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A Modest Proposal for Bipartisanship in Congress: Health Care Delivery System Reform

By Katherine Hayes

Wednesday, April 9, 2014

As if anyone needs a reminder how far we are from reaching bipartisan accord on health care delivery system reform and cost containment, a quick comparison of the Medicare proposals in President Obama’s budget and the recently released Ryan budget is a quick refresher course in the great partisan divide. Last month, we noted the healthcare proposals included in the president’s budget, and lamented the lack of significant discussion or proposals on delivery system reform. (See BPC’s summaries of the president’s and Ryan’s budget proposals.)

Last week, House Budget Committee Chairman Paul Ryan released his budget for fiscal year 2015. Like the president’s budget, there is little movement on viable delivery system reform. Clearly, the proposal to change Medicare to a premium support model starting in 2024 could justifiably be characterized as Medicare reform; the idea has been wandering the halls of Congress since it was proposed 15 years-ago by Senator John Breaux and Representative Bill Thomas as part of the Bipartisan Commission on the Future of Medicare. Although Chairman Ryan refined the idea, premium support is on par with the president’s proposal to require drug manufacturers to offer prescription drug rebates in Medicare Part D on the legislative viability scale. One can’t help but note that premium support was not enacted when Republicans controlled both houses of Congress and the White House. Likewise, Democrats were unable to pass the drug rebate proposal when they controlled both ends of Pennsylvania Avenue. The Ryan budget repeats his proposal from last year to block grant the Medicaid program and repeal the Affordable Care Act (ACA). So, what exactly is in the Ryan Budget, and how does it differ from the president’s?

In summary, Chairman Ryan’s budget proposes a variety of health-related policies that, combined, would save over $2.9 trillion over a decade, which accounts for a majority of the $5.1 trillion in estimated savings for the overall budget proposal. Chairman Ryan proposes to repeal the ACA in its entirety. Repeal of the coverage provisions is estimated to reduce outlays by about $2.1 trillion from the elimination of subsidies for the purchase of health insurance on exchanges and repeal of the expansion of Medicaid eligibility. He would also repeal the tax revenue provisions of the ACA, but he assumes that overall revenues would not decrease as part of a broader, revenue-neutral tax reform, and he would repeal $716B in Medicare cuts included in the law, which would be replaced with other Medicare cuts that are not specified.

In addition to these changes, Ryan again proposes converting the Medicaid program into a block grant – reducing federal outlays by $732 billion over ten years. The block grant would be indexed for inflation and population growth, and federal requirements for eligibility and covered services would be eliminated, if approved by the authorizing committees. Aside from replacing ACA Medicare cuts with unspecified savings, the Ryan proposal would make modest changes to Medicare in the next ten years, including replacement of the sustainable growth rate (SGR) physician payment formula and adoption of President Obama’s proposal to expand income-related premiums, which would reduce subsidies to higher-income Medicare beneficiaries. Beginning in 2024, Chairman Ryan proposes other Medicare reforms, including a gradual increase in the age of eligibility, simplification of deductibles, reforms to supplemental insurance, and the establishment of a premium support approach for all newly-eligible beneficiaries and existing beneficiaries who opt-in.

Health care savings and policy proposals differ significantly from the president’s budget. Chairman Ryan’s proposed health-related savings ($2.9 trillion) are far larger than the president’s proposed savings ($400 billion). Ryan would repeal the ACA; Obama would not. Ryan proposes fundamental changes to Medicare, but these would not take effect for a decade, outside all but one year of the budget window being considered by Congress. Both Ryan and Obama propose modest efforts to reduce the growth of Medicare spending in the near term. Ryan would reduce net Medicare spending by $166 billion over ten years, and Obama’s policies would reduce net Medicare spending by $66 billion over the same period, as compared to the CBO baseline.

So what do the president’s and Ryan’s budgets have in common? Notably, neither budget includes aggressive efforts in the near term to modernize the traditional Medicare benefit and encourage providers and patients to transition from fee-for-service payment to more organized systems of care featuring payment models that incentivize quality and value, as proposed by BPC’s 2013 Healthcare Cost Containment Initiative, and proposals offered by organizations including Brookings, the National Coalition on Health Care, the Commonwealth Fund, the “Strange Bedfellows” coalition, and the Center for American Progress.

There was a spark of hope with the bipartisan, tri-committee proposal to replace the SGR with a value-based approach earlier this year, but that glimmer was doused by partisan divide over offsets and the eventual passage and enactment of Congress’s 17th temporary SGR “patch” last Monday. Perhaps it is unrealistic to expect either party to begin negotiations on delivery system reform as part of their budget proposals since that does involve Medicare reform. And yes, we are in an election cycle, but in recent years elections are non-stop. So, are Washington’s health policy wonks doomed to watch reform vicariously from afar via agency demonstrations or state-level and private sector reforms? Is it possible over the next few years to find a narrow truce on one aspect of health care whose solution could both chip away at the $700 billion of estimated waste and inefficiency AND improve health care quality outcomes and provider and patient satisfaction? Here’s the proposal:

  1. we agree to disagree, for now, over the success or failure of the insurance coverage provisions of the Affordable Care Act (ACA);
  2. we leave a little room to explore bipartisan discussion on delivery system reform (after all, most of the delivery system reform provisions of the ACA and past efforts at value-based care were developed on a bipartisan basis);
  3. we agree that our current, fragmented system of fee-for-service reimbursement drives volume, increases cost, and compromises quality; and
  4. we begin to explore the possibility of additional and more meaningful reforms that change reimbursement in federal health programs to improve quality and value, reduce federal spending growth on health entitlement programs, improve the solvency of the Medicare trust funds and help lower federal deficits.

Just a thought…

2014-04-09 00:00:00
Envisioning a truce on an aspect of health care whose solution could both chip away at inefficiency and improve the quality of care

 

KEYWORDS: AFFORDABLE CARE ACT, BILL THOMAS, HOUSE BUDGET COMMITTEE, JOHN BREAUX, MEDICARE, PAUL RYAN, PRESIDENT BARACK OBAMA