David R. Henderson  

Centralizing Medicare Even Further

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Somehow I missed this when it came out Monday. Here's what James C. Capretta reported about Obama's amazing power grab:

Today, the Obama administration delivered one of the more remarkable presidential power grabs seen in recent memory (the transmittal letter is here, and a section-by-section description of the proposal is available here).

The president has decided -- just days before the deadline he himself set for passage of health care bills in both chambers of Congress -- that he wants to create a new and very powerful executive branch agency, the Independent Medicare Advisory Council (IMAC), which would be accountable only to him and have the authority to re-write the Medicare program from top to bottom by executive memo. Now that's audacious.

The council would be made up of five members, all selected by the president and confirmed by the Senate. The president could fire any one of them for cause. They would have two jobs. First, each year, the council would make recommendations to the president regarding inflation updates to Medicare's payment rates for hospitals, doctors, and other suppliers of services. Those recommendations, if approved by the president, would automatically go into effect in thirty days unless Congress passed a resolution disapproving them -- which the president would also have to sign into law. Of course, if the president approved the council's original package of recommendations, it is unlikely he would sign a congressional disapproval resolution overturning them. So, as a practical matter, the proposal would force Congress to find a two-thirds supermajority to stop presidentially-approved IMAC recommendations from going into effect.

That would be a remarkable shift of power on its own, but the president's proposal doesn't stop there. Not only would the council make recommendations on payment updates, it would also have the authority to propose other "Medicare reforms" which would go into effect unless Congress could muster veto override majorities in opposition. What are "Medicare reforms"? From the write-up, it seems they could be just about anything. Changes in beneficiary cost-sharing. New rules for establishing qualified hospitals and doctors. Penalties for physicians who don't follow government guidelines. Pretty much anything except for the payroll tax and premium structure. The only parameters are that the "reforms" must improve the quality of medical care and the efficiency of Medicare operations.

H/T to Keith Hennessey

COMMENTS (8 to date)
mark writes:

But it's such a simple political philosophy:

Markets: bad.
Representative government: bad (except when I get elected)
Total control by my appointees - all good.

smn writes:

Don't see what's so egregious about this... Medicare has been a bit bloated and inefficient for a while(along with the rest of the health care system), so why not an small team to wring changes to it? If executive fiat is what it takes, so be it.

Patrick writes:

The only way Medicare (and Medicaid) can continue to exist for much longer is to ration care just like the European medical bureaucracies do. I think Congress would be happy to let the President take all the heat for that. Somebody has to be the bad guy, they must think, so why not him?

John Booke writes:

The President's proposal is a good way to take massive political "pressure" off congressmen and senators. Pressure created by greedy doctors and insurance company executives who are unwilling to abide by fee reductions according to the "Sustainable Growth Rate" rule. A rule that includes a formula that reduces doctors fees when healthcare costs rise too fast. Doctors and insurance companies agreed to this rule over a decade ago in 1997. Over the last 4 years that rule should have kicked in and doctors should have reduced their fees 4 times. The doctors refused to reduce their fees and instead launced four different lobbying campaigns to "increase" fees. US doctor fees are exhorbitant and must be reduced.

Niccolo writes:

John Brooke is right. After all, the president doesn't want to be the CEO of health care anymore than he wants to own Government Motors. So don't worry about it, it's not like it's Bush in office; we're talking about the Obamessiah here.

Don't you love hope, Hanson?

David C writes:

Let me paraphrase an argument you made here:


"the purpose seems to be, and the likely result would be, to make the Fed less independent. But a lot of research in the last 15 years or so, including work done by Alberto Alesina and Larry Summers [pdf.], finds that the more independent a central bank is, the lower is its inflation rate. So an ironic effect of auditing the Fed and reducing its independence could well be to raise the inflation rate."

In regards to maintaining the status quo, the purpose seems to be, and the likely result would be, to make Medicare less independent. But a lot of research and plain old common sense, including work by Maggie Mahar ( http://www.thehealthcareblog.com/the_health_care_blog/2009/06/medpac-on-steroids-part-1-an-exciting-proposal.html ), finds that by letting Congress make all the decisions, the cost of Medicare has been increased. So an ironic effect of giving the Medicare Payment Advisory Commission zero control over the Medicare system could well be to raise the cost of Medicare.

Tom writes:

"Independent Medicare Advisory Council (IMAC), which would be accountable only to him...
The president could fire any one of them for cause."

Just like the Amtrak Inspector General or Inspector General Walpin who was fired for stopping fraud from another of Obama's supporter.

1984 definition of Independent.

Dr. T writes:

John Booke said: "Doctors and insurance companies agreed to this rule over a decade ago in 1997."

Most doctors agreed to no such thing. The government just rammed it down our throats: sign the agreement or lose all your Medicare patients. Since doctors are not allowed to organize against such threats (the government can and will prosecute for anti-trust violations), each doctor had to choose the less bad option. Most doctors could not afford to drop their Medicare patients, so they reluctantly signed.

Now, when doctors continue to fight against this unwanted agreement, we're labeled as greedy. Perhaps its our elderly who are greedy for gaining such a massive entitlement at almost no costs to themselves.

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