GOP Senators better wear their cheap suits while marching in Independence Day parades this weekend, as it is tough to get tomato stains out of nice wool.
As Bob Laszewski pointed out, Republicans were boxed into a very tight corner by their Democratic colleagues after GOP Senators blocked a bill that would have prevented a drastic cut in physician fees. The maneuvering was ugly, as the Dems apparently backing out of an earlier deal that would have restored the cuts. Once the bill was overwhelmingly passed by the House, Senate Democrats were presented with a very big cudgel they could use to smack their Republican colleagues around. And with Congress heading out for the 4th of July recess, they have done so – publicly, loudly, and repeatedly.
Republican Senators now find themselves defending their vote to reduce physician fees by 10% (that’s not exactly what happened, but close enough for politics) while refusing to reduce payments to big insurers. Payments that most view as far too generous.
Politically, the picture could not be better for Democrats. Republicans will be vilified for their vote to cut payments to Dr. Welby, everyone’s kindly neighborhood physician while continuing to pay huge sums to big, faceless, bureaucratic insurers located far away staffed by nasty clerks who delight in forcing new moms to leave the hospital mere moments after giving birth.
And in an election year too.
There is a good bit of substance to the argument against continuing the massive subsidies for Medicare Advantage (MA) and Private Fee for Service plans (PFFS). These payments were supposed to be temporary, used to motivate health plans to set up alternative Medicare programs, to make it worth their while to get started. Now that many of these plans have been up and running for several years, they should be able to survive on their own.
And as far back as 2005, health plans in these programs were doing just fine. In an example of exquisite timing a GAO audit revealed health plans in the program made over a billion dollars more than they expected; $1.14 billion in extra profit.
Yet healthplans are fiercely lobbying to hold onto the subsidies, and their GOP allies are marching in lockstep – right off a cliff.
Health plans, and their Republican allies, now look like they won’t pull their heads out of the public feedbag, even when it is obvious they are getting fat on taxpayer-funded subsidies.
Politically, both the GOP and health plans are being stupid. There’s no other word for it. Not only is this politically suicidal, the longer term implications are obvious. Health reform is coming, and private health plans will want to play a major role. They will claim that the market is the solution (a point I have also been making).
Yet these free-market companies continue to argue they can’t compete with the government-run Medicare program without massive subsidies.
Jul
2
Joe, you are so right about this. It was well played by the Democrats and it just happened to be good policy, too — something you don’t often get out of Congress.
And yet . . .
I only saw it written up in the Washington Post and a couple of other major city dailies. On the TV news, bupkus. On the cable chat shows, nada.
I have about worn out my “don’t people get it that this stuff’s important” speech.
Maybe if we could work a flag-pin angle into the story, it would draw more interest.
You had me right up until the very end, at least in the view that the Democrats scored a political victory.
“Yet these free-market companies continue to argue they can’t compete with the government-run Medicare program without massive subsidies.”
When the government sets mandated benefit and cost levels and structures payments in such a way that it makes it very difficult for a private company to tailor policies to individual needs, not only is that not “free market,” but they are right: it is difficult to compete with the government-run program without subsidies to make up the cost differential. Government programs do not have to stay within budgets (and they haven’t for years, the continual need of the SGR overrides speaks to this fact) but can instead shift costs to future taxpayers. Private companies do not have this luxury.
There is something to be said in favor of decreasing payments to MA plans, but the sad truth is that the whole thing stinks, and we are really arguing over one grain of sand on an entire beach that needs to be swept.
Lower payments to MA plans will result in decreased access as surely as payments to docs will. Participating insurance companies will either absorb the hit through benefit cuts, or decrease their own payments to docs that congress finds it impossible to do. Either that or they will drop out of MA altogether.
As Robert Laszewski has argued, there is little that can be done on the health reform front without first addressing the payment methodology for physicians.
The problem isn’t so much that a cut will or will not take place (it will, eventually), but that, year after year, we cling to a formula (SGR) that we know to be unsustainable in a program that itself is soon to be insolvent. Still, every year, we squabble like children over how to shift money around so we can cling to this sinking ship for just one more year.
From a broader perspective, we have to recognize that there really weren’t any good options here. However, the only responsible one is to stop talking about the grains of sand and focus more on how we are going to clean up the beach.
See the above post and others like it at http://www.healthcaremanumission.com.
John, I have to respectfully disagree that structuring benefits and setting payments undermines the free market. It merely changes what parameters those companies must compete on in that market.
Certainly, regulating benefits and reimbursement creates a regulated market, but I think that’s a good thing. That’s because I firmly believe that when price is limited to a certain range, and benefits are given a floor — and as is the case with Medicare, the plans are guaranteed-issue — then insurers must compete on service and quality. If Company X can process claims more quickly it will get the better docs. If Company Y has the nicer call center operators with superior knowledge, it will gain more enrollees. If Company Z is outdone on both of these accounts, it will lose, and will rightfully either struggle or drop out of the marketplace. That’s competition. That’s a well-functioning, if well-regulated marketplace. The consumer wins thanks to regulation, and the better sellers win thanks to the freedom of the marketplace, within limits.
As the banking and credit debacle has proven, neither the consumer nor the system as a whole are well-served in the long-run by under-regulated markets.