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How Obama Plans to Reform Medicare

"To identify and achieve additional savings, I am also open to your ideas about giving special consideration to the recommendations of the Medicare Payment Advisory Commission (MedPAC), a commission created by a Republican Congress," writes Barack Obama in his letter to Sens. Ted Kennedy and Max Baucus. "Under this approach, MedPAC's recommendations on cost reductions would be adopted unless opposed by a joint resolution of the Congress. This is similar to a process that has been used effectively by a commission charged with closing military bases, and could be a valuable tool to help achieve health care reform in a fiscally responsible way."

Just remember kids: You read it here first. But suggesting this is Congress's idea doesn't quite fit. The main congressional legislation on this issue is Sen. Jay Rockefeller's MedPAC Reform Act. Rockefeller would transform MedPAC into an executive branch agency that would act much like a Federal Reserve for Medicare: Commissioners would be confirmed by Congress for six-year terms and their recommendations would be automatically implemented.

The worry of the White House -- and some others -- is that there is good reason that Medicare should not be taken fully from Congress. The program's revenue, after all, flows through the Finance Committee. The program's constituents -- not just industry, but seniors -- have an active, and occasionally even productive, relationship with the legislative branch. And though monetary policy has substantial effects on individual lives, its inherent complexity tends to discourage popular attention. There are very few street protests that are explicitly about interest rate cuts. Not so for Medicare. Health care is very personal.

But that has gone too far. Medicare is effectively frozen. For a long version of this argument, read Bob Berenson and Len Nichols' argument in Making Medicare Sustainable. Last night, I spoke with Nichols, however, and he put it more pithily: "The thing I'd say about the whole genre of proposals in this area is that it's really about empowering information and science and evidence over lobbying. Everything else is a device to make that happen."

"The members of the Finance Committee now who have been there a long time get this," continues Nichols. "They know the Center for Medicare and Medicaid Services does their due diligence and takes their public reporting responsibilities seriously and that device manufacturers present their case to CMS and frequently lose. And when they lose, they come to Congress and get friendly senators to sponsor an amendment and overturn CMS's rules. Every member of finance has seen this hundred times."

This proposal is about stopping time 101 from happening. The key feature of a defense base-style commission (a "BRAC" commission), is that the proposal that goes to Congress cannot be changed. You have to vote for, or against, the whole document. For or against all the recommendations at once. You can't take out the one provision that your hometown device manufacturer didn't like. That raises the stakes. The choice stops being whether you support skinning that one hometown prosthetics makers and becomes whether you support the national need for deficit reduction and health care reform or the parochial interests of the one manufacturer in your hometown. This doesn't guarantee good behavior from Congress, of course, but it makes it more likely.

By Ezra Klein  |  June 3, 2009; 3:11 PM ET
Categories:  Health Reform  
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Next: What MedPAC Recommendations Look Like


Whoa. It is like Daschle's Federal Health Board; he even uses that comparison to the base-closing commission in his book. To make it work I think there needs to be a very considerable broadening of power though.

Posted by: ThomasEN | June 3, 2009 4:33 PM | Report abuse

The brilliant move here, of course, isn't just the policy. It's that Barack Obama specifically mentioned that MEDPAC was created by a Republican Congress.

He's pointing out that this is their baby. This isn't socialists--it's a REPUBLICAN commission. MEDPAC is something they created, and this is an Obama "hey, I'm taking a good Republican idea" moment, as well as making it much more difficult for Republicans to whine about a secret socialist rationing scheme. Democrats have the ultimate comeback: "But YOU GUYS created MEDPAC!"

It's a brilliant piece of politics. He's not going to get caught out again as they were on SCHIP when Republicans argued a 1997 program to give $ to low income families so they could buy private insurance for their kids was secretly socialism.

Posted by: theorajones1 | June 3, 2009 6:13 PM | Report abuse

I thought according to our increasingly less obeyed Constitution, Congress was supposed to be responsible for passing laws, including setting up, funding and overseeing government programs. Giving outside commissions such inordinate power over Medicare, arguably the most important program of the federal government, would be another abandonment of basic constitutional duties of Congress.

Congress already has made a mockery of the Constitution's requirement it, not presidents, declare war. Congress meekly acquiesced in the Bush-Cheney model of a unitary executive, whereby the legislative and judicial branches are subservient to the executive branch in certain areas.

Posted by: Aprogressiveindependent | June 3, 2009 9:05 PM | Report abuse

Good going for Obama!

We need to come up with fresh perspectives relating to the healthcare cost, which are directly impacted by the overall health of our citizens (the less healthy the more the cost).

Our dependence on the medical/research/pharm complex for plans and solutions have let us down over the years. They do a great job of fixing us when we're sick, but when it comes to why we get ill in the first place, they bite!!

Matt Stone, a leading independent health researcher and writer at: has been researching the problem for years and has come up with solid facts which indicate that we have been led in the wrong direction relating to nutrition in this country. The "scientific research" has failed us miserably in this area.

The country needs a wake up call and Obama has to get the corruption and mis-information out of the system. We have developed a national eating disorder of sorts and are headed for a 70% overweight population with no end in sight if we keep following the medical/research/pharma complex's misinformation.

Posted by: ronn44 | June 4, 2009 1:11 PM | Report abuse

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