the cost savings in his bill possible, while the cost savings in the Affordable Care Act aren’t?…when it comes to the ACA, Ryan firmly believes that seniors will quickly and successfully force Congress to reverse any reforms that degrade their Medicare experience. That’s a fair enough concern, of course. What’s confusing is why it isn’t doubly devastating when applied to Ryan-Rivlin.

Set aside that Klein violates Cannon’s First Rule of Economic Literacy: Never say costs when you mean spending.  And that he uses the word “affordable” to describe ObamaCare.

There are two reasons why the Medicare spending restraints in the Ryan-Rivlin proposal are more likely to hold than those in ObamaCare.

First, ObamaCare’s restraints amount to nothing more than ratcheting down the price controls that traditional Medicare uses to pay health care providers.  Structuring Medicare subsidies in this way – setting the prices that Medicare pays specific providers – makes it very difficult to lower those prices, because the system itself creates huge incentives for providers to organize and lobby to undo those restraints.  As I explain more fully in this op-ed from September 2010, Medicare vouchers would change that lobbying game by reducing the incentives for provider groups to expend resources in the pursuit of higher Medicare spending.  That gives the Ryan-Rivlin restraints a much better shot at surviving.  (Seriously, it’s a pretty cool feature.)

Second, Klein predicts a backlash against Medicare vouchers because he says it amounts to “giving seniors less money to purchase more expensive private insurance.”  The notion that Medicare is less costly than private insurance is pure, uninformed nonsense.  Medicare and a “public option” are attractive to the Left precisely because such programs hide the full cost of their operations from enrollees and taxpayers.  It is a virtue of vouchers that they would reveal to Medicare enrollees the actual prices of the coverage and services they demand, because that information will spur enrollees to be more cost-conscious when selecting a health plan and consuming medical services.  That, in turn, will force insurers and providers to compete on the basis of cost to a degree never before seen in this nation, competition that will generate the sort of cost-saving innovations that Jim Capretta discusses here.

Both of these reasons boil down to the truism that nobody spends other people’s money as carefully as they spend their own.  We’ll make a lot of progress in this country when the Left realizes how much damage they’ve done by ignoring that truism.

‘1099’ Repeal Speaks Volumes About ObamaCare

From my latest Kaiser Health News op-ed:

When 34 Senate Democrats joined all 47 Republicans last week to repeal ObamaCare’s 1099 reporting requirement, their votes confirmed what their talking points still deny: ObamaCare will increase the deficit, no matter what the official cost projections say…

This public-choice dynamic [of concentrated benefits and diffuse costs] is why the Congressional Budget Office, the chief Medicare actuary, and even the International Monetary Fund have discredited the idea that ObamaCare will reduce the deficit. It is one of the principal reasons why, as Thomas Jefferson wrote, “The natural progress of things is for liberty to yield, and government to gain ground.” In other words, the game is rigged in favor of bigger government.

It also explains why the Obama administration is sprinting to implement ObamaCare in spite of a federal court having struck down the law as unconstitutional. The White House needs to get some concentrated interest groups hooked on ObamaCare’s subsidies – fast.

Read the whole thing here.