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Are We Entering an Era of Political Cooperation on Medicare?

There’s a chance that we’re starting to see a convergence of opinion on Medicare among Democrats and Republicans on Capitol Hill. I know the recent bickering makes this seem like an odd contention, but consider the following:

  • In recent decades Republicans have done a great job of tarring Democrats with the “tax and spend” label while being fiscally irresponsible themselves. Republicans criticized Carter era deficits, and then proceeded to run up much more startling deficits under President Reagan. Bill Clinton had us looking at surpluses(!) as far as the eye could see until W came in and sent the red ink soaring –partly through tax cuts but largely by boosting spending. When Republicans continued brandishing the “tax and spend” cudgel, Democrats figured they were suckers to go the Clinton route of fiscal responsibility and get no credit for it
  • We’re now at the point where the size of the national debt actually matters. The only way to bring it under control is to bring deficits down. This is something on which Republicans and Democrats can agree. So now you’ve got both parties committed to the idea of deficit reduction; that just hasn’t been the case before.
  • There are still big differences on how to do it, but approaches –at least on Medicare– are likely to converge once the challenge is faced in a serious way, i.e., with an eye toward solving the problem rather than pandering to one group or another. In the case of Medicare, Republicans are likely to move toward the Democrats’ position over time.
  • The Ryan budget proposal is the beginning of this convergence. Rather than cynically trying to scare seniors by claiming Democrats are taking away Medicare (as his colleagues have been doing up til now), Ryan is explicitly acknowledging that Medicare spending can’t continue on its current path. His frank talk is now earning some serious backlash in “town hall meetings” –the same venues where opponents of the Patient Protection and Affordable Care Act (PPACA) took out their wrath on Democrats in the run-up to health reform’s passage. It’s actually good that Republicans are getting a taste of the same medicine they were dishing out  –maybe it will make the GOP think twice about starting up those tactics in the future.
  • Once Republicans decide to think seriously about Medicare costs, they’ll find that the Ryan plan isn’t going to do the trick. A loosely regulated private health insurance industry like Ryan envisions can’t and won’t deal with societal priorities like enrolling sick people for premiums they can afford. At a minimum that’s going to lead Republicans toward similar insurance industry reforms as PPACA (e.g., guaranteed issue, limitations on medical underwriting) in order to preserve Medicare’s universal coverage of the elderly
  • If well-informed, constructive parties –including the Congressional Budget Office, the media, policy wonks, and maybe even presidential candidates– engage on these issues they may yet get toward a national consensus. One reason I’d like to see Mitt Romney get the Republican nomination is it might actually engender a productive debate about Medicare. (Then again Mitt has disappointed in the past.)

I’m getting ahead of myself, but I also think it’s possible that in about 10 years we’ll see significant support among Democrats and Republicans for a single payer system. But that will have to be the topic for a future post.

David E. Williams is co-founder of MedPharma Partners LLC, strategy consultant in technology enabled health care services, pharma,  biotech, and medical devices. Formerly with BCG and LEK. He writes regularly at Health Business Blog, where this post first appeared.

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MD as HELLMGBarry CarolGary O.Margalit Gur-Arie Recent comment authors
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MD as HELL
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MD as HELL

We are actually entering a suicide alley politically. If there is to be a bipartisan solution, then the Dems get to take the lead, since it is their constituency that will scream the loudest.

This should be fun to watch, a bear market in government.

Nate Ogden
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Nate Ogden

“slice by equal slice costs more here. ” “Interestingly, the study also shows that the U.S. has one of the highest levels of generic drug use relative to total prescription volume, and that generic prices are lower in the U.S. than in all the countries except Canada, where the difference is 6%.” Except it doesn’t. Generic Rx for example. While we do pay more per unit the bigger problem is the number of units and the type of units we are getting. ” the US has historically subsidized bread” No like you point out it does wheat and wheat is… Read more »

Margalit Gur-Arie
Guest

Why pick generics of all things? And for that matter, why pick any one particular expense?
Let’s cut a little bit on utilization, a little on costs, a little on fraud, a little on self-referrals, a little on administrative functions, etc. – everybody gets hit a little bit and nobody gets clobbered out of existence, i.e. shared sacrifice.

Nate Ogden
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Nate Ogden

because you said on every service, apples to apples, we are more expensive then OECD, bread bread comment.

I agree we need to cut a lot of utilization, a lot of fraud, little unit cost, but that wasn’t how I read you earlier comment. Now that we agree do you want to call barack and Don or do you want me to? You know they will want to take credit for this.

Generitcs are a great example of how competition can foster lower prices and efficent markets

Nate Ogden
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Nate Ogden

” The simple fact is that a loaf of health care costs twice as much in the US than anywhere else.” Technically lunch cost twice as much in the US then anywhere else. Part of this is becuase we eat more and part becuase we like artisian breads instead of the plain boring Euro loafs. To solve the problem of bread costing twice as much is a totally different solution then lunch costing twice as much. “bread must be subsidized so it’s cheap, available and accessible to all. ” Really? How come every collapsed economy that subsidies bread has bread… Read more »

Margalit Gur-Arie
Guest

No, not lunch, just bread, slice by equal slice costs more here. Solve this one first, then we can discuss the condiments.

Just a quick reminder, the US has historically subsidized bread (wheat) and it is still doing so. I don’t see any bread lines. Are you, perhaps, confusing cause and effect?

MG
Guest
MG

Hate to tell you this Nate but the US massively subsidies wheat to the tune of billions every year. Corn, feed grains, and soybeans too for that matter. All together when you add up federal and state subsidies whether direct payments or other forms of support it was well over $100B in 2008.

MD as HELL
Guest
MD as HELL

Subsidy equals control.

Margalit Gur-Arie
Guest

And one more thing….. If you are willing to learn just one lesson from those Socialist Europeans, learn this: bread must be subsidized so it’s cheap, available and accessible to all. The cake alternative leads to instability and violence.

Nate Ogden
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Nate Ogden

Interesting question for all the liberals here; If your a fan of progressive taxes then do you support progressive drug prices? What about progressive healthcare cost? If we make more then everyone else in the world shouldn’t we pay more, or does that only work when your taking other people’s money? “The study addresses the issue of “what can we say about the average price of drugs in the U.S. relative to other countries,” says Danzon, “and also looks at the question of whether other countries are paying their fair share.” On the first point, “when we look at a… Read more »

Margalit Gur-Arie
Guest

This is like fitting a square peg in a round hole. The simple fact is that a loaf of health care costs twice as much in the US than anywhere else. Not because we are inefficient and have primitive means of production, but because selling health care is a much more lucrative business in the US, allowing for more layers of “value” added intermediaries into the process.

Barry Carol
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Barry Carol

Liberals keep telling us that healthcare in other countries cost half as much per capita as it does in the U.S., they have universal access and comparable or better quality. They praise the European and Canadian concept of solidarity. They downplay rationing, especially in the UK and Canada and, in short, they wonder why we can’t be more like Europe and Canada, at least when it comes to healthcare. At the same time, malpractice suits are far less common in other countries so there is less defensive medicine. When serious tort reform, including health courts and safe harbor protection from… Read more »

Gary O.
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Gary O.

David in this post speculates “that we’re starting to see a convergence of opinion on Medicare among Democrats and Republicans on Capitol Hill” regarding ways to address the Medicare cost problem. He notes that the Republicans used the “tax and spend” cudgel on Democrats, while at the same time “being fiscally irresponsible themselves”; but, he argues, now that the deficit is so large, the Republicans are likely to move toward the Democrats’ position over time. A key part of the Democrats’ position is the establishment of the Independent Payment Advisory Board (IPAB), which has been described as a mechanism designed “to… Read more »

Nate Ogden
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Nate Ogden

“but most do not and that includes the majority covered by employers” How do you define the word most? Most people would consider most to be atleast 50%+1, you apparently have redefined it to low double digits. No study ever has shown 50% of americans having trouble paying their healthcare bills. “being made uncompetitive on account of high health care prices.” Only companies being made uncompetitive by healthcare are those with union CBAs that lock them into overly expensive benefits. WOuld it really kill Union members to use generic instead of brand, maybe not have every hospital in the country,… Read more »

Margalit Gur-Arie
Guest

“Americans want lots of healthcare and they have the money to buy it.” That’s a two headed myth. Witness the recent “free” preventive care screenings offered by Medicare and how people are not lining up to get their freebies. Medical care is not like chocolate. Some do have the money to buy it, but most do not and that includes the majority covered by employers, which from what I hear are being made uncompetitive on account of high health care prices. Or is that not really so? “Over the past 100 or so years which of those OECD countries would… Read more »

Nate Ogden
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Nate Ogden

“Every other OECD country has heavy government involvement and lower costs. It is not that it cannot be done, it is the politics in the US that hold us back. ” Politics or public demand? We consume more junk food then other nations, is that also politics? Americans want lots of healthcare and they have the money to buy it. Its politicis that people spending public money do so inefficinetly but as Americans if we want to blow our personal money on wasteful care is it the roll of government to tell us no? “OTOH, there is no model in… Read more »

steve
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steve

“So that was all Bill Clinton and had nothing to do with the Republican House that you know actually writes the spending bills?” That same GOP House ran up the debt again once they had a GOP POTUS in office. Also,, it is well known that Rubin, for all of his faults, pushed Clinton to hold back on spending and work to reduce the deficit. “As Medicare has proven a heavily regulated public plan can’t and won’t deal with fisical priorities like actually delivering what they promise and doing so in a somewhat efficent and fraud free sustainable manner” Every… Read more »

Roger Collier
Guest

A more cynical view, but one that leads to somewhat the same conclusion, is that eventually a few politicians are going to be smart enough to realize that making politically unacceptable proposal (like both Paul Ryan’s and the President’s) is stupid, and that it’s necessary to seek some middle ground. In a THCB post a couple of days ago, I suggested looking again at the bipartisan proposal from the 1999 Medicare Commission, at least as a starting point for discussion. The 1999 proposal isn’t necessarily the answer to Medicare’s woes, but it was one that gained some support from both… Read more »

Nate Ogden
Guest
Nate Ogden

” Bill Clinton had us looking at surpluses(!) as far as the eye could see until W came in and sent the red ink soaring ” So that was all Bill Clinton and had nothing to do with the Republican House that you know actually writes the spending bills? Bill Clinton’s surplus as far as the eye could see? You that short sighted you can’t see the end of your nose? Clinton’s last year when the dot com crash started whiped trillions off our balance sheet. The surplus was gone Bush’s first year in office not becuase of anything he… Read more »