No Matter Who’s in Charge, Health Care Entitlement Changes Are Coming

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As Robert Pear shows in his enterprising story in Tuesday morning’s New York Times, the Affordable Care Act—Obamacare—calls for sweeping changes to Medicare. These changes are designed to cut costs by close to $1 trillion, and you can bet there will be pitched battles every step of the way. Pear looks at one particular change:

The administration plans to establish “Medicare spending per beneficiary” as a new measure of hospital performance, just like the mortality rate for heart attack patients and the infection rate for surgery patients.

Hospitals could be held accountable not only for the cost of the care they provide, but also for the cost of services performed by doctors and other health care providers in the 90 days after a Medicare patient leaves the hospital.

This plan has drawn fire from hospitals, which say they have little control over services provided after a patient’s discharge — and, in many cases, do not even know about them. More generally, they are apprehensive about Medicare’s plans to reward and penalize hospitals based on untested measures of efficiency that include spending per beneficiary.

You can learn a lot about runaway medical costs in America from that last sentence—the idea that hospitals see spending per comparable patient as an “untested measure of efficiency.” And you can also learn something else, something that you might not guess from the current rhetoric in Washington: Medicare is going to change significantly no matter which party is in power.

This is a good thing. Medicare promises more to future retirees than it is going to be able to deliver. Change is urgently needed. ObamaCare envisions change within the existing structure of the health care industry, while Republican Paul Ryan’s proposal would impose change by having elderly patients buy their own coverage, using government vouchers. Both of these represent huge departures from the status quo. If this election educates voters to make an informed choice between these options, we’ll be a stronger country for it.

But we certainly didn’t see that sort of informative campaign in the special Congressional election in New York’s 26th District last week. Instead, we saw candidates accuse each other of trying to destroy Medicare.

Why is that a problem? Because it delays the moment when the government gets honest with younger Americans—people 50 and under—and lets them know that they need to save more of their own money if they want to have the sort of retirement their parents are enjoying. No matter who is in charge, health care spending is not going to be able to rise indefinitely at twice the rate of inflation. Cost will, inevitably, become “a measure of efficiency,” whether the government applies that discipline directly or through vouchers. Call it rationing, call it “bending the curve”—whatever. It means that some things that would be paid for under the current system will not be paid for in the future. If younger Americans want those things, they will need to have money socked away to pay for them.

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