ISPS Panel Tackles Tough Questions on Medicare

People of all ages filled the Presidents’ Room in Woolsey Hall on Tuesday afternoon to attend “The Future of Medicare: Policy Options and Political Realities,”organized by Assistant Professor of Public Health and Economics, and ISPS Resident Faculty Fellow, Zack Cooper. The roundtable event featured stakeholders drawing on a broad range of health policy backgrounds. Panelists included David Brooks, the noted political commentator and New York Times columnist; Thomas Scully, former Director of the Centers for Medicare and Medicaid Services under President George W. Bush; as well as ISPS’s own Jacob Hacker and Zack Cooper. Sarah Kliff, health policy reporter for The Washington Post, moderated the discussion.

True to the event’s title, this diverse panel engaged some of the most abstract and fundamental challenges facing the Medicare system and the U.S. health care system more broadly, but always with an eye to addressing practical and political realities. Zack Cooper kicked off the conversation by succinctly distilling the interlocking factors that have made the structure of the Medicare system such a pressing issue today: As the American population ages, an ever-growing number of Americans rely on Medicare, leaving a relatively smaller base of working Americans to fund the program. Meanwhile, the costs of providing health care on a per-capita basis are constantly increasing. Taken together, these demographic and economic issues result in an unsustainable trajectory for Medicare spending, with more than 17% of annual government spending allocated to Medicare alone by 2020.

Each of the panelists offered a different perspective on the policy changes necessary to reign in spending, but all agreed that without reform Medicare spending would undoubtedly preclude the allocation of discretionary funding to crucial programs ranging from infrastructure to education. In fact, one of the most striking trends throughout the conversation was the degree of consensus amongst the panelists. While a hearty debate flourished on issues ranging from the causes of declining pharmaceutical spending to the merits of insurance vouchers, the primary points of disagreement were often narrow. Indeed, the panel produced a strikingly coherent picture of the broad issues facing Medicare: Cost management, incentive structures, and the political context.

One common theme raised by the group was the central role that cost management must play in reducing spending. All panelists agreed that a fundamental problem is the high price tag on many common medical services. They each concluded that a radical reduction in these costs is needed to slow the growth of medical spending. A number of speakers attributed the problem in part to the consolidation in the hospital industry, resulting in shrinking competition between medical service providers. More narrowly, the views of the panelists diverged. Thomas Scully advocated for an increase in market-based pricing. Jacob Hacker and Zack Cooper expressed some doubts about whether price competition would be a panacea, commenting that the prices of health services in the United States often greatly exceed the cost of the same procedures in other countries around the world, many of which rely heavily on government price-setting.

Later in the discussion, David Brooks identified the importance of incentive structures as another point of common ground within the panel. Thomas Scully and Jacob Hacker agreed that programs like Medigap, which undermine consumer price consciousness, are detrimental. Correcting physician incentive structures is similarly crucial. Professor Hacker observed, in response to an audience member’s question about provider incentives, “Here Tom and I agree, you want to set up incentives properly to allow physicians to have clinical autonomy in the right ways and the right kinds of support systems to allow them to deliver care effectively in ways that are integrated across different providers…there is a lot of conflict of interest in our system for physicians and other providers.”

While the conversation regarding “Policy Options” was wide-reaching and varied, there seemed to be only one resounding message on the subject of “Political Realities.” Moderator Sarah Kliff posed the question to the panel, “What is the tipping point [for change]?”  Partisan politics and fear of constituent response will prevent politicians from acting on many of the most unambiguously advisable policy changes, be it malpractice reform or reducing the tax subsidy for employer sponsored health insurance. Following a dynamic discussion of possible approaches to reforming Medicare, David Brooks put it best when he wryly commented “I just have a comprehensive political point…my observation covering politicians is that none of this is going to happen.” As evidence, he cited lack of political willingness to endure the public backlash to entitlement reform, conjuring the infamous image of democratic House Representative Dan Rostenkowski running from a mob of angry senior citizens at a 1989 town hall meeting. As Brooks noted, almost 25 years later a YouTube search of “Dan Rostenkowski town hall” will yield video clips with titles such as “Rep. Dan Rostenkowski Running from Seniors.” (Some of these clips are worth viewing for those interested in watching a very slow motion chase scene).

Ultimately, the panel wrapped up on a note of cautious optimism. While certainly there is no silver bullet for resolving the weighty problems facing Medicare, Jacob Hacker concluded the talk with the observation that dramatic national change is not the only answer. The large challenges facing the system also offer opportunities to pursue increased citizen engagement and to shift toward a more majoritarian approach to federal decision-making, and state-level problem-solving. We are in a better place with respect to health insurance accessibility today than we were five years ago, Hacker observed, and change in the health care system is moving generally in the right direction.