Health Reform: Bending that Curve

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In reading the comments of CBO Director Doug Elmendorf from yesterday, a number of Swampland commenters asked what, precisely, might be done as part of health reform to (1) put more downward pressure on health costs overall and (2) make it deficit-neutral, as President Obama has promised.

Today, OMB Director Peter Orszag reminds congressional leaders of one proposal that might help do that:

Today, the Administration sent a letter to congressional leaders outlining our support for this approach, with a proposal for an Independent Medicare Advisory Commission (as well as Senator Rockefeller’s similar proposal to accomplish this through the existing MedPAC) to detail how one might accomplish this goal.

The Independent Medicare Advisory Council (IMAC) would be an independent, non-partisan body of doctors and other health experts, appointed by the President, confirmed by the Senate, and serving for five-year terms. The IMAC would issue recommendations as long as their implementation would not result in any increase in the aggregate level of net expenditures under the Medicare program; and either would improve the quality of medical care received by the program’s beneficiaries or improve Medicare’s efficiency.

As with the military base-closing commissions, this proposed legislation would require the President to approve or disapprove each set of the IMAC’s recommendations as a package. If the President accepts the IMAC’s recommendations, Congress would then have 30 days to intervene with a joint resolution before the Secretary of Health and Human Services is authorized to implement them. If either the President disapproves the recommendations of the IMAC or Congress passes such a joint resolution, the recommendations would be null and void, and current law would remain in effect.

This approach would free Congress from the burdens of dealing with highly technical issues such as Medicare reimbursement rates while rightly giving them, your representatives, a say in the matter. Moreover, this kind of body would enable the health care system to respond to a very dynamic market and technical landscape, making Medicare policy more responsive and effective in the future. All together, the IMAC proposal would make sure that there is someone always on the beat, looking for ways to bend that curve.

Taking the job of setting Medicare reimbursement rates out of the hands of politicians makes sense, right? So why isn’t the House willing to do it? The Washington Post’s Shailagh Murray explained why earlier this week:

Setting reimbursement rates for local hospitals, doctors, home health-care centers and other providers is a legislative ritual that amounts to one of the most effective and lucrative forms of constituent service. Delivering federal money through Medicare, the country’s largest insurance program, can be a powerful tool on the campaign trail, allowing lawmakers to argue that they are creating jobs and improving the quality of health care for voters.

Longtime members of Congress have become masters at dominating the tug of war between keeping providers flush and trying to rein in the entitlement program’s dramatic growth. House Ways and Means Chairman Charles B. Rangel (D-N.Y.) champions New York City’s teaching hospitals. Charles E. Grassley (Iowa), the Senate Finance Committee’s ranking Republican, makes sure rural health-care services are amply funded. Months before Sen. Ted Stevens (R-Alaska) left office, he secured a permanent 35 percent increase in Medicare payments for Alaska physicians.

Watch this issue. We’ll know that Congress is getting serious about bringing down health costs when we see whether lawmakers are willing to give up one of their political prerogatives to do it.

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