Washington Health Policy Week in Review

Washington Health Policy Week in Review is a weekly newsletter that offers selected stories from the daily newsletter CQ HealthBeat.

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Experts Spar Over Best Models for Health Care

By Rebecca Adams, CQ Staff

Health care experts at a forum Monday debated such questions as how payments to medical providers might be structured and how Medicare's administrative costs compare with those of private health insurers.

The hourlong forum, the first public briefing by the Congressional Health Care Caucus this year, featured the views of Karen Davis, president of the Commonwealth Fund, a nonpartisan, left-leaning research organization; Merrill Matthews, director of the Council for Affordable Health Insurance, an advocacy group representing insurers; and Grace-Marie Turner, president of the Galen Institute, a nonprofit organization that promotes free-market ideas.

Davis advocated that Medicare change its payment policies so that medical providers would get one bundled payment to treat people for the duration of an illness, with an emphasis on incentivizing high-quality care rather than a high volume of care, which rewards providers who do not improve patients' health but perform a lot of medical services. The idea is that providers would have incentives to treat people effectively and efficiently. Davis said that changes to the system should be phased-in over time.

However, Turner said she was concerned that this model could create perverse incentives of its own. For instance, she said, a doctor treating a patient for cancer could have an incentive to start by prescribing the least expensive options before trying a more expensive one, even if the costly option would be more effective in treating the patient.

"Everyone is going to be trying to game the system to maximize profit and I'm not sure that the patient is going to continue to be at the center" of decisions, Turner said.

Davis, Merrill, and Turner also debated whether public programs such as Medicare or private insurers are best at holding down administrative costs. Davis said there is "no reason" why insurance companies should spend the amount of money that they do on administrative costs. Merrill and Turner, representing more conservative and industry-friendly views, said that cost comparisons between Medicare and private insurers are unfair because some of Medicare's costs are not explicitly delineated as administrative program costs. They argued that Medicare's "true costs" for administrative expenses are higher than is widely assumed.

The caucus, chaired by Rep. Michael C. Burgess, R-Texas, is planning a series of hearings. The next one will be held Tuesday in the Cannon house office building, said a Burgess aide, and is cosponsored with the American Enterprise Institute.