Premium Support’s Cost Control Problem

My colleague Ezekiel Emanuel makes two important points in a New York Times critique of the new Wyden/Ryan Medicare premium support plan: 1) since the proposal maintains the spending cap of GDP plus 1 percent already included in the Affordable Care Act, Wyden/Ryan “saves nothing in the federal budget,” and 2) the plan shifts beneficiaries into less efficient private plans without actually improving the efficiency of health care delivery. “To address the root of the cost problem, we must change how we pay doctors and hospitals,” Emanuel explains. “We must move away from fee-for-service payments to bundled payments that include all the costs of caring for a patient, thereby encouraging providers to keep patients healthy and avoid unnecessary services. Medicare should announce that it will make this change by Jan. 1, 2022, and that it will begin by switching to bundled payments for cardiac and orthopedic surgery within one year and for cancer patients within five.”