MM: That can only work in a large institution like a hospital, and even there it will take time. It’s difficult to do at the physician level. We don’t have good measures of good quality of physician visits, and if we did, trying to apply them might not go over so well with patients. No one wants to think they are going to a below-average doctor.
TL: So how will giving more money to better hospitals reduce costs?
MM: Better hospitals tend to do a very high volume of services. If they are very good at a particular surgery, for example, they may create fewer complications that ultimately raise costs. This means that we would steer people away from their local hospital to “centers of excellence,” and these have not always been a big hit with patients.
TL: What about the docs?
MM: We pay very little for primary care, and that leads those doctors to spend very little time with patients. Their response is to give a prescription, run a test, or send someone to a specialist because they don’t have time to figure out what you need. We have created perverse incentives. We may actually need to pay some of them more.
TL: How will making wealthier beneficiaries pay more for Part D, the drug benefit, help the program?
MM: This is another step that unnecessarily complicates the program, and making wealthier beneficiaries pay more will not raise that much money. This is similar to the provision that requires individuals with incomes over $80,000 (families over $160,000) to pay more for Part B benefits—those that cover doctor services. If there’s a similar income cut-off, it will not affect that many people, since there are just not a large number of high-income seniors.
TL: Does this hasten privatization?
MM: It could if more people opt out of the system. For example, if we make the premiums high enough, some beneficiaries will go elsewhere for the insurance.
TL: Can you describe the Republicans’ budget proposals to turn Medicare into a voucher plan?
MM: The idea behind a voucher system is to give people a set amount per year with which to buy an insurance plan of their choosing—usually a private health plan. The premium would be adjusted for their health status to prevent sicker patients from having a harder time finding insurance. The only way to save money over time is to limit the increase in the voucher amount each year. But if health care continues to rise faster than the voucher amount, the individual must make up the difference between what the voucher buys and what a policy costs in the marketplace. Success depends on private plans holding down the growth of health care spending—something they have never been able to do.
TL: Is this a serious attempt at privatization?
MM: Supporters claim that limiting the amount of the voucher would cause plans to become serious about saving costs, and they would compete with each other to do the best job. At this point, this is a theoretical argument, not one based on any evidence. It’s the health care equivalent of the Hail Mary pass.
TL: What’s the most important story journalists can write now about Medicare?
MM: Reporters should look at the lessons of Medicare—both the good and the bad—and what health reformers can learn from them. They are instructive for crafting a health reform proposal.
TL: What are the pluses and minuses of letting people age fifty-five to sixty-four buy into Medicare?