Republicans and Medicare Cuts

I don't mind saying, John McDonough's blog is worth following.

The claim that Democrats voted to cut Medicare through the ACA has gotten a lot of play.  Here in Oregon it came up a lot in the Bonamici-Cornilles race, with Cornilles claiming Bonamici wanted to restrict choices for seniors.  Via McDonough, here is an aspect that didn't get a lot of press (emphasis mine):

In the new Republican-controlled House of Representative in 2011, House Budget Chair Paul Ryan (R-WI) advanced a controversial federal budget plan which included a major restructuring of the Medicare program to change the program from largely fee-for-service to premium support/vouchers. This proposal drew widespread praise and condemnation, and mountains of attention.

Less noticed was the part of the Ryan budget plan which repealed most of the ACA, with one huge and unnoticed exception -- the $449 billion in Medicare reductions, documented in the CBO report on the Ryan plan. The Ryan plan was put before the entire House, and nearly every Republican member voted for it; the plan was also put before the Senate and endorsed by all Republican members minus four (one of those four was MA Senator Scott Brown).

So the one part of the ACA that congressional Republicans are on record as supporting are those same Medicare cuts that Republican candidates use to bash Democrats.  And Rob Cornilles was as culpable as Bonamici (neither served in Congress for the ACA or its repeal vote) of everything he accused her of.  Gee, I wonder how Politifact missed that.

Health Insurance is not Auto Insurance

John McDonough reviews Mitt Romney's concept of cost control: co-insurance and high deductibles (emphasis mine)

...Mitt Romney's approach to controlling private sector health spending growth is to continue and to accelerate the shift to insurance policies that expose patients to higher and higher levels of cost sharing. This reflects a view, popular among conservative health economists, that health insurance should, as much as possible, resemble auto insurance, where you only get help for catastrophic events.

 There is a big problem with equating health insurance and auto insurance.  With auto insurance underlying costs tend to correlate with income.  Someone working minimum wage probably drives a beater with no collision and minimal liability limits.  That policy costs much less than the one for a one-percenter driving a porsche with $1M limits.  Cost, and thus premiums correlate with income.

In contrast with health insurance there is no correlation, poorer people do not need less expensive care than richer people.  There is no equivalent to a "beater" surgeon, cutting people open in a dirty basement.  At least not today...

Interesting New Years Healthcare Retrospective

by John McDonough.  He touches on the irony of  the potential rebirth of provider rate regulation on the 20th anniversary of its execution.  He condenses decades of history into a paragraph:

In the late 1980s, reducing the size of the hospital system was an unattainable policy obsession, and in the 1990s, the deregulated market made it happen with stunning efficiency. This is a clear-cut case of "be careful what you wish for, because you just might get it." While the downsizing eliminated excess capacity, it also enabled market consolidation triggering widespread hospital payment and health insurance cost inflation over the last ten years.

 I wish Oregon had someone of his caliber and commitment to public engagement writing about healthcare.  What could such a person tell us about Kitzhaber, about CCO's or the insurance exchange?

As a followup question, that's the first reference I've seen to a  perception in the 80's of excess capacity.  What's that about?

Hospital Pricing Regulation: A History (as of 1997)

I came across an extremely readable short history of state level hospital pricing regulation.  I highly recommend it for getting a broad overview of what was going on in the 70’s, and why it stopped. 

The short version is that prices were gamed, particularly by urban and teaching hospitals.  It created a situation where everyone, from the insurers to businesses to unions to the states themselves decided they could negotiate lower prices than the official rates.

The author notes the influence of politics on deregulation but suggests it was mostly symbolic, providing a rallying point for existing interests.  I think that gives short shrift to the power of ideology.  It’s a reverse Lake Woebegone effect- its mathematically impossible for everyone to negotiate costs below average, but everyone in the 80’s suddenly became convinced that’s what they could do.  Whatever you call it, the Reagan ethos had an effect.

It’s kind of funny, you wouldn’t guess from the paper’s tone that 14 years later HMO would be a 4 letter word.  The paper is actually a sort-of defense of regulation.  From the conclusion:

…viewed by the standards of the era in which they were created, and seen in the context of the tools that were available and usable at that time, mandatory hospital rate-setting programs were able to leave an overall legacy of effective intervention. In future years, when the shape and effects of the emerging system are more clear, we may yet come to a greater appreciation of the challenges and accomplishments of this health policy epoch.

I wonder if the author expected we’d be taking another look at this.