Democrats’ Mediscare Rhetoric Exposed
Over the past week, two articles have appeared challenging the tired allegation from President Obama and Democrats that premium support proposals would raise seniors’ Medicare premiums by $6,400. First, the Washington Post’s Fact Checker gave Democrats Two Pinocchios for basing their allegations on the House Republican budget created in April 2011, even though that plan was substantially modified earlier this year: “The policy differences on Medicare are substantial, but that still does not justify using out-of-date figures from last year’s plan — especially because the plan has been updated and made more generous to deal with some of the original criticisms made by Democrats.”
Second, this week’s Health Matters column in CongressDaily (subscription required) pointed out another key flaw in Democrats’ allegations. The CBO analysis on which the Democrat attacks are based assumes that Medicare premium support results in ZERO budgetary savings from plans competing head-to-head to see which can offer Medicare benefits most efficiently:
[CBO] Director Douglas Elmendorf told the House Budget Committee in 2011, his office doesn’t have the ability to account for any cost decreases (or increases, for that matter) that could come from competition between private plans. “We are not applying any additional effects of competition on this growth rate over time in our analysis of your proposal. And, again, we don’t have the tools, the analysis, we would need to do a quantitative evaluation of the importance of those factors,” Elmendorf said.
That’s because most health economists have no idea what really happens when insurance companies truly compete for Medicare beneficiaries. The studies aren’t there….
CBO’s current estimate puts the effects of competition at zero, which Gail Wilensky, a former head of Medicare and Medicaid in the George H.W. Bush administration, says is an even worse assumption than making some sort of educated guess. “You know it’s not zero, that’s the complete cop-out,” Wilensky said in an interview. “Their assumption is zero; it’s a very specific assumption, and it’s the one thing that’s definitely not accurate.”
It’s particularly ironic that the Obama Administration is relying on an analysis that assumes no savings from competition – because the Administration is perfectly willing to trumpet savings from competitive bidding when it suits its own purposes. Last year, the Administration sent out a press release trumpeting Medicare’s competitive bidding process for durable medical equipment. Among the quotes in that press release:
[Then-CMS Administrator Donald Berwick:] “By expanding our successful competitive bidding program, we can ensure that Medicare pays a fair rate for these goods.”
[Medicare head Jonathan Blum:] “The success we’ve had in the first phase tells us that we can achieve these savings with no disruption for patients’ access and no negative effect on patients’ health.”
So if the Administration admits that competitive bidding can work for durable medical equipment purchases within Medicare – saving taxpayers (and seniors) money without harming beneficiaries – why can’t the same tactics work for the Medicare program as a whole? Or are Democrats’ objections to premium support primarily ideological – because liberals can’t stomach the idea of seniors choosing their own private health insurance plan, rather than participating in an entitlement run by the federal government…?