Saturday, May 21, 2011

Beyond Mediscare

7 comments:

PBM said...

Firstly, if the GOP and their media counterparts were so anti-"mediscare," then why were they predicting the same things about seniors dying earlier and death panels during the health care debate? That wasn't even close to true. The left's points on Medicare and Medicaid, while hyperbole, are much closer to reality than the right's during the health care debate, which I'm sure the Weekly Standard participated in.

I know your a fan and a defender of the Ryan plan, TJE, but I don't see how you can defend some aspects of the plan. The cuts to Medicare and Medicaid are pretty bad on their own, and I guess you/conservatives expect the poor to become more self-reliant without health care, food stamps, etc.? I don't agree, but that's fine. My main problem is that Ryan talks about shared sacrifice, while sacrificing the poor and giving more to the rich(those making $1 million/year and up), who have done pretty well for themselves while the rest of the country has suffered during this recession. That is the part of the plan that, to me, lacks morality and basic fairness even if you are a libertarian against government and taxes because, guess what, the government exists now and will always exist, and people rely on it for a multitude of services, and taxes pay for that, and you can tinker with that, but you can't make the enormous changes to make society fit your ideology. That isn't how American governance works.

The article also says that "democrats have opted for no solution at all." What about the IPAB, you know, that thing Obama brought up in his debt speech, and either WS or NR featured on its cover as a panel full of grim reapers because they said it would cut Medicare costs too much, thereby killing people? And the left is the only one using "mediscare" tactics.

PBM said...

Checked on Weekly Standard and National Review, and both have actually used grimreapers on the covers for articles that discuss Obama's health care law as it relates to Medicare.

Patrick_L said...

I’ll just add a few points.
a) Of all the Republicans/Conservatives who have any standing to object to the Democratic attacks, the Weekly Standard would be one of the last, because of their crucial role in the death panels and Medicare cuts debate over ACA. Ex: http://www.weeklystandard.com/Content/Public/Images/Thumbnails/15-14.Dec21.Cover.small.jpg

b) Ryan actually includes all of ACA’s Medicare cuts that he and Republicans said were a) destroying Medicare and b) never going to actually be implemented by Congress. (Yes- those statements are contradictory, but that doesn’t stop them from saying both in the same breath). Shockingly, Ryan and House Republicans now include them, think they’re achievable, and not going to devastate Medicare. (They then move beyond that with the cuts of their premium support model, which would simply shift costs to beneficiaries and do very little or nothing to control health care costs for reasons I have talked about on this blog multiple times in recent weeks. At the end of my post, I discuss why cost-shifting on this scale is a bad idea. For now, I’ll just add the additional point that Ryan’s approach does not empower beneficiaries to choose among providers and force them to respond- it allows them to select their health insurance- something from personal experience I’m sure all of us feel qualified to rationally select in an attempt to lower health care costs. ).

c) The point made by Sebelius and others that people that RyanCare/RepublicanCare will lead to worse health outcomes because people will cut back on health care is perfectly valid- though admittedly, it would be very hard to prove empirically that people would die sooner under this new system. The RAND Health Insurance Experiment, the gold-standard in health policy research because it’s an experimental as opposed to observational study, found that the health of individuals with certain chronic illnesses included in the RAND HIE was harmed by increased cost sharing. The RAND HIE did not include the elderly, but more recent work here http://papers.ssrn.com/sol3/papers.cfm?abstract_id=971606 has shown that increased cost sharing for Medicare beneficiaries can lead to adverse outcomes and doesn’t necessarily save taxpayers money

d) Obama’s quoted description of the voucher approach is perfectly accurate, and I haven’t seen a sensible conservative response to the fact that the Republican-changes do end Medicare as we know it. It’s a bigger shift than transitioning from a defined-benefit to a defined-contribution pension plan, since in addition to financing changes- Republicans move people from the traditional Medicare program to private insurance companies.

Patrick_L said...

e) Medicare Part A’s trust fund is going to be insolvent in 2024 according to the most recent Medicare Trustees’ report. Note the distinction- Medicare Part A versus the whole Medicare program. The short answer for why the trust fund insolvency date moved forward, in the words of CMS Chief Actuary Rick Foster (the one that conservatives love to cite because he’s more skeptical than most about ACA), is weak economy’s impact on revenues. ACA actually extends the trust fund’s solvency by eight years. Repealing ACA, which Yuval (and Republicans) frequently advocate, would actually worsen the program’s long-term viability. Thus, Obama’s budget rightfully tackles Medicare’s problems by emphasizing the ACA approach which doesn’t just shift costs to seniors and do nothing to bend the cost curve. Yuval also clearly doesn’t know how to read … the “Medicare’s chief actuary” letter- which does not say anything close to what he claims it does. Rick Foster has been quite clear that the market-based reforms included in ACA, like the ACO’s and other delivery reforms first being implemented as pilot projects which the HHS Secretary can bring up-to full scale whenever they like, hold great promise. The IPAB is also strongly supported- the problem with it is that is has such limited power (let alone which uninformed critics think it can do) to achieve the kind of massive savings it potentially could achieve if fully empowered to do what private companies are expected to do- you know, use their market leverage. He is concerned about the long-term sustainability of the provider-payment updates formula passed in ACA, which assumes that the health care sector can achieve the same productivity increases as the rest of the economy (something which health care has struggled to do in the past).

f) Obama’s budget and ACA include market-based reforms, and the Republican budget’s claims in these areas are extremely weak. As I’ve mentioned, they only choose between insurers- there is no mechanism for this to “create financial incentives for providers to work more efficiently and reduce the growth of the health care costs that are at the heart of the problem.” If this approach where to be successful- it would have to be the beneficiaries shopping among insurers would lead INSURERS to put pressure on providers. This is questionable, considering private insurers have seen higher cost growth than either Medicare or Medicaid for at least the past decade.

g) The Republican budget also repeals ACA’s closing of the Medicare Part D doughnut-hole, so that provision affects current beneficiaries and dramatically increases their medical costs. Similarly, we have to remember the likely devastating effects of the proposed Medicaid cuts- which would reduce the federal funding contribution by 35% by 2022 from what it otherwise would be.

h) Once again, Yuval purposefully misrepresents (or understands?) what ACA does. It moves Medicare away from the fee-for-service system to get savings so there aren’t incentives to increase utilization.

Patrick_L said...

i) Yuval implicitly concedes my point- seniors don’t choose among providers in the Republican approach- they choose among insurance companies. If he acknowledges this fact, why does Yuval (and every conservative on this issue-probably because it’s poll-tested) lie and talk about empowering seniors to chose among providers and promote market-based responses? Do you notice how often Yuval throws in the word providers- when seniors relationship to them would not change? This is particularly irritating- either Yuval is incredibly misinformed about the premium-support model, or (more likely considering his careful parsing of words) he’s deliberately trying to misinform people about the proposal. Great example sentence: “Rather than pay all providers a set fee directly, seniors would use the money (in the form of a premium support payment that would start at current Medicare rates and grow with inflation) to choose insurance plans from a menu of guaranteed private coverage options.” Why does Yuval start out the sentence mentioning providers, when it has nothing to do with the rest of the sentence? Hmm…

j) Again. Ex sentence: “Insurers and providers would compete for seniors’ dollars.” Insurers would compete for seniors’ dollars; providers would compete for insurers’ dollars.

k) Again. Sentence: “It’s a choice between giving a board of experts the power to deny care to seniors based on its magisterial judgment of quality and value, and giving seniors the power to deny business to providers based on their individual opinions and priorities.” Seniors wouldn’t deny providers business, insurance companies would. ACA is not about the IPAB- the CBO and others don’t even think the IPAB is likely to be called upon in the first decade because ACA’s other savings- the vast majority of the bill- would prevent IPAB from being needed. Is Yuval either a) grossly misinformed, b) stupid, or c) deliberately spreading lies and misinformation? Either way, why is he doing this? The choice is not “between markets and central planning,” unless you live in a fantasy world which doesn’t require actually reading about what you’re talking about. ACA is about two things- expanding insurance coverage and promoting delivery reforms that create better market-based incentives to improve quality and lowering health costs for the government and the private sector. It guarantees the insurance coverage expansion. The Republican budget is about cost-shifting to seniors in the hopes of it lowering all health care costs, including private ones. Otherwise seniors are going to have to pay thousands of dollars more to get the same insurance coverage other seniors have now. More likely, seniors will pay more to get worse insurance coverage than in the current Medicare program. The Republican budget guarantees that health care costs for the federal government are dramatically reduced- shifting the obligation to improve the system or pay for the unchanged health care costs, to the states and individuals like the elderly, disabled, sick, poor people on Medicare and Medicaid. Those are the simple facts- something which Yuval apparently can’t grasp.

Patrick_L said...

l) Let me talk here about all the problems with this increased-cost sharing model, which is all that the Republican budget/Medicare reforms do:
Once again, conservative tout the virtues of consumer control. First, they ignore the many theoretical problems with this idea applied to health care. Ryan’s approach rests on the argument that we need to make patients more cost sensitive with their medical decisions, which first of all ignores the fact that a significant portion of medical treatment is absolutely necessary and non-negotiable (i.e. heart attack response) and that the current system provides patients with little or no evidence on which to evaluate providers (similar to the quality of goods that consumers keep in mind when considering price).

Also, health care costs are incredibly concentrated among a small sub-set of the population who will never be cost-sensitive in their medical decisions because their bills run in the hundreds of thousands of dollars almost instantly- none of which is exposed to cost-sharing because no one would hold anyone but the uninsured (the ranks of which Ryan & Republicans increases by at least 30 million) to such massive liabilities. (Conservatives are the ones who always pushing for catastrophic health insurance alone- ignoring the fact that much of health care costs would fall under these programs).

Also, a large percentage of medical costs go to end-of-life-care or treatment for people (often in Medicaid) with multiple physical and mental impairments- which is why their medical decisions are handled by other people or the medical system-at-large. The system, and family members, is based on humanity’s sense of morality and ethics that you have to help these people- that it’s not right for you to decide to not pay for these people’s treatment because you don’t want to pay the cost. Look at our debates over Terri Schiavo and others- people who actually arguably brain-dead. People had problems with family members trying to end their care, imagine how people would react if people tried to deny people care because they were almost guaranteed to die… in a few weeks, or gave people less care because of their disabilities. That won’t happen, which is why costs for these types of people wouldn’t be significantly impacted by increased cost-sharing that Ryan proposes for them, and if it did have an impact it would be because other people over their cost concerns were limiting patients’ access to care. Is that an outcome Ryan is hoping for?

Cost-sensitivity is also flawed because it ignores how humans’ well-established problems with making rational time preferences would make them particularly inadequately able to make the trade-offs between preventative care and more costly long-term treatments, besides the fact that even health experts dispute whether preventative care is cost effective! Republicans also ignore how there are and always will be huge informational asymmetries in the doctor-patient relationship that inevitably lead to supply-driven demand which instantly breaks down the economic theory they are trying to apply to enable consumers to control the market.

Patrick_L said...

Ryan & House Republicans’ proposal actually increases Medicare costs by introducing a middleman and highly inefficient private insurance entity. This will offset any cost savings from increasing cost-sharing for Medicare beneficiaries. That's why economist Tyler Cowen, libertarian economist and general director of the Mercatus Center, said (in reference to the premium support model) "The vouchers idea won’t help cut health care costs."

Besides theoretical problems, the Ryan proposal/Republican budget flies in the face of facts and evidence. For instance, we already have higher cost-sharing than other countries. Republicans ignore the evidence that consumers in American largely have no control over their medical decisions, even with far higher cost-sharing levels and presumed sensitivity to cost than patients in other nations. If increased cost-sharing is such a panacea, than how come other nations have far lower health care costs with less cost-sharing (hint: maybe it’s because of their far greater government interventions in the very problematic health care sector, where the very nature of the good makes economic theory of the perfect free market/”invisible hand” break down.)

They ignore the fact that increased cost-sharing has been shown to lead to worse outcomes for the particular populations Republicans are solely interested and able to apply it to- the elderly, disabled, very sick, and low-income Americans dependent on Medicare and Medicaid. All the conservative shills have been able to do is say over and over again is “increased consumer choice, competition, cost sharing” will have an impact. They ignore the actual facts that we already have higher levels of cost-sharing than other countries (that somehow do 50% or more better than us on controlling costs while getting the same outcomes), that there are huge theoretical problems with applying those concepts to a) medical care, and b) specifically, the disadvantaged populations in government programs, and that the empirical literature is screaming huge big red flags that this won’t work but it will have substantial unintended consequences. Do these facts mean anything to anyone?
Finally, much of the point of PPACA is to get providers, insurers, and consumers (i.e. patients) to all have the right incentives at making medical decisions. In the current system, multiple providers have introduced reforms that improved patient quality but actually cost them revenues because patients needed less health care. Duke Medical Center has a well-known example related to heart-treatment. This is the kind of currently-existing pre-PPACA “market” which Republicans hope will introduce significant cost-savings if we just let it run free.

Lastly, cost-sharing is designed to get people to be price-sensitive- aware of price because it’s an important market signal between firms and consumers- or in this case providers and insurers/patients. But the Duke example provides an instance where price isn’t a good signal of quality or outcomes or process going into the medicine. In health care price isn’t a very good signal of quality or anything really about the good of firm providing the good- it might be a bad thing to make consumers more aware of price.