For more than the 33 years since I was elected to the U.S. Senate, members of Congress have been working to bend the national health care cost curve. Mainly by changing how the Medicare program pays health care providers. In 1993, President Clinton focused both on Medicare and on other policies to reduce the impact of cost drivers in health care. For example, he sought to expand insurance coverage to every American. He was defeated in this effort by Republicans, led principally by House GOP leader Newt Gingrich who went on to become Speaker when Republicans won the House in the 1994 election.
Democrats in Congress and President Obama were more successful in 2010. They passed the ACA which, besides targeting the cost drivers in health care and accountability in Medicare payment policy, expanded coverage and set important national policy goals of healthy people, healthy communities and a reformed health care payment and delivery system. As they did in 1993, Republicans opposed the ACA and have unanimously sworn to repeal and replace it should they win the Presidency in 2012.
So it’s news that a House Republican and Senate Democrat, who are both health policy aficionados, have agreed to work jointly on a plan to privatize the Medicare program and to limit the amount of federal spending on Medicare, the health insurance program on which 46 million aged and disabled Americans have come to depend because they have been taxed to prepay a part of the premium costs all their working lives.
Proposals to privatize Medicare are not new. With authority from Congress, Medicare piloted them successfully with risk-bearing HMOs starting in 1985. In regions of the country with integrated care systems the HMO was successful in substantially reducing Medicare spending – from 15% to 17% in Minneapolis-St. Paul and Rochester in just two years. Because there was intense competition among private HMOs and because nearly every doctor had to belong to one or the other of them, the result was bending the cost curve for non-Medicare patients as well.
Unfortunately, much of the country didn’t know what an HMO was. Doctors, hospitals and insurers were doing just fine under traditional Medicare’s fee for service system, so they resisted the opportunity to be part of an HMO. Fact is the AMA had been fighting HMOs for decades in their historic battle against “corporate medicine.” Private HMOs like Physicians Health Plan in Minneapolis “went public for-profit,” began acquiring HMOs in other parts of the country, and is now UnitedHealth Group. BCBC non-profits converted and more than half of them nationally are now Wellpoint or other for-profits companies.
These companies supported privatization of Medicare (like Medicare Advantage today) but insisted on getting paid more than traditional Medicare or they wouldn’t compete. In 1998 the managed care plans fought efforts by a Republican House in the Balanced Budget Act of 1997 to require them to bid competitively for Medicare business. Republicans in Congress caved to their entreaties “to protect medical insurance markets.” And health care costs measured by insurance premiums and uncontrolled by any sensible payment policy, went right back up.