After my Medicare First meme bounced around the blogosphere (thanks, Glenn, for the initial link), I got an email from Peter Orszag at OMB, asking to chat. His major points in our subsequent phone conversation:
1) The administration does have big Medicare changes planned, both immediate cuts in reimbursements and "game changers" to impose more scientific management, potentially realizing savings down the road.
2) "I hope I'm not making anything sound like they're painless." There are going to be "hard, CBO-scored cuts" in Medicare, "mostly involving provider payments." The administration is proposing cutbacks in home-health care and Medicare Advantage payments, for instance. It isn't expecting to get its initial savings from better management.
3) Medicare First--changing Medicare and waiting to see how it works before messing around with the rest of the health care system--won't work politically. "I don't think you're going to get these aggressive changes in Medicare unless you do some coverage expansion now." The AARP, for example, has said it will accept significant changes in Medicare only if the money goes to expanding coverage.
My observations:
1) Unlike critics (including me), Orszag does not regard the administration's plans as a significant change in the health care system because "you're keeping employment based insurance in place and you're adding coverage in way that can be dialed up or down."
2) He's not particularly interested in my personal obsession, the effects of centralized controls on long-term medical innovations, which may require very modest incremental improvements that cost a lot but lead to bigger improvements later.
3) The administration is beginning to realize that it overreached when it tried to spin health-care reform as a free lunch.
Posted by Virginia Postrel on June 05, 2009 • Comments
But how do these happily out-of-work people pay their bills? Isn't that a basic question reporter Kimi Yoshino should answer before leaping into discussions of "narcissism" and the "generational shift"? What makes funemployment financially possible? Are these people living on savings? Spouses? Credit cards? In a market full of (f)unemployed journalists, a paid reporter ought to cover the basics.
UPDATE: I'm embarrassed to say that I read over the explanatory clause. Reader Jens Fiederer points out the relevant sentence: "Buoyed by severance, savings, unemployment checks or their parents, the funemployed do not spend their days poring over job listings." I would still like more details. Many recession articles implicitly demonstrate what a rich country this is, but this one does it more explicitly than most. I owe Kimi Yoshino an apology for being snarky about an interesting story.
Posted by Virginia Postrel on June 04, 2009 • Comments
In a remarkably disingenuous report, the Council of Economic Advisers assumes the can opener of easily reduced health care costs. One crucial argument, illustrated by this map, is the presumed waste represented by disparities across Medicare regions (click for a larger view):
From the report:
These large differences in spending suggest that nearly 30 percent of Medicare's costs could be saved without adverse health consequences. If these patterns are consistent with the experience of other populations, such as Medicaid enrollees and the privately insured, then it should be possible to cut total health expenditures by about 30 percent without worsening outcomes. Since we currently spend approximately 18 percent of our GDP on health care, a 30 percent reduction in expenditures would again suggest that savings on the order of 5 percent of GDP could be feasible.
"Nearly 30 percent of Medicare's costs could be saved without adverse health consequences."
The report also suggests that we know what the problems are, listing the usual suspects:
We spend a substantial amount on high cost, low-value treatments.
Patients obtain too little of certain types of care that are effective and of high value.
Patients frequently do not receive care in the most cost-effective setting.
There is extensive variation in the quality of care provided to patients.
There are many preventable medical errors that lead to worse outcomes and higher costs.
Our system is complex and we have high administrative costs.
Think about this for a moment. Medicare is a huge, single-payer, government-run program. It ought to provide the perfect environment for experimentation. If more-efficient government management can slash health-care costs by addressing all these problems, why not start with Medicare? Let's see what "better management" looks like applied to Medicare before we roll it out to the rest of the country.
This is not a completely cynical suggestion. Medicare is, for instance, a logical place to start to design better electronic records systems and the incentives to use them. But you do have to wonder why a report that claims that Medicare is wasting 30 percent of its spending thinks it's making a case for making the rest of the health care system more like Medicare.
UPDATE: Thanks to reader Colin Gilboy for pointing me to this New Yorker article, which fleshes out the aggregate data with reporting from McAllen, Texas, which has some of the highest Medicare expenses in the nation--much higher than very similar El Paso. If Medicare can't fix McAllen, why think a similar program will fix the country?
ADDENDUM: A physician who asks not to be named writes:
I put a plate on a distal radius today. Fifteen years ago, I may have used a cheaper technology, an external fixator or reducing and pinning it. Open reduction and internal fixation of distal radius (wrist) fractures gives the best result and it is because of significant improvement in plate and screw design and manufacture (and better surgical technique, if any credit in America can go do physicians). This is on small problem that can lead to significant disability and pain. Multiply by every medical and surgical condition. Under a government controlled healthcare system, how much improvement will follow? Where will be the evidence for "evidence based medicine" when a green eyeshade guy is determining whether new technology can be used? If everyone is happy with healthcare in 2009, performed at the lowest per capita cost that can be managed, then go for Obamacare. If you think there might be significant improvements in the future, realize Obamacare will be an abortion. Doctors will do their best with whatever system we get, but we are not driving this. If it is a poor system that we get from the government, expect a worse future for medical care. Thanks for letting me vent.
On this issue, see my Atlantic column on cancer drugs and the followup response to letters.
MORE on the MAIN BLOG PAGE
Posted by Virginia Postrel on June 03, 2009 • Comments
Is taxonomy disappearing?
Posted by Virginia Postrel on June 02, 2009 • Comments
In an important column, the WaPo's Maya MacGuineas echoes points I made, in a more specific context, here and, even more explictly, here. Her conclusion:
Here is the bottom line: Most health-care inflation is the result of new technologies. Bending the curve enough to help balance the budget means walking away from some of the new technologies and devices that people want when they are sick. It also means improving consumer cost-consciousness through insurance reform and higher deductibles and co-payments. For most of us, that means paying more, not less. Even then, it is unlikely to be enough to get costs under control.
Health-care reform will have to be an incremental process: Try some things now, and try more in a few years. Maybe we will choose to spend a good deal more on health care, but if so, even more will have to be done to fix the rest of the budget. As much as we might wish it were so, creating an expensive plan to expand coverage, with some measures to get us started on bringing down costs, will not be sufficient to improve America's fiscal health anytime soon -- let alone fix the federal budget.
[Via Greg Mankiw.]
Posted by Virginia Postrel on June 01, 2009 • Comments
Derek Lowe explains.
Posted by Virginia Postrel on May 31, 2009 • Comments
Like Cato's Dan Mitchell, quoted in this LAT article on what the government should do with its auto company stock, my first instinct is to say, "Divest immediately." But I'm not so sure that's right. Owning a big chunk of the auto companies--and (this is important) hoping to profit from that ownership--could check some of the worst excesses of the Obama administration's lust for industrial control, starting with the belief, against all evidence, that U.S. automakers would be more successful if they abandoned SUVs and concentrated on competing with the Prius and Civic. Trying to maximize shareholder return might persuade policy makers to keep out of management decisions. On the other hand, it's a great incentive for further subsidies and favoritism. (Even the NYT, bellwether of liberal conventional wisdom, notes, for instance, that cap-and-trade "is almost perfectly designed for the buying and selling of political support through the granting of valuable emissions permits to favor specific industries and even specific Congressional districts.") All in all, a no-win situation.
Posted by Virginia Postrel on May 30, 2009 • Comments
Tough but fair words from Jim Glassman:
I head a nonprofit group that encourages developing nations to adopt policies that will lead to prosperity — starting with transparency and the rule of law — and hold up America as a model. Yet in its high-handed dealings with Chrysler and G.M., the Obama administration reminds me of an irresponsible third-world regime, skirting the law and handing economic prizes to political cronies.
How long before the UAW dumps the stock? And, if it doesn't, how long before Ford seeks to decertify the union and replace it with one that doesn't own the company's competitors?
Posted by Virginia Postrel on May 30, 2009 • Comments
The SacBee's Dan Weintraub has a good column on California's ongoing fiscal mess and the need for performance-based budgeting.
Posted by Virginia Postrel on May 06, 2009 • Comments
A too-short, but significant article from Foreign Policy. I certainly hope he's right. (Via Lynne Kiesling, who applies the idea to the electrical grid.)
Posted by Virginia Postrel on May 04, 2009 • Comments