Today’s newsletter highlights several important new pieces from Paragon. First are a report and op-ed from our policy analyst, Joe Albanese, on the disappointing track record of MACRA, the Medicare Access and CHIP Reauthorization Act of 2015. Second is an op-ed I coauthored about Indiana’s aim to improve their health care market through expanded ICHRAs. Finally, I highlight four recent Congressional testimonies by Paragon public advisors.
MACRA: Medicare’s Fitful Quest for Value-Based Care
Paragon’s aptly named report takes a close look at MACRA as another fitful attempt of Washington to improve Medicare. MACRA was billed as a major bipartisan reform aimed at updating Medicare’s payment system for physicians with the aim of rewarding providers for quality rather than quantity of care. In practice, it has done little except add administrative burden and a set of quality metrics that are easily gamed and don’t translate into better or more efficient care.
The omnibus package that Congress passed in December overrode parts of MACRA, and members are discussing whether to revise it further. Paragon’s report provides much-needed historical context to policymakers and staffers grappling with how to pursue Medicare payment reform, showing how government-driven methods for measuring value fall short. As Joe summarized in his accompanying piece in the Washington Examiner on May 16:
Since Congress may revisit MACRA, it should keep in mind the obvious limits of central planning. Fee-for-service payment drives overspending without regard for value, but quality metrics and payment models often reflect the priorities of federal bureaucracies rather than patients themselves. Turning the practice of medicine into a series of depersonalized box-checking exercises only increases cost and complexity without improving health.
Indiana Enacts Pro-ICHRA Legislation
I coauthored a May 15 Newsweek op-ed, To Improve Health Care, Let Consumers Choose, with former National Economic Council Director Al Hubbard on how individual coverage health reimbursement arrangements (ICHRAs) can improve American health care. We begin by noting that most employees have no control over the design of their health coverage and have just a few employer-selected plans to choose from. A 2019 rule from the Trump administration “provides employers with an opportunity to put more control in the hands of their employees.” This rule permits employers to use pre-tax dollars to reimburse employees’ choice of individual market coverage that best fits their needs.
Last month, Indiana legislators enacted a two-year tax credit for small employers (less than 50 full-time employees) that offer ICHRAs. While employers and employees benefit from the option of ICHRAs, Al and I explain that “the main benefit of expanded ICHRAs is how the expanded choice and competition will improve Indiana’s health care market.”
Using an ICHRA, employees will shop for the lowest-cost plan that best meets their needs. As more employees shop for themselves, insurers will develop more attractive and innovative products because they would be selling plans directly to people and would be forced to meet their individual needs, not the needs of the employer. The increased pressure on insurers to offer higher-value products will incentivize them to minimize the prices that they pay for medical services and administrative expenses. This will lead to lower health costs and higher wages.
Read the full op-ed here.
Paragon Public Advisors Testify on Need for Nonprofit Hospital and Public Health Reforms
Three of Paragon’s public advisors recently testified before Congress: Johns Hopkins University professor and CBO health policy advisor Ge Bai; Dr. Marty Makary, a surgeon and professor at Johns Hopkins University; and Carl Schramm, a Syracuse University professor.
On April 24, Dr. Bai testified before the House Committee on Ways and Means, on the efficacy of nonprofit hospitals. Bai discussed the failure of many nonprofit hospitals to provide community benefit, noting that nonprofit hospitals increasingly provide less charity care than for profit hospitals. According to Bai, “In aggregate, tax-exempt hospitals spent $2.30 of every $100 in total expenses incurred on charity care, which was less than for-profit hospitals ($3.80). More than one-third of tax-exempt hospitals (36%) provided less than $1 of charity care for every $100 in total expenses.” Bai also described how the federal 340B Drug Pricing Program has strayed far from its original mission. According to Bai, “this ‘buy-low-sell-low’ program for safety net hospitals has evolved into a ‘buy-low-sell-high’ program for eligible tax-exempt hospitals, who can generate substantial profits by providing these drugs to well insured patients.”
On April 26, Schramm testified before the Senate Committee on the Budget on the implications of climate change for public health. Dr. Schramm discussed how mission creep at the CDC, such as a focus on climate change, has led to profound public health failures. According to Schramm, “CDC, the nation’s principal agency charged with protecting public health, failed to effectively control the COVID pandemic. … the principal reason is that both the CDC and the country’s larger public health establishment, reflecting in part initiatives of Congress and major philanthropies, have expanded the scope and definition of public health such that its boundaries are nearly meaningless to the public.” According to Schramm, only about seven to eight percent of CDC’s workforce is focused on identifying and controlling contagious biological threats.
On May 4, Dr. Makary testified at a Senate HELP Committee hearing on the reauthorization of the Pandemic and All-Hazards Preparedness Act to explain that bureaucracy, not a lack of funding, harmed the government’s pandemic response. According to Makary, “One Johns Hopkins student developed a Covid tracker that the CDC, with its 21,000 employees, was unable to create.” He described how the uncertainty caused by bureaucratic failure led to public health decisions based on opinion, not science. “Regardless of one’s political affiliation, in the absence of good scientific evidence, doctors and the public were flying blind. What filled the void were opinions. That’s how Covid became the most political pandemic in U.S. history.”
On May 11, Dr. Makary testified again, this time before the House Select Subcommittee on the Coronavirus Pandemic. He emphasized how public health officials dismissed the importance of natural immunity. According to Makary, “public health officials made ignoring natural immunity a political badge. They dismissed it by dangling uncertainty about it, saying we don’t know how long it lasts. As if we knew that vaccinated immunity was certain to be durable.” Highlighting the steep costs of this behavior he asked, “Why were life-saving vaccines being used for second doses in those who already had natural immunity when they could have been used as a first dose to save the life of someone with no immunity?”
