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June 14, 2011

Our View: Controlling health costs biggest key to budget debates

The Free Press

Debates on taxing and spending at state and national levels seem to divert attention away from the big issue: the rising costs of government-paid medical care for a greater number of people who qualify for it.

Debates at the state level center around a health and human service budget that was projected to grow by $1.6 billion under current law. The Republican plan that passed and was vetoed by Gov. Mark Dayton still grew the budget by $600 million.

Medicare faces the same trend. As medical costs and medical insurance premiums increase — in some cases by double digits each year — Medicare spending will be unsustainable. The CBO projects Medicare will go from a cost of about $568 billion this year to twice that amount in 10 years as enrollment increases 30 percent.

Unfortunately, both political parties at the state and national level appear to be posing to taxpayers an either-or approach that appears to leave little choice between raising taxes or cutting benefits, while important cost control policies appear to be overlooked or used for political gain.

One key provision at the national level that has been demagogued and overlooked is the Independent Payment Advisory Board, also inaccurately described by some as “death panels.”

Joshua Gordon of the budget watchdog group The Concord Coalition notes that the board will be advisory, be independent and have 15 experts representing patients, doctors and other stakeholders and they will be appointed and approved by the U.S. Senate. He also points out the panel is a promising way to control health care costs.

The advisory board was set up as part of the 2010 health care law reform and is key to controlling Medicare costs. The law prohibits it from rationing or limiting Medicare benefits, raising Medicare taxes or increasing costs to patients.

Instead, it will advise that certain wasteful medical practices be curtailed and create incentives for increasing patient outcomes while keeping costs low. It might advise against the current wasteful “fee-for-service” system that pays doctors for the number of visits they schedule. A new system would create incentives for quality outcomes for patients.

The state of Minnesota has also set up study groups that focus on the same kind of cost and quality advice. There are currently working models that show how medical providers can collaborate to lower costs.

Yet these reforms are getting lost in the political debate. Republicans and Democrats excoriate each other when one suggests they’re going to reduce Medicare costs. It automatically gets framed as a cut in Medicare benefits. It’s a shameful approach on both sides.

We’ll all be better off if we begin to admit the medical delivery systems we have set up for government programs are wasteful and create the wrong incentives. When elected leaders try to frame the debate as more taxes or less benefits, they should be asked how they are going to lower costs.

That issue, adds Gordon of the Concord Coalition, will be more important to the whole debate than the false political choices of only raising taxes or cutting benefits.

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