Will the Medicare Commission survive Congress?
The easy dismissal of the Medicare Commission is that Congress will simply reject its recommendations, no matter how streamlined the process or wise the wonks. The template here is the Medicare Sustainable Growth Rate, which sought a growth rate that was much lower than the reality of Medicare, and prescribed sharp cuts to doctor's payments only to see the cuts overturned by Congress.
There's certainly a possibility that history could repeat itself with the recommendations of the Medicare Commission. But it's being given every chance to take a different course.
The architects of the Medicare Commission idea learned a couple of lessons from SGR. First, the underlying mechanism was too blunt. The choice was between deep cuts to doctor payments or ... nothing. With the Medicare Commission, the spending targets will be more realistic, but just as importantly, the choice will be between a package of reforms to the Medicare program and the insolvency of the federal government. It relies on changes, not cuts.
Moreover, if the Finance Committee and the relevant House committees (not the Congress as a whole, just the committees) don't like the reforms proposed by the commission, they have the option of substituting their reforms that hit the same spending target. There are, in other words, options. At that point, the bill is brought to the floor for an up-or-down vote. Debate is limited, the filibuster is short-circuited and extraneous amendments are not allowed.
It's possible, of course, that Congress will still reject the ideas. At that point, however, it's pretty much time to give up and go home. If there are no circumstances under which Congress will reform Medicare, there are no circumstances under which the federal government will not go bankrupt. It would be interesting to watch the jump in interest rates on Treasury bills the first time Congress rejects a Medicare Commission report, which will also be one of the first times that it really becomes clear that the federal government will not be able to honor its debts.
But Congress has made tough decisions before. The House, for instance, just voted to cut $500 billion from Medicare to reform the health-care system. The Senate is expected to cut a similar amount, and also create a new institution to make future cuts easier. Hard votes often fail, but they occasionally succeed.
As do institutions. "Imagine if the Congressional Budget Office analyzed the Congressional Budget Office," Peter Orszag said to me. "They'd say there was no way this would work. That it was a totally feckless institution. The director is chosen by the Congress. The director can be fired by the Congress. The budget is controlled by the Congress. And yet, CBO is effective. That's because Alice Rivlin and other directors gave it a reputation for independence that nobody could mess with."
The Medicare Commission will require something similar. Like the CBO, it will need strong leadership. Like the CBO, it will need to gain Congress' respect, if not its affection. And like the CBO, the opportunity it has is that it's necessary, and members of Congress may well come to understand that.
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