Wednesday, January 26, 2011

Can Congress do hard things?

Interesting snippet from today's House Budget Committee hearing, where chairman Paul Ryan briefly explains his Roadmap plan's proposed Medicare changes after a Democratic member must have been criticizing it. The setting is a hearing where Richard Foster, the actuary of HHS testified to the following two notions according to press coverage (I didn't watch the hearing):
  • (1) some persons covered by Medicare Advantage would lose their private plans (and so violate the 'you can keep it if you want' pledge) because payment cuts will cause some insurance companies to not offer plans in their county; and
  • (2) he (Foster) doesn't think the Medicare savings promised in the ACA will materialize because he doesn't think Congress will follow through on hard things.
If the past is a perfect predictor of the future, Richard Foster is correct on point 2. We will not do the hard things to slow Medicare growth, and health care costs will bankrupt our nation.

Opponents of the ACA are gleeful over his pronouncements today, and seem to nearly be saying, 'we pledge to be irresponsible' and if we cannot repeal the ACA we will just get rid of the parts that have a chance to slow cost inflation (like the Independent Payment Advisory Board). And we 'know' Congress will never follow through with cuts in the future.

The essence of Mr. Ryan's Medicare portion of the Roadmap is to say to people age 55 and over, Medicare won't change for you. Fee for service Medicare will be around as long as there is one of you left. If you are 54 and under, we will take Medicare spending the year we enact the Roadmap, and let it grow much slower than health care cost inflation in Medicare has grown in the U.S. for the past 40 years. Then in 10 years, when the 54 year olds hit 65, they will get an amount of money to purchase private health insurance that will be a good bit less than what Medicare spent on 65 year olds the year before. This WILL SAVE THE FEDERAL GOVERNMENT MONEY. There is no doubt about it. Transitioning Medicare into a defined contribution voucher for private health insurance would reduce the federal government's expenditure of care for the elderly. The big question is what could it buy in the way of coverage for the elderly?

If it happens.

Why is it that Congress would be able to do this hard thing if we are now saying they cannot do any hard thing in the way of Medicare cuts? The year before the first age cohort (when the 54 year olds reach 65) get their voucher to go and buy private health insurance instead of fee for service Medicare, why will Congress not say 'well, we need to increase the amount of the voucher because we are worried about....' Or, 'we need to delay the implementation for 5 more years because'....

Health care costs are the essence of our long term budget problem. It would appear that our culture has a nearly insatiable ability to consume health care. We are spending ourselves into oblivion on health care, and do not appear to be getting our monies worth. The arrival of the baby boomers to Medicare is going to greatly stress the federal budget absent any consequential changes. We have got to do something, and it will be hard.

The tearing down of the best faith efforts of the CBO to score the ACA, and the statement that we can never do anything hard to achieve cost savings may win the sound bite competition on the next segment on cable news, or even the next election. However, at some point our country has to come up with a credible way to address health care costs. The proposed 10 year ACA Medicare cuts are nothing compared to moving in the future to replace Medicare with defined contribution vouchers with which the elderly can buy private health insurance. How does Mr. Ryan expect anyone to believe we will do what he wants if he and others say we can't even do easier hard things?

We will only do the hard work of addressing health care costs if somehow both political parties can work together.

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