HCI3 Update from the Field: Challenges and Opportunities

Submitted by francois.debrantes@hci3.org on Thursday, July 14, 2011 - 08:28

HCI3 Update from the Field – Newtown, CT

A number of papers in this week's NEJM remind us of our challenges and opportunities – and do so in an adult and constructive dialogue that is quite refreshing given the imbecility currently reigning over the debt ceiling discussions. Mike Chernew and Katherine Baicker remind us that even in the best of circumstances, the growth in Medicare spending will have to require some increase in allocation of general revenues (and therefore trigger some tax increases), or benefits will have to be cut significantly. Robert Blendon and John Benson illustrate how tremendously difficult reducing benefits in Medicare can be because of the sway that older voters have in general elections. And that sway will increase as the Baby Boomers continue to swell the rolls of the over 65. Ultimately, it's about trade-offs – shifting the financial risk to future Medicare beneficiaries, providers, or, more likely, both in reasonable amounts. Anyone with half a brain gets this, except, seemingly, anyone currently serving in Congress. Balancing risk and reward is the topic of a paper written by Meredith Rosenthal, David Cutler and Judy Feder. In it they show how the two-sided risk model in the proposed ACO regs can be improved by making the upside more appealing. It's an important insight in understanding risk corridors and how they can affect decision-making.

What this means to you – First, if you had any doubt about the importance of the IPAB, Congress' current display of ineptitude should dispel it. If we can't count on these folks to reach some reasonable compromise to avoid debt default, can we truly count on them to make the balanced decisions on cost-sharing? Second, while Chernew and Baicker are skeptical that the shifts in incentives contained in the ACA can help stall the inexorable growth of Medicare spending, we owe it to our children and grandchildren to lay aside all of our self-interests for the common good, and push as hard and fast as we can to move away from fee-for-service. Because if we don't do it, no one will.


Francois de Brantes
Executive Director
Health Care Incentives Improvement Institute, Inc. 
w: www.hci3.org