The health policy team at the Urban Institute is out with a new paper arguing that health reform legislation will do little to constrain costs unless it includes the threat of a government-run program that unilaterally imposes rates the way Medicare does that providers who now serve Medicare patients would be required to participate in.
The mere threat of such a strong public plan might be adequate to induce change, the authors argue. But if targets weren't met, the government would come in with both feet, offering a plan of its own in the local insurance exchange. By reducing payments to providers, such a plan would impose a downward pressure on reimbursement generally and, indirectly, on premiums as well.
Their argument is a well-meaning effort to square the circle between supporters and opponents of the public plan (there won't be one unless the existing system fails to meet targets) and those who argue about whether such a plan would work (there's general agreement it won't have much of an impact unless it can set rates rather than negotiate them as private insurers do).
Triggers are attractive because they seem to guarantee good results without necessarily imposing pain. But they won't work unless they're credible, and past efforts haven't always been, which the Urban analysts acknowledge. Congress has repeatedly ignored triggered warnings about accelerating Medicare bankruptcy.
More relevant is the widespread belief that Congress is on the cusp of undermining a basic Medicare trigger set in the 1990s that basically attempted to relieve the tension between lower rates (imposed by the government) and higher volume (created by providers) by saying that rates would drop if the total bill rose too quickly. Now Medicare physician payment rates will be slashed by better than 20% next year if Congress doesn't once again postpone the day of reckoning.
Smart money bets it will.
Obviously that decision will have an impact on whether the Urban plan would work because it could provide the public plan with a basis for paying doctors 20% less which would permit lower premiums. Whether the existence of a public plan paying such a low rate would accelerate the exit of doctors from the program entirely is a question worth pondering.
Perhaps the most interesting aspect of the Urban proposal is its apparent assumption that we have a healthcare system that can discipline itself. Many of us don't believe such a system exists. What would happen, for instance, if big increases in hospital rates overwhelmed physician restraint and triggered the public option.
As a result, doctors would be included in the new system despite their responsible behavior. Or a more probable big increase in drug prices could make successful hospital cost containment irrelevant.
Once again, the devil's in the details that understandably are subject to negotiation by those who take the basic proposal seriously. Ultimately, though, the new Urban analysis is yet another acknowledgement that the plan now cruising toward enactment probably won't do much to control costs.
