Bending the Curve on Health Spending: The CBO Is Not a Policy Philosopher-King Office II (Please Think About It Peter Orszag and Doug Elmendorf Department)
Igor Volsky:
Wonk Room: Will The CBO Score Obama’s MedPAC Proposal?: After Congressional Budget Office director Douglas Elmendorf suggested that the current reform legislation would do little to reduce the growth of health care spending, the White House doubled down on its support for establishing a MedPAC-like commission — MedPAC is an independent agency advising Congress on issues affecting the Medicare program — that would help lower future health care spending. Every year, MedPAC publishes two reports chock full of the kind of payment reform that could truly transform the health care system from incentivizing quantity to quality and value of care and every year Congress ignores them. By giving a MedPAC-like panel the power to implement the kind of payment reforms that MedPAC has always advocated, the proposal would free the panel from the constraints of congressional politics and allow it to actually influence Medicare spending patterns.... The President could choose to submit all of MedPAC’s recommendations as a package deal. Congress would have 30 days to intervene, but they couldn’t pick and choose what proposals they’d like – they could only vote up or down on the whole package.” This kind of proposal kicks payment reform into high gear....
Greg Poulsen.... “Unless we get the incentives right, nothing else in health reform really matters.” Poulsen is part of a group of officials at so-called “integrated” institutions that already operate using MedPAC’s many of recommendations and are generally able to provide quality care more efficiently....
The administration is a strong proponent of these reforms, but the challenge lies in pleasing the CBO — which finds savings by following Potter Stewart rule life: “I know it when I see it.” However, since the MedPAC-like proposal is predicated on the President accepting its recommendations and Congress not voting them down, (and MedPAC is only required to not “increase in the aggregate level of net expenditures under the Medicare program,”) the CBO — which rarely defines the criteria of savings — is unlikely to “see” savings.
For CBO to find real money in the transformation from MedPAC to IMAC, it would have to be willing to stand up and say: "We believe that this procedural reform would change your deliberations, Mesdames and Messieurs Congresspersons, in a healthy and cost-reducing direction." They were always very unlikely to do that--to say that congressional action could be constrained or limited by anything other than explicit congressional votes that had a dollar bottom line attached to them.
I see two things that could be done going forward:
The Obama administration could, in its IMAC legislative proposal, mandate that each year IMAC come up with payments reform recommendations that it believes will cut $20 billion off the baseline for government health spending, and require as part of the legislative proposal that congress either (a) approve the IMAC recommendations, or (b) approve other alternatives that achieve the same scorable savings as those suggested by IMAC. For those who believe that IMAC would work, the baseline reduction requirement wouldn't impose additional pain on the system. And for those who don't believe that IMAC would work--well, time for them to put their cards on the table as to whether they want to bend the curve on health spending or not. Think about it, please, Peter...
The CBO already has gotten a little bit pregnant to the extent of forecasting what congressional action would be in that it presents not just a "baseline" for government spending but an "alternative fiscal scenario." It should score the IMAC proposal in an analogous way: report, first, the effect of approving IMAC on the baseline; and, second, the effect of approving IMAC on the alternative fiscal scenario. That way they could score savings without scoring savings, if you know what I mean. Think about it, please, Doug...
