The Cost Control That ObamaCare Doesn't Try


Alice Rivlin founded the Congressional Budget Office and served as its first director. She ran of the White House Office of Management and Budget under President Bill Clinton. Today, she's a senior fellow at Brookings, and one of the most respected policy minds in Washington. Like many policy experts associated with the Democratic party, Rivlin is on record as supporting the Patient Protection and Affordable Care Act. But she's also open about saying that its Medicare reforms may not work as well as advertised. 

At a Congressional hearing on Medicare this morning, Rivlin reiterated her support for the president's health law and said she believed that many of its Medicare reforms—Accountable Care Organizations and multiple health system research institutes—"can help to assemble solid evidence about cost-effective approaches to delivering health care." She cautiously suggested that the Independent Payment Advisory Board (IPAB), the cost-control bureaucracy created by the law to hold down Medicare spending growth, might also produce savings: "If [IPAB] functions as intended, it will design regulations that encourage more cost-effective delivery of care in traditional Medicare."

But that's a big if. And as Rivlin further argued, the success of these reforms is hardly guaranteed. "It remains to be seen how well these new institutions will perform," she said. And that's why Rivlin has teamed up with former Senator Peter Domenici to endorse a Medicare premium support plan that relies on competition between private insurers, in conjunction with a government-run Medicare fee-for-service plan, to hold spending in check.

Rivlin spoke this morning in front of the House Ways and Means Committee about the plan she authored with Domenici, and why she believes that it's a good idea to bring private competition into the system:

Under the current system, with Medicare savings achieved largely through simple reductions in reimbursement rates, cost shifting has been a major concern.  However, our proposal is driven differently.  If competition works to produce more cost-effective delivery, Medicare can be a leader here. Plans and providers that have incentives to serve their Medicare patients more cost-effectively will do the same for their other clients.

…We think it only prudent to strengthen competition as an additional tool. Under our proposal,competing health plans all over the country would have strong incentives, not only to implement innovative ideas coming out of the federally-supported institutions created by the PPACA, but to seek every possible way to provide higher-quality care at a lower costin their own local area.  The PPACA attempts to reward Medicare providers that meet the conditions set in regulations. Enhancing competitive incentives to achieve savings and improve outcomes could prove the more effective approach. Our proposal is to try both.

One could argue that Rivlin is merely proposing to actually do what Democrats have long said they're committed to doing: trying all the health care cost and spending controls available.

When the health care overhaul passed in 2010, Obama administration officials offered assurances that they were doing all they could on cost control. Former White House budget director Peter Orszag and health policy advisor Ezekiel Emanuel insisted that the health law "puts into place virtually every cost-control reform proposed by physicians, economists, and health policy experts." But virtually every reform is not the same as every reform. And the one potentially transformative reform that the law's authors declined to include is the one that relies more on competition and market forces than the introduction of more bureaucratic payment reforms. 

Leaving a government-run, fee-for-service Medicare option in the mix is not ideal by any means. But Rivlin's approach is vastly preferable to the current administration's insistence on crossing its fingers and hoping that a largely technocratic approach to cost-control will work. 

NEXT: "We're all moving to Alberta, get on the bus"; Buffett Rule Coming To Ontario



    1. (sniffs) Iocaine. I’d swear my life on it.

      1. “My Fiancee, Prince Humperdink can track a hawk on a cloudy day”

        1. “Esscoose me, I don’t mean to rude, but, uh, I don’t suppose you happen to have six fingers on-ha you right hand”


            1. “Not good enough. I’ve known too many Spaniards…”

    2. Nice quote, source???

      1. *blink, blink*

        You mean you’ve never seen one of the greatest movies of all time?

        1. Nope, I try (not sucessfully) to avoid all shows with “Princess” in the title.

          1. I highly recommend that you view it this weekend. With your children if you have any, I promise you’ll all love it.

          2. You’ve never seen it?


          3. Oh, you need to watch this one. I saw it at the theater when it came out, only because a girl I had just started dating insisted. Could have waited years if it hadn’t been for that.

            1. How unsurprising that you hadn’t read the book. You can’t even disappoint me any more. That’s how bad it’s gotten.

              1. But I have read the book. In fact, I own it.

                1. Had you read it before the movie came out?

                  I rest my case.

                  1. Did you? If you say yes, you’re either (1) lying or (2) closely related to Bill Goldman.

                    1. What are you talking about, retard? The book was published in 1973.

                    2. Yes, I know, and about seventy people read it before the movie came out.

              2. Oh, I think there is still some disappoint for Pro’L Dib left in you. I wouldn’t say a bottomless well. But I’m sure it’s getting there, S. Morgenstern.

        2. Inconceivable!

    3. “Ha ha! You fool! You fell victim to one of the classic blunders – The most famous of which is never get involved in a land war in Asia”

  2. One could argue that Rivlin is merely proposing to actually do what Democrats have long said theyre committed to doing trying all the health care cost and spending controls available.

    Horseshit. There are quite a few others that I have yet to hear mentioned.

    1. And, let’s face it, if the Death Panel, aka IPAB, walls off any treatment that then results in the death of a single granny or gramps, legislators will be trampling each other to get to the floor of their respective chambers to huff and puff and blow down those unconscionable restrictions. Ain’t shit gonna be cut, quite the opposite.

      1. So, we can expect IPAB to restrict treatments that improve quality of life, as opposed to those that extent duration of life?

        1. Until a good sob story can be put on the teevee, yes.

  3. The “non-partisan CBO” (as I’ve heard it called) is inherently suffers from liberal bias. They estimate bills based on current assumptions which means that they consider dynamic behavior.

    (1) They don’t consider that economic output will decrease when taxes going out, thus realistically decreasing the amount of tax revenue actually collected. Case in point: the excise tax on tanning saloons was supposed to raise $200M a year, but it actually raised only $54M — see…..0754314/1.

    (2) They don’t consider that people will spend more of a thing when it is free or cheap.

    Think about it. They originally said Medicare part D would be $400B over ten years, and now it’s $800B. Actually I think it’s more than that, but I’m too depressed to look it up.

  4. sophomoric alt-alt-text:

    “Away put your healthcare…”

    1. Personally, I would have used “Cut. Or do not. There is no ‘Try’.”

      1. “NO! Try not. Cut. Or cut not. There is no try.”

        1. “Only in your mind is there a difference between health insurance and health care.”

        2. Yoda PWN’D

          1. “Only a Sith deals in absolutes.”

            1. “If you seek to aid everyone that suffers in the galaxy, you will only weaken yourself- and weaken them. […] If you care for others, then dispense with pity and sacrifice and recognize the value in letting them fight their own battles. And when they triumph, they will be even stronger for the victory.”

              God, I love Kreia.

  5. “puts into place virtually every cost-control reform proposed by physicians, economists, and health policy experts.”

    Total Bullshit.

    Obamacare did the exact opposite. It avoided putting into place EVERY empirically proven or supported cost-control reform such as:

    1. Health savings accounts

    2. Medical tort reform

    3. Allowing purchase of health care insurance across state lines

    4. Tax code reform to eliminate the discrimination against individually purchased health care

    5. Decreased regulation to allow greater supply of health care providers and goods

    6. Decreased mandates for routine care in health care “insurance”

    In fact, Obamacare went in THE OPPOSITE direction of some of these cost-control reforms by limiting HSA’s, increasing the linkage of employment to health care insurance, increasing mandates for insurance coverage of routine care and increasing regulations.

    Unless you assume that Obamacare’s architects are complete idiots (a distinct possibility), it is most logical to conclude that the intent of Obamacare is to further marginalize the private health care market, drive up health care costs, claim that the “free market” has failed and ultimately push for a fully nationalized health care system.

    1. And these would be those ideas I have yet to hear spill out of the pieholes of any would-be CBO TEAM “reformer”.

      1. They know what side of their bread is buttered on, GM.

    2. That’s just crazy talk man.

  6. Allowing competition to hold down prices. What a novel and radical idea. But could such a thing possibly work?

  7. Medicare is in need of reform.

    The 2012 Report from the Trustee’s of the Medicare Trust Fund projects that Medicare Trust Fund will be exhausted in 2024. At that time Medicare will not have sufficient money to pay the total costs of its benefits.

    The sooner reform take places, the smaller the reform needs to be.

  8. “assemble solid evidence about cost-effective approaches”

    I wonder what supporters of Obamacare think those cost-effective approaches are going to look like. The first thing that pops into my head hearing that phrase is denial of care.

  9. Totally rock and roll dude, I really liek it man. WOw.

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