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Government Health Plans Always Ration Care
by SCOTT GOTTLIEB
WSJ.com
Only by expanding government control of health care can we bring down its
cost. That's the faulty premise of the various proposals for health reform now
being batted around Washington. The claimed cost control depends on politically
safe ideas such as preventive care or the adoption of electronic health records.
And neither -- even according to the Congressional Budget Office -- will do much
to reduce spending.
If these proposals are implemented and fail to produce savings, government
will turn to a less appealing but more familiar tool to cut costs: the
regulation of access to drugs and medical services. Medicare is already going
down this path. What will be new about government-run health care is the
instrument of regulatory control. There will be an omnipotent federal health
board. Buried in current reform proposals, this board deserves closer scrutiny.
Our best look at this construct comes from a bill released by the Senate
Health, Education, Labor and Pensions (HELP) Committee. The bill calls for a
"Medical Advisory Council" to determine what medical products and services are
"essential benefits" and those that shouldn't be covered by a public insurance
plan.
The Senate Finance Committee turns to a "Federal Health Board" to compare
similar medical treatments in order to steer reimbursement to lower-cost
options. Senate Finance also proposes a "sustainability commission" charged with
finding automatic cuts to Medicare spending that would then pass Congress by a
simple up or down vote.
Meanwhile, a draft health-care reform proposal introduced last week in the
House of Representatives by the three committees with jurisdiction over health
policy set up an independent "advisory committee" that will "recommend a benefit
package based on standards set in the law." It also proposes a new "commission"
that may, among other things, help develop treatment protocols based on
government-directed research.
Congress, of course, can authorize the creation of panels and commissions to
provide expert advice to the executive branch. But such bodies are typically
advisory, and their advice is free to be rejected or modified by the president.
Under the HELP committee's plan, the health board's recommendations would be
binding unless Congress acts within a brief period to pass a "joint resolution
disapproving such report in its entirety."
President Obama objects when people use the word "rationing" in regards to
government-run health care. But rationing is inevitable if we simply expand
government control without fixing the way health care is reimbursed so that
doctors and patients become sensitive to issues of price and quality.
Like Medicare's recent decisions to curtail the use of virtual colonoscopies,
certain wound-healing devices, and even a branded asthma drug, the board's
decisions will be one-size-fits-all restrictions. Such restrictions don't
respect variation in preferences and disease, which make costly products
suitable for some even if they are wasteful when prescribed to everyone.
Moreover, these health boards prove that policy makers know they'll need to
ration care but want to absolve themselves of responsibility. Some in Congress
and the Obama administration recently tipped their hand on this goal by
proposing to make recommendations of the current Medicare Payment Advisory
Committee (MedPAC) legally binding rather than mere advice to Congress. Any new
health board's mission will also expand over time, just as MedPAC's mandate grew
to encompass medical practice issues not envisioned when it was created.
The idea of an omnipotent board that makes unpopular decisions on access and
price isn't a new construct. It's a European import. In countries such as France
and Germany, layers of bureaucracy like health boards have been specifically
engineered to delay the adoption of new medical products and services, thus
lowering spending.
In France, assessment of medical products is done by the Committee for the
Evaluation of Medicines. Reimbursement rates are set by the National Union of
Sickness Insurance Funds, a group that also negotiates pay to doctors.
In Germany, the Federal Joint Committee regulates reimbursement and
restrictions on prescribing, while the Institute for Quality and Efficiency in
Healthcare does formal cost-effectiveness analysis. The Social Insurance
Organization, technically a part of the Federal Joint Committee, is in charge of
setting prices through a defined formula that monitors doctors' prescribing
behavior and sets their practice budgets. In the past 12 months, the 15 medical
products and services that cleared this process spent an average 35 months under
review. (The shortest review was 19 months, the longest 51.)
In short, other countries where government plays a large role in health care
aren't shy about rationing. Mr. Obama's budget director has acknowledged that
rationing reduces costs. Peter Orszag told Congress last year when he headed the
Congressional Budget Office that spending can be "moderated" if "diffusion of
existing costly services were slowed."
Medicare can already be painstakingly slow. Appealing to it takes patients an
average 21 months according to a 2003 Government Accountability Office report
(17 months involve administrative processing). Layers of commissions and health
boards would delay access still further.
When asked to judge the constitutionality of the Senate HELP committee
proposal, there's a reason why the nonpartisan Congressional Research Service
said that the proposed Medical Advisory Council "raises potentially significant
constitutional concerns." Our Founders thought politicians should be accountable
when it comes to citizens' right to life, liberty and the pursuit of heart
surgery.
Dr. Gottlieb, a physician and resident fellow at the American
Enterprise Institute, is a former senior official at the Centers for Medicare
and Medicaid Services. He is partner to a firm that invests in health-care
companies.
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