Monday, June 06, 2011

Michael Gets It

Once again, Los Angeles Times business columnist Michael Hiltzig proves that he has a firmer grip on reality than most Republicans. His latest column takes a look at the Ryan Medicare proposal, finds it morally bankrupt, and offers some alternatives to reining in healthcare costs.

His first blast is aimed at Ryan's tying Medicare costs to deficit cutting. Hiltzig points out that Medicare didn't cause the deficit. That was caused by fighting two wars off-budget and giving tax cuts to the wealthy. He also admits, however, that Medicare does need to pare expenditures, just like all healthcare programs.

Medicare's ills are entwined with our national system of healthcare — how it's used and how it's distributed. You're not going to make a dent in the problem unless you change the underlying system. Ryan's approach doesn't lay a finger on that system, except to magnify its inefficiencies and expense. ...

...In fact, plenty of research points to ways to extract excess costs from the healthcare system and to alter its embedded incentives to reward efficient and effective care rather than just lots of care.

Some of these methods were enacted last year as part of healthcare reform, much of which Rep. Ryan proposes to repeal. The healthcare act reduced payments for Medicare Advantage plans, HMO-like plans that have turned into lavish giveaways to health insurers. The act will save $136 billion over 10 years by trimming those government handouts to insurers, according to a CBO projection. Ryan would put insurers in the saddle. ...

The medical and drug lobbies have beaten down numerous other cost-cutting proposals over the years. Medicare could save $24 billion to $60 billion a year in drug costs, according to various estimates, if it were permitted to negotiate prices directly with drug companies for its Part D pharmaceutical benefit. Pressure from Big Pharma killed any hope of that when the drug benefit was enacted in 2003.

The indispensable key to bringing down healthcare costs, and therefore Medicare costs, is to alter the incentives driving both insurance pricing and doctor and hospital behavior. One idea is known as competitive bidding, which would require health plans to bid to provide a minimum menu of Medicare benefits; the government subsidy for Medicare members would be pegged to the cheapest bid. Members who chose a more expensive company would pay the difference out of their own pockets, a requirement that proponents say would force insurers to truly compete on price and quality of care.

More fundamentally, what may be needed to change the cost profile of American medicine is a reorientation of care at the end of life from extending one's years at all costs to improving the quality of those years. That means less institutionalization, more home healthcare, a more rational appraisal of heroically aggressive therapies. It doesn't mean rationing or "death panels," but change in the name of humaneness and dignity.

Those are just a few of the things people interested in actually saving Medicare should be looking at. Michael Hiltzig managed to do so in one column. Surely Congress could do likewise, but it won't unless more people speak out with their voices and their votes.

One way to get some movement in the proper direction might be to simply email Hiltzig's column to the congress critters. Let them know you're paying attention and you expect them to do likewise.

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