How Entrepreneurs Could Solve Medicare’s Problems
Thursday, January 31, 2013
by John C. Goodman, Greg Scandlen and Devon M. Herrick
Medicare faces growing problems of cost, access and quality. These problems exist because Medicare is structured in a way that eliminates or suppresses features of a normal market system. In order to truly reform Medicare, entrepreneurs must be free to innovate.
In competitive markets, entrepreneurs discover new, more efficient ways of producing products and providing services. They must also compete to attract new customers and always seek to improve quality. In Medicare, this happens only sporadically, if at all.
True reform falls into four basic categories: freeing the patient, freeing the doctor, freeing the market and freeing the insurer.
Freeing the Patient. Instead of treating beneficiaries as passive recipients of government largess, it is time to treat them as partners in the enterprise. This requires making health care more like other consumer markets. In health care, however, prices are difficult to obtain and often meaningless when they are disclosed. The reason: patients rarely pay their own bills.
The first step to freeing the patient is to make individuals responsible for managing at least some of the money. They would benefit from prudent decisions and be penalized by bad ones.
In addition, under a market-based approach, providers find it in their self-interest to solve other people’s problems. The more problems they solve and the more thoroughly they solve them, the more take-home pay they realize. Without in any way discouraging altruism, a market-based approach harnesses the pursuit of financial self-interest in the course of lower-cost, higher-quality, more accessible care.
Free the Doctor. Importantly, in a real market it is the suppliers (in this case health care providers) who come up with the innovations. They develop a new idea and see if anyone wants to buy it. There are many services physicians and other providers would like to offer their patients, but the current system of bureaucratic payments prohibits it, as Medicare has strict rules about how tasks can be combined and reimbursed. The solution is to allow any Medicare provider to propose and obtain a different reimbursement arrangement, provided that: (1) the total cost to government does not increase, (2) patient quality of care does not decrease and (3) the doctor proposes a method of measuring and assuring that conditions (1) and (2) have been satisfied.
Free the Market. Medical fees should be determined the way prices are determined everywhere else in the economy — in the marketplace. However, normal market forces in medical care have been suppressed, making it difficult to determine the actual market price. Furthermore, many economists believe that Medicare uses its purchasing power as the single largest buyer of health care services to push provider fees below market levels.
There are at least 10 important policy changes that can circumvent these two problems and free the marketplace in the process:
Retail Outlets. Medicare should immediately allow enrollees to obtain care at almost all walk-in clinics and free-standing emergency care clinics — paying posted market prices, not Medicare’s prices.
Telephone and E-Mail Services. Medicare should allow beneficiaries to use telephone and e-mail physician services — paying market prices, not Medicare’s prices.
Concierge Doctors. If patients and doctors are willing, Medicare should be willing to throw away its 7,500 item price list, pay some portion of the concierge fee (usually about $1,500 per patient per year) and let the medical marketplace handle the rest.
Billing by Time, Rather Than Task. Doctors should be allowed to change the mix of services they offer. If the change in practice is substantial enough, we should allow patient copayments and let them be determined in the marketplace.
Paramedical Personnel. Nurses and physician assistants should be allowed to perform tasks that do not require a physician’s level of expertise in order to expand the availability of low-cost medical care.
Bundling. Providers should be encouraged to offer package prices for bundled services and Medicare should be willing to pay the package price wherever it is expected to be less than what taxpayers would otherwise have paid.
International Medical Tourism. Medicare should take advantage of the international medical tourism market — a real market where providers routinely compete for patients based on price and quality.
Domestic Medical Tourism. Medicare should allow seniors to share in the savings created by traveling to a higher-quality, lower-cost facility domestically.
Selective Relaxation of Price Controls. Medicare should let a few doctors in a given area — but not most — charge anything they like for covered services. Medicare would continue to pay its list price, but the patient would have to pay any extra charge out of pocket.
Health Care Stamps. Health Care Stamps for low-income seniors eligible for both Medicare and Medicaid (so-called dual-eligibles) would function similar to the Supplemental Nutritional Assistance Program (SNAP), formerly called food stamps, ensuring that the poor can complete for resources with all other buyers of care.
Free the Insurer. Insurers need to be given incentives to create specialized plans — especially for chronic illnesses — that compete with each other. An example can be seen in Medicare Advantage plans, which allow seniors to choose to receive their benefits from a private insurer. The insurers must compete to make their service the most attractive to participants.
Financing Senior Health Care in the Future. The NCPA proposes to replace Medicare’s current structure with a new simplified structure meant to mimic the health insurance benefits the rest of Americans enjoy. A “Standard Comprehensive Plan” (SCP) would be the new “core” Medicare plan. It collapses all of the current archaic divisions of Part A, Part B and Part D into a single comprehensive program with an across-the-board $5,000 deductible. Current enrollees could stay where they are or could switch to the new plan, but all new enrollees would be in the SCP.
The plan would be administered by private carriers under contract to the government, much as Medicare is currently administered. But there could also be competition from private carriers, as there is with Medicare Advantage. These might include Preferred Provider Organizations, Accountable Care Organizations, Health Savings Accounts with higher or variable deductibles, and special needs plans.
The SCP would be accompanied by a Medicare Health Savings Account built on the Roth IRA model (that is, after-tax deposits, tax-free build up and tax-free withdrawals), where seniors can save for premium costs.
Future retirees would save for future health costs using individually-owned Health Insurance Retirement Accounts (HIRAs). Through these accounts current workers would partially prepay future Medicare costs and thereby reduce the projected tax burden on future workers. Initially the mandatory contribution level would be 4 percent of payroll — 2 percent each from the employer and employee. All funds would be invested in diversified, conservative portfolios managed by private agencies that compete on reporting, accounting and other services.
With these reforms, projections based on an actuarial analysis show that Medicare will take little more of national income than it does today. By mid-century, savings would amount to an estimated $2.4 trillion annually compared to the status quo.
Conclusion. The problem with most Medicare reform plans, including the Affordable Care Act, is that they do not change the incentives for any entity involved. The NCPA’s reforms, however, would dramatically change incentives. Specifically, Medicare patients would have a direct financial interest in seeking out low-cost, high-quality care. Providers would have a direct financial interest in producing efficient, high-quality care. And workers/savers would have a financial interest in a long-term financing system that promotes efficient, high-quality care for generations to come.
Medicare, the nation’s health care program for seniors, faces growing problems of cost, access and quality. The solution lies in Medicare reforms that liberate health care providers to innovate, empower patients to control some of the money spent on their health care, and allow workers to save for their retirement health care expenses.
The problems of cost, access and quality exist because Medicare is structured in a way that eliminates or suppresses features of a normal market system. For example:
Because Medicare is a use-it-or-lose-it system, patients benefit only by consuming more health care; they receive no personal benefit from consuming care prudently, and they bear no personal cost if they are wasteful.
Because Medicare providers are trapped in a system in which they are paid predetermined fees for prescribed tasks, they have no financial incentives to improve outcomes; in addition, physicians often are paid less if they provide low-cost, high-quality care.
Because of Medicare’s payment system, patients do not always have the same access as nonseniors to walk-in clinics, freestanding emergency rooms and other lower-cost, higher quality services developed and produced by entrepreneurs.
Because most Medicare enrollees do not have access to the same insurance arrangements available to the working-age population, they usually pay three premiums to three plans — an inefficient arrangement that adds to costs and bureaucracy.
Because Medicare is funded on a pay-as-you-go basis, many of today’s taxpayers are not saving and investing to fund their own post-retirement care; thus, today’s young workers will receive benefits only if future workers are willing to pay exorbitantly high tax rates.
Solving Medicare’s problems requires a new approach: freeing entrepreneurs to innovate. In competitive markets, entrepreneurs discover new, more efficient ways of producing products and providing services. Entrepreneurs compete to attract customers. Entrepreneurs continuously seek to improve quality. In Medicare, these activities only occur sporadically, if they occur at all.
The Problem with Medicare
In health care, many policymakers, government bureaucracies and insurers have approached the issues of cost and greater access to higher quality care as engineering problems.1 They believe that through experimentation with various design features, such as payment methods, they can discover the most efficient way to deliver exactly the kind of care needed, and in just the right dose, to do the most good. They believe it is possible to just copy what works and impose it on all providers across the entire health care industry. The problem with this approach is that it involves tinkering by people on the demand side — the bureaucracies and businesses that pay the bills — rather than relying on innovations by entrepreneurs who are competing with one another on the supply side in any other market.2
There are numerous examples of islands of excellence (Mayo, Intermountain Healthcare, Cleveland Clinic and so forth) on the supply side of the health care market. Their success is often the result of the efforts of a few individual entrepreneurs. However, there is little incentive for other health care providers to copy their successes because there is no penalty for low-quality, high-cost providers when Medicare (or Medicaid) is paying the bills. On the demand side, government, nonprofit foundations and private insurers have sponsored a slew of pilot programs, such as pay-for-performance and others, designed to lower costs, increase access and improve quality. But these efforts have not produced measurable results. In fact, there is no single institution providing high-quality, low-cost care that was created by any demand-side buyer of care. Not the Centers for Medicare and Medicaid Services (CMS), which runs Medicare and Medicaid. Not Medicare. Not BlueCross. Not any employer. Not any payer, anytime, anywhere.
Problem: The Cost of Medicare. Over the last 40 years, Medicare spending has increased at an average annual rate of two percentage points faster than the growth of gross domestic product (GDP).3 Medicare spending already exceeds the payroll and income taxes, premiums and general revenues dedicated to funding the program. Medicare’s projected unfunded liability — the present value of all future promised benefits over and above dedicated funding sources — dwarfs projected spending not only for the Medicare program, but for every other program provided by the federal government.4 In 2012, the Medicare Trustees calculated the unfunded liability of Medicare at $42.8 trillion — nearly three times the size of the U.S. economy.
The Affordable Care Act (ACA) promised to limit the growth in Medicare spending to roughly the growth in the economy by delivering health care more efficiently. If it is successful, Medicare’s financial difficulties will disappear. However, over the past two decades, a plethora of pilot programs and demonstration projects, such as disease management, pay-for-performance and electronic medical records, have tested models that sought to control costs, improve access and increase quality. With few exceptions, most of these programs have proven unsuccessful.
Disease management and care coordination demonstrations, for example, consisted of 34 programs that used nurses as care managers to educate patients about their chronic illnesses, encouraged them to follow self-care regimens, monitored their health, and tracked whether they received recommended tests and treatments. The primary goal was to save money by reducing hospitalizations. However, the Congressional Budget Office (CBO) found:
On average, the 34 programs had little or no effect on hospital admissions.
In nearly every program, spending either was not reduced or increased relative to spending that would have occurred in the absence of the program.
Another pilot program, value-based payment demonstrations, consisted of four programs in which Medicare made bundled payments to hospitals and physicians to cover all services connected with heart bypass surgeries. But the CBO finds that “only one of the four . . . yielded significant savings for the Medicare program,” and in that one, Medicare spending only “declined by about 10 percent.”5
Problem: Access to Care. Given these dismal results, if the Affordable Care Act does not achieve the savings necessary to rein in the growth of Medicare through increased efficiency, it will have to contain costs in other ways.6
The ACA does not implement any reforms that would improve the efficiency of Medicare. Without reforms that remedy Medicare’s inefficiencies, the only way spending can be constrained is by rationing care. Cutting provider fees is one way to ration care.
Such spending cuts would reduce Medicare payments to doctors below Medicaid rates in about two years [see Figure I]. Seniors would become financially less desirable patients than Medicaid enrollees. As a result, more and more doctors would refuse to accept new Medicare patients. Already, some doctors are dropping out of the Medicare program altogether.7
In addition, cuts in payments to hospitals are planned (for both Medicare and Medicaid). These cuts will reduce Medicare payments to hospitals to less than one-third of what private insurers pay. [See Figure II.] As a result, the supply of health care services will contract and an estimated one in seven hospitals will become unavailable to Medicare patients by the end of this decade.8 Senior citizens will find it increasingly difficult to obtain access to care. In fact, Harvard University health economist Joseph Newhouse predicts senior citizens and the disabled — those who depend on Medicare Part A — may be forced to seek care at community health centers and in the emergency rooms of safety net hospitals, just as Medicaid recipients do today.9
Previous efforts to rein in the growth of Medicare spending by cutting fees paid to doctors, hospitals and other providers have been launched over the years, but none have been fully implemented. For example, the Sustainable Growth Rate (SGR), created in 1997, is a mechanism established to control Medicare spending by reducing the growth of payments to doctors and health care providers. Due to concerns that more and more doctors will stop providing care for current and new Medicare patients, Congress has suspended SGR rate cuts nine years in a row. Eventually, further cuts in provider fees are likely. However, Medicare already pays doctors and hospitals 20 percent and 30 percent less, respectively, than privately-insured patients. As a result, many providers are already limiting the number of Medicare patients they will treat.10 Additional cuts in provider fees would accelerate this trend.
Problem: Quality of Care. Medicare typically does not pay more for services that would improve quality. For instance, coordinating the care of patients with multiple chronic conditions would improve the delivery of care to those patients and could potentially improve their medical outcomes.11 However, Medicare does not pay doctors and hospitals that make the extra effort to integrate and coordinate medical care provided to chronically ill patients. For example:
Doctors and hospitals provide fragmented services to diabetics, but do not manage the patient’s treatment from beginning to end by offering coordinated diabetic care.
Patients with chronic conditions could manage much of their own care, but Medicare does not pay doctors to train diabetics to manage their own care.
The result is that many innovations that could incrementally improve health care quality are largely absent.12
Solving the Problems of Medicare through Entrepreneurship
There is no single overarching solution to reduce the growth in Medicare spending. Rather, thousands of small solutions need to be tried and implemented. Those that succeed will make a significant difference. This is how innovation works in the marketplace: Competing producers make many small improvements to the products and services they offer in order to anticipate and meet the demand of potential customers while relentlessly looking for ways to reduce the cost of production or delivery of services.
The same type of innovations could do the same for the Medicare program. Under current law, however, health care entrepreneurs have little incentive to innovate because they cannot gain from their success. Congress needs to give doctors, hospitals and other Medicare providers the entrepreneurial flexibility to experiment and identify unique solutions. Medicare should be receptive and flexible enough to allow these entrepreneurial providers to propose alternative compensation agreements for specific procedures if new protocols lower costs without lowering quality. Furthermore, to encourage providers to innovate, both providers and the government need to share in the savings.
True reform falls into four basic categories: freeing the patient, freeing the doctor, freeing the market and freeing the insurer. The impact of each of these reforms is discussed below.
Free the Patient. Instead of treating beneficiaries as passive recipients of government largess, it is time to empower seniors by allowing them to control more of the health care dollars that pay for their care. This requires making health care for seniors on Medicare more like other markets consumers are familiar with — markets where consumers make rational decisions based on comparisons of price and quality. In doing so, they benefit from prudent decisions and are penalized by bad ones.
Every day, millions of American consumers go shopping. They compare the prices and quality of goods and services ranging from groceries to cellular telephone service to fast food to housing. But prices for health care are difficult to obtain and often meaningless when they are disclosed. Doctors and hospitals do not disclose prices in advance of performing services because they do not compete for patients based on price. The reason: Patients rarely pay their own health care bills.13
Health care is characterized by third-party payment. Patients pay, on average, only about 11 percent of their medical bills directly. Third party insurers pay the remaining 89 percent. When patients enter their doctor’s office, they only pay about 10 percent of the bill; when they enter the hospital, they only pay about 3 percent. Because of the presence of third party payment, patients care little about the cost of medical care. When patients only pay 10 percent of their medical bills, they only care about 10 percent as much about high prices as they would care when paying the entire tab directly. This creates a powerful disincentive to controlling cost.
If Medicare beneficiaries were given control over a portion of the funds spent on their health care, several million additional people would suddenly have money in hand to shop for services. Some successful examples of individuals managing some of the funds spent on their care include:
Cash and Counseling.14 From 1999 to 2003, the Robert Wood Johnson Foundation’s Cash and Counseling experiments in four states gave disabled Medicaid recipients a budget to hire the attendants of their choice to provide care in their homes. Before the experiment, disabled Medicaid recipients had no say in who came to their homes, what they were paid, when they came or what they did. During the experiment, recipients could hire and fire their caregivers, set their wages, and determine their hours and terms of employment.
Consumer-directed care reduced rates of unmet need, theft and injury. Though individuals purchased fewer hours of attendant care overall, they were more satisfied. In fact, patient satisfaction was almost 100 percent. In the second year of the experiment, Medicaid beneficiaries in Cash and Counseling spent fewer days in nursing homes and had fewer home health therapy visits. Cash and Counseling’s wage flexibility allowed the disabled to receive the care they were promised. As a result of this success, about half of the states are currently either experimenting with Cash and Counseling or a similar program, Independence Plus, under a waiver of Medicaid rules designed to expedite requests for consumer-directed support services.15
Other Examples of Self-Directed Care. Many European countries are implementing similar self-directed care approaches.16 For example:
In Germany and Austria, a cash payment is made to people eligible for long-term care — with few strings attached and little oversight on how the money is spent. In England and the Netherlands, the disabled and the elderly manage budgets in a manner similar to Cash and Counseling in the United States.
The British National Health Service (NHS) is already contributing to self-directed care budgets for muscular dystrophy, severe epilepsy and chronic obstructive pulmonary disease. The NHS believes it is saving money in reduced hospital and nursing home costs. The NHS is also about to launch pilot programs that will include mental health, long-term chronic conditions, maternity care, substance abuse, children with complex health conditions, and end-of-life care.
In this country, Florida and Texas have self-directed care programs for patients with serious mental illness, and the Veterans Administration has a self-directed care program operating in 20 states for long-term care and mental illness.
Individuals with Chronic Conditions. The greatest potential for successful programs emphasizing self-directed care is in the treatment of chronic illness. By some estimates, more than half of U.S. health care spending is for patients with chronic conditions. Indeed, about 60 percent of all health care spending for people age 65 and above is for chronic care services, according to economist Christopher Conover.17 This money is wasted because care is often delivered in discrete, disjointed and disconnected ways. The most efficient form of therapy (drugs) is substantially underutilized. And many chronic patients are not receiving care at all.18
Studies show that chronic patients can often manage their own care with results as good as or better than traditional care. Moreover, if patients are going to manage their own care, it makes sense to allow them to manage the money that pays for that care. People with chronic conditions typically consume multiple prescription drugs, which opens up a plethora of opportunities for better care. Individuals with chronic conditions are often sick enough to be highly motivated to seek better care, but still healthy enough to function as active consumers.
Mobility is often a problem for patients with chronic conditions. These individuals would greatly benefit if their regular physician could stop by the house to check on them, or if they could use the phone or e-mail to update their physician on how they are doing, or if they did not have to wait an hour to see their doctor in the office.
Medicare Part D is a good example of the kind of program that does far more to improve the care of patients than simply paying for drug purchases. Many of these Part D plans also recommend ways to save money with generic substitution, delivery by mail order and bulk purchasing, when appropriate. They send out reminders when it is time to refill a prescription and offer suggestions for management of chronic conditions at home.
Those with comorbidities (patients with more than one health issue) or who see multiple specialists might find it a blessing if all their providers had the same updated information in an electronic record.
Fortunately, there is a better way. Under a market-based approach, providers find it in their self-interest to solve other people’s problems. The more problems they solve and the more thoroughly they solve them, the more take-home pay they realize. Without in any way discouraging altruism, a market-based approach harnesses the pursuit of financial self-interest in the course of lower-cost, higher-quality, more accessible care.19
Free the Provider. Doctors participating in Medicare today must practice medicine within an outmoded, wasteful payment system. Typically, they receive no financial reward for talking to patients by telephone, communicating by e-mail, teaching patients how to manage their own care, or helping them be better consumers in the market for drugs. These activities are not reimbursable, however, because Medicare pays only for specific tasks that must be performed in a doctor’s office or other provider setting, such as a hospital or laboratory. Thus, doctors who help patients in these ways are taking away from other billable uses of their time and, in fact, may end up with less payment from Medicare. Other health care providers face the same perverse incentives. All too often, high-cost, low-quality care is reimbursed at a higher rate than the alternative, and Medicare’s payment rules get in the way of providers working together to improve health care.
In a real marketplace, the suppliers are the innovators. An entrepreneur develops a new idea, then launches it into the marketplace hoping someone will buy it. This is how most of the technological innovations of the past 40 years came on the market. No consumers were beating on the doors of tech companies demanding fax machines, e-mail, CD players or iPods. In fact, consumers did not even know such things could exist until entrepreneurs unveiled them.
Physicians and other providers would like to offer their patients a variety of innovative services, but the current system of bureaucratic payments prohibits it. For example, Camden, New Jersey, physician Jeffrey Brenner is saving millions of dollars for Medicare and Medicaid by essentially performing social work services to reduce spending on his most costly patients. 20 But “social work” is not on the list of 7,500 tasks Medicare will reimburse doctors for, so he gets nothing in return for all his efforts.21
Geisinger Health System is another example. The company offers a warranty of sorts on cardiac surgery to payers willing to reimburse Geisinger a higher initial amount. Geisinger absorbs all costs for unforeseen complications, follow-up treatments or readmissions. However, Medicare lacks the flexibility to pay Geisinger a higher reimbursement — even if the company saves Medicare money in the long run.22
In another case, Virginia Mason Medical Center found a less expensive way to treat lower back pain by substituting less-invasive physical therapy for more costly (but no more effective) digital imaging and surgery. But it lost money on each procedure because its less-invasive protocols lowered revenue. Virginia Mason went to insurers and offered to continue the program in return for higher reimbursements for the procedures performed. However, Medicare does not have the flexibility to offer higher reimbursement, even though it would save taxpayers money.23
Medicare has strict rules about how tasks can be combined. For example, “special needs” patients typically have five or more comorbidities. Medicare spends about $60,000 per year on each of these patients, and they consume a large share of Medicare’s budget. Ideally, when one of these patients sees a doctor, the doctor would deal with all five problems sequentially. That effort would economize on the patient’s time and ensure that the treatment regime for each malady is integrated and consistent with all the others.
Under Medicare’s payment system, however, a specialist can only bill Medicare the full fee for treating one of the five conditions during a single visit. If she treats the other four, she can only bill half-price for those services. And the situation is even worse for primary care physicians — they cannot bill anything for treating the additional four conditions.24
The solution? Any Medicare provider should be able to propose and obtain a different reimbursement arrangement, provided that: (1) the total cost to government does not increase, (2) patient quality of care does not decrease, and (3) the doctor proposes a method of measuring and assuring that conditions (1) and (2) have been satisfied.25
Free the Market. Once we have freed the patient (buyer) and freed the doctor (seller), we can finally look at what a free market might look like. In a free market medical fees should be determined the way prices are determined everywhere else in the economy — in the marketplace. However, two problems arise when trying to achieve this.
First, the third-party payer and Medicare systems have suppressed normal market forces in medical care for many years. How can market prices exist where no real market exists? Medicare has a list of some 7,500 separate tasks it pays physicians to perform. For each task a price exists that varies according to location and other factors. Of the 780,000 practicing physicians in this country, not all are in Medicare and no doctor is going to perform every task on Medicare’s list. Yet Medicare is potentially setting about six billion prices across the country at any one time. Each price Medicare pays is tied to a patient with a condition. And with the 7,500 things doctors could possibly do to treat a given condition, Medicare must be just as diligent in not paying for inappropriate care as it is in paying for necessary procedures. So, in fact, Medicare isn’t just setting prices. It is regulating whole transactions.
Is there any chance that Medicare can set prices and approve transactions in a way that does not cause serious problems? Not likely. And what happens when Medicare gets it wrong? One result is that doctors face perverse incentives to provide care that is costlier and less appropriate than the care they should be providing. Another result is that the skill sets of our nation’s doctors become misallocated, as medical students and practicing doctors respond to the fact that Medicare overpays for some procedures and underpays for others.
Second, many economists believe that Medicare, as the single largest buyer of health care services in America, uses its purchasing power to push provider fees below market levels. Economic theory predicts that this monopsony power not only allows Medicare to pay rates below what a free market would set, it also results in a lower volume of services. In this case, that means less medical care. Without government acting as a monopsony buyer, patients might pay more for the services they currently get, but they would also get more care, or their access to higher-quality care would improve.
There are at least 10 important policy changes that can circumvent these two problems and free the marketplace in the process.26
1. Retail Outlets. All over the country, retail establishments have begun to offer primary care services to cash-paying patients. Because these services arose outside of the third-party payment system, they offer free-market prices. Walk-in clinics, doc-in-the-box clinics and freestanding emergency care clinics post prices and usually deliver high quality care. Many follow evidence-based protocols, keep records electronically and order prescriptions electronically.
Medicare should immediately allow enrollees to obtain care at almost all of these places — paying posted market prices, not Medicare’s prices. These fees are far below what Medicare would have paid at a physician’s office or hospital emergency room: thus, reform would lower Medicare’s costs, even as it makes primary care more accessible.
2. Telephone and E-Mail Services. Medicare should allow enrollees to take advantage of commercial telephone and e-mail services. Research has shown that only 24 percent of physicians communicate with patients by e-mail, only 19 percent use electronic medical records and very few make adequate use of the telephone, mostly because third-party payers, including Medicare, do not pay for these services.
TelaDoc is a company that offers physician telephone consultations at a price that is usually lower than the same service delivered by a nurse at a Minute Clinic.27 And, where appropriate, its services are more accessible than those of the walk-in clinic. Also, TelaDoc doctors use electronic medical records and they prescribe electronically. Again, it is important to pay market prices, not Medicare’s prices, although Medicare patients should probably pay a good portion of the cost of each phone call out of pocket. Telephone and e-mail services are not comprehensive practices, but are meant to supplement care provided by a patient’s regular provider when, for instance, the patient is traveling.
3. Concierge Doctors. Medicare should encourage physicians to repackage and reprice their services in ways that are good for the doctor, good for the patient and good for Medicare. For example, Medicare should encourage — rather than discourage — the emergence of concierge doctor arrangements.
A typical concierge doctor charges about $1,500 per patient per year. In return, patients get telephone and e-mail consultations, same-day or next-day appointments, electronic medical records, electronic prescribing and so forth, and an agent to help them solve problems in dealing with the rest of the health care system. If patients and doctors are willing to participate in this form of health care system, Medicare should throw its 7,500 item price list away, pay some portion of the concierge fee and let the medical marketplace handle everything else.
4. Billing by Time, Rather Than Task. Most professionals are paid by the time it takes to deliver their services, not by the task — the way doctors are paid. And when we pay doctors by task, we will always omit valuable services from the price list, no matter how long the list. In the current system, doctors get no compensation (or woefully inadequate compensation) for talking to patients by telephone and e-mail, for patient education, for helping patients become smart shoppers for drugs and diagnostic tests, and for dozens of other things.
As an alternative, we should allow doctors to change the mix of services they offer, and pay them for their time. If the change in practice is substantial enough, we should allow patient copayments and let them be determined in the marketplace. The test of whether the new set of services has added value is whether seniors are willing to pay more out of pocket to get them.
5. Paramedical Personnel. One way to expand the supply of low-cost medical care is through the increased use of nurses and physician assistants to perform tasks that do not require a physician’s level of expertise. The current system discourages the creative use of paramedical personnel, however. The reason: When a task is performed by a nurse rather than a physician, Medicare automatically reduces its fee.28
The term “provider” must be redefined. A “provider” is not only a hospital or a health care professional, but might be any qualified individual or company that serves empowered patients. Relaxed state laws and regulations that prevent trained individuals from providing specific services without the supervision of physicians might expand the supply of caregivers and put downward pressure on prices. Examples of these include nurse practitioners who work in both traditional and nontraditional settings, such as retail clinics.29
Needed changes should also address both how providers are trained and who is trained. Pharmacists, for example, have extensive training in drug therapies but are prevented from dispensing all but over-the-counter remedies without a doctor’s prescription.30 However, many countries allow pharmacists to dispense so-called “behind-the-counter drugs” to patients after a brief consultation to determine if the therapy is appropriate.
6. Bundling. One of the obstacles to offering patients a package surgery price, covering all services, is that surgery typically involves several entities, each of whom is financially independent — the hospital, the surgeon, the anesthetist and so forth. In a normal market, independent entities come together all the time, jointly produce a good or service, and agree on how to divide the revenue. This would happen in medicine were it not for the so-called Stark laws, which make such arrangements illegal.31
Providers should be encouraged to offer package prices for bundled services, and Medicare should be willing to pay the package price whenever it is expected to be less than what taxpayers would otherwise have paid. Patients should share in the savings in order to encourage them to patronize lower cost, higher quality care.
7. International Medical Tourism. Today’s patient doesn’t have to go to India, Thailand or Singapore to find high-quality, low-cost medical care. Medical tourism is coming much closer. For example, a renowned Indian heart surgeon is building a medical tourist facility in the Cayman Islands. Others will surely follow suit. The growth of this business has been explosive. A search for the term “medical tourism” turned up 615 million hits on Bing.com. It includes cosmetic surgery in Brazil and Argentina, dental procedures in Mexico and Costa Rica, and cancer care in Dubai. Since the international medical tourism market is a real market where providers routinely compete for patients based on price and quality, Medicare should take advantage of it.
Further, if a patient saves money for Medicare by traveling, the patient should share in the savings. As in the case of doctors, patients should be encouraged to make money by saving Medicare money.
Of particular interest to people on Medicare might be hip transplants. While the typical cost of a hip transplant in the United States might be $40,000, one can obtain the procedure for $8,000 in India, $15,000 in Singapore and as low as $19,000 through a domestic network in the United States. 32
8. Domestic Medical Tourism. A patient does not actually have to go off shore to participate in the market for medical tourism. There is a flourishing market for it in North America. The only problem: The option is not available to Americans. Canadians, for example, routinely come to the United States for surgical procedures, and they usually face a package price for all services agreed to in advance. The general rule: Hospitals only step outside the system and charge package prices to people who travel (thus, they are a marginal customer) and who pay out of pocket (thus, the hospital has to compete on price).
Seniors could participate in this market, and they would if Medicare allowed them to share in the savings created by traveling to a higher quality, lower cost facility.
Medical tourism may appear to be a more difficult proposition for Medicare beneficiaries with chronic conditions. The very qualities that make concierge medicine or physician house calls attractive to these folks (lack of mobility and so forth) are likely to make a trip to India for a procedure less appealing. However, “domestic tourism,” such as a California patient going to Oklahoma for a lower cost elective procedure, would be a viable option for many people on Medicare. But it would likely require some form of facilitator such as MediBid, which allows providers to bid on providing a particular service to a particular patient, or North American Surgery, which offers substantial cash discounts on the services of some two dozen surgical centers in the United States.33
9. Selective Relaxation of Price Controls. There is substantial evidence that Medicare fees are well below normal fees paid by the private sector. There is very little evidence to show us what difference this makes, however. Are we substituting rationing by waiting for rationing by price? Are seniors getting lower quality care? Are they being deprived of amenities? One way to answer these questions is to allow a few doctors in a given area — but not most — to charge anything they like for Medicare covered services. Medicare would continue to pay its list price, but the patient would have to pay any remaining extra charge out of pocket.
Patients would have a choice. They could go to doctors who charge the regulated Medicare fee, or they could go to doctors who charge a market-determined fee. Here is the test: Can doctors who are free to do so attract patients even though those patients have to pay more than they would pay elsewhere? If so, the meaning is clear: Under the current system Medicare patients are being denied convenience, amenities and perhaps quality that they are willing to pay for in the market. In the face of such evidence, Medicare should then be willing to allow even more doctors the same option.
10. Health Care Stamps. One way to make the transition from the current centrally controlled system to individual control for low-income seniors eligible for both Medicare and Medicaid would be to distribute benefits in a framework similar to the Supplemental Nutritional Assistance Program (SNAP), formerly called food stamps.
Supermarkets contain thousands of individual products all with prices attached. Since food is a necessity, just as health care, how do we ensure that food is available to all? Rather than having “Foodcare,” we subsidize low-income individuals by selling them “dollar value food stamps” at discounted prices. Since most individuals consume more than their food stamp limit, on the margin they are spending a dollar for a dollar. However, if they choose to use their food stamps dollars to buy pricey steak instead of hamburger, they will have less to spend on other products.
Competition for food stamp dollars forces stores to compete on price and, unlike health care, the prices are transparent. Indeed, every newspaper contains full-page ads in which price plays a dominant role. A combination of health care stamps for smaller bills and so-called premium support (discussed later) for the purchase of private insurance coverage for major medical expenses would help control Medicare costs for the dual eligibles and allow the elderly to consume whatever level of health care they desire.
These health care dollars would be full dollars to providers, ensuring that the poor can complete for resources with all other buyers of care.
In each of these cases, the principle is the same: Let markets do what only markets can do well. In essence, the market would replace the gigantic Medicare regulatory apparatus.
Free the Insurer. Insurers need incentives to create specialized plans — especially for chronic illnesses — that compete with each other to attract patients. An example of this type of competition can be seen in the private Medicare Advantage plans, where insurers compete to make their service the most attractive to participants.
About one in every four seniors is enrolled in a Medicare Advantage plan. Medicare pays these plans a risk-adjusted premium reflecting the expected cost of the enrollee, based on age, sex, previous medical history, comorbidities and so forth. These plans are populated primarily by low- and moderate-income members — seniors who have too much income to qualify for Medicaid, but are generally too poor to afford supplemental Medigap insurance. Without Medicare Advantage, these seniors would have only the skimpy benefits that Medicare provides — leaving them exposed to thousands of dollars in potential out-of-pocket costs. With Medicare Advantage, they have the kind of coverage comparable to what most nonseniors have.
Critics have complained that the government pays Medicare Advantage plans about 13 percent more than conventional Medicare would have spent. However, Medicare Advantage plans provide seniors extra benefits, including lower out-of-pocket payments and better coverage for drugs, preventive care and chronic disease. On the average, Medicare Advantage plans provide approximately $825 in added benefits annually compared to traditional Medicare.34
On measures of quality and efficiency, Medicare Advantage managed care plans score quite well against conventional Medicare. Consider:35
Medicare Advantage enrollees had 33 percent more doctor visits (presumably representing more primary care), yet experienced 18 percent fewer hospital days and 10 percent fewer hospital admissions.
More importantly, enrollees had 27 percent fewer emergency room visits, 13 percent fewer avoidable admissions and 42 percent fewer readmissions.
Medicare Advantage plans could be improved. Right now, almost all enrollees are in Health Maintenance Organizations (HMOs). Very few have Health Savings Accounts (HSAs). And there is no practical way for the chronically ill to manage their own budgets, the way the Medicaid disabled can in the Cash and Counseling pilot programs.
While Medicare Advantage plans often pay for medical care the same way the conventional Medicare program pays, a more interesting arrangement exists where the actual care is provided by entirely separate entities, often called Independent Delivery Networks. Under a typical arrangement, the insurer specializes in the insurance aspects of the plan (benefit design, actuarial analysis, claim adjudication, marketing, accounting and so forth) and the Independent Delivery Network specializes in health care delivery. One such a system is IntegraNet, an organization with a network of about 1,200 doctors. Every Medicare patient has a medical home. The physicians follow evidence-based practices, and care is integrated and coordinated. In addition, electronic records are being introduced. It appears that quality is higher and costs are lower than in conventional organizations providing Medicare services.36
Financing Senior Health Care in the Future
Under the current structure, seniors pay as many as three premiums to three plans (Medicare Part B premium, Medigap premium and Part D premium) and often still do not have the coverage nonseniors typically have. The NCPA proposes to replace this structure with a new simplified structure meant to mimic the health insurance benefits the rest of Americans enjoy. How could such a program be designed and implemented?37
Standard Comprehensive Plan. A “Standard Comprehensive Plan” (SCP) would be the new “core” Medicare plan. It collapses all of the current archaic divisions of Part A, Part B and Part D into a single comprehensive program with an across-the-board $5,000 deductible. Current enrollees could stay where they are or could switch into the new plan, but all new enrollees would enroll in the SCP.
The SCP program would be administered by private carriers under contract to the government, much as Medicare is currently administered. But there could also be competition from private carriers, much like there is with Medicare Advantage. These private competitors would be paid risk-adjusted premiums. Other innovative plans might participate as well. These might include HMOs, Preferred Provider Organizations, HSAs with higher or variable deductibles, and special needs plans.
Medicare Health Savings Accounts. The new Medicare SCP would be accompanied by a Medicare Health Savings Account (MHSA). Like the Roth IRA, individuals would make after-tax deposits, interest would build up tax-free and withdrawals for health care expenses would be tax-free. They should be very attractive to seniors whose incomes (and tax burdens) are typically lower. Unlike the current Medicare Medical Savings Account program, which is solely public money, there would be no public funds put in the MHSA. The funds would come from money that seniors would otherwise spend on out-of-pocket costs or Medigap premiums.
A Roth-type account is attractive for two reasons. First, most senior health spending is already made with after-tax dollars. Indeed, out-of-pocket spending and Medigap premiums not paid by an employer are clearly after-tax. Payroll tax dollars for Part A coverage have already been subjected to the income tax. And Part B premiums are deducted from Social Security benefits that are subjected to income taxation through the Social Security benefits tax.
Second, a Roth account allows the beneficiary to make unbiased choices between health care and other uses of money. With a regular HSA, a dollar withdrawn for nonhealth purposes faces a 30 percent tax, say, for someone in a 30 percent tax bracket. That means a dollar of health care must trade against 70 cents of other goods. With a Roth account, by contrast, a dollar of health care trades against a dollar’s worth of other goods and services. As a result, people will not spend a dollar on health care unless they get a dollar’s worth of value.38
Health Insurance Retirement Accounts. Individually-owned Health Insurance Retirement Accounts (HIRAs) would allow people to prefund some of their postretirement health care benefits. Through these accounts current workers would partially prepay future Medicare costs and thereby reduce the projected tax burden on future workers.39
Initially, the mandatory contribution level would be 4 percent of payroll — 2 percent each from the employer and employee. All funds would be invested in diversified, conservative, international portfolios managed by private security agencies. These companies would compete, as in the case of Chile’s social security system, not on portfolio selection but on reporting, accounting and other services.
While individuals would be the nominal owners of their HIRAs, their rights to these funds would be contingent on two factors. First, an individual must survive to the age of eligibility for Medicare. In the case of an early death, a worker’s fund would be distributed to the accounts of all remaining workers. Second, the SCPs would receive risk-rated premiums for all their enrollees. The risk rating could be achieved initially by adjusting the government’s contribution. However, over time, HIRA balances in overfunded accounts could be “taxed” to make risk-rated premium payments on behalf of individuals with underfunded accounts. Then, HIRA owners would be entitled to a “risk-rated annual withdrawal.”
Owners of HIRA accounts would have these insurance options: (1) They could cede their funds to the government and enroll in a conventional Medicare SCP, (2) they could purchase an annuity to be used to pay private health insurance premiums and purchase health care directly, or (3) they could keep the account and withdraw a specified amount each year for the payment of premiums, with the withdrawal percentage determined by the government.40
Unlike the current Medicare Advantage program, using HIRA funds to purchase private insurance would be based on a long-term relationship between seniors and their insurers rather than a system that encourages annual plan switching. A long-term relationship with an insurer typically also makes possible a long-term relationship with providers of care. In addition, if insurers know they will be responsible for care in the future, they will have incentives to make investments today that have future health consequences. Hence, the insurance contract should be at least five years in duration, and perhaps even longer.
Even though most seniors would have long-term relationships with their insurer, that does not preclude the opportunity to switch plans. Certainly, seniors should be able to make another choice if their plan is abusive or fails to honor its contracts.
Health plans should be encouraged to create specialized treatment plans if there are advantages to doing so. For example, one plan might become the best at cancer care and try to solicit cancer patients from other plans. In order to make such a switch, all three parties (patient, original insurer, new insurer) must agree; and achieving agreement may involve severance payments between the insurers. In this way, the new system would encourage a “market for sick people” in which health plans will find it in their financial self-interest to attract patients by providing efficient, high-quality care.41
Effects of Medicare Reforms
The problem with most Medicare reform plans, including the Affordable Care Act, is that they do not change the incentives for providers or patients. The NCPA’s reforms, however, would dramatically change incentives. Whether in their role as patient, provider or worker/saver, people would reap the benefits of socially beneficial behavior and incur the costs of socially undesirable behavior.
Specifically, Medicare patients would have a direct financial interest in seeking out low-cost, high-quality care. Providers would have a direct financial interest in producing efficient, high-quality care. And workers/savers would have a financial interest in a long-term financing system that promotes efficient, high-quality care for generations to come.
With assistance from senior fellow Andrew J. Rettenmaier, the NCPA performed economic simulations of the long-term impact of some of these reforms.42 The NCPA also engaged Milliman Inc., a nationally recognized actuarial consulting firm, to analyze the NCPA’s Medicare Reform Plan.43 Actuaries modeled various scenarios, resulting in a range of estimates of the percent of gross domestic product (GDP) consumed by Medicare over a 40-year period under the reform proposal.44 The bottom line: Under reasonable assumptions, we can reach the mid-21st century with seniors paying no more (as a share of the cost of the program) than the premiums they pay today and with a taxpayer burden (relative to national income) no greater than the burden today. Along the way, the structure of Medicare financing will be totally transformed.
There is no prefunding of Medicare today — nearly all of Medicare spending is funded through taxes. With no reform, the size of the Medicare program will more than double (relative to national income) by the middle of this century. [See Figure III.]
However, with reform, Medicare will take little more of national income than it does today. By mid-century (2053), the NCPA Plan would save an estimated $2.4 trillion annually compared to the status quo. [See Figure IV.] Of this:
An estimated one-fifth ($434 billion) will come from better incentives that reduce the rate of health care inflation (that is, the medical trend rate).
An estimated one-third of the savings ($787 billion) will come from reduced use of benefits by seniors.
An estimated one-fourth ($651 billion) will come from increased cost-sharing by seniors.
Medicare must be reformed, but the current ideas in Washington are guaranteed to fail. They are clumsy and bureaucratically imposed. The only cost control idea the Affordable Care Act offers is the Independent Payment Advisory Board (IPAB), that will make arbitrary cuts to provider payments. The other idea is the creation of Accountable Care Organizations, which are similar to Health Maintenance Organizations (HMOs).45 This is not reform and it will not work any better than all of the other ideas that have been tried over the past 30 years. By unleashing the power of entrepreneurs and consumers of health care, Medicare’s problems of cost, access and quality can be solved.
1. John Goodman, “Doctors as Engineers,” John Goodman’s Health Policy Blog, Health Alerts, August 30, 2010. Available at http://healthblog.ncpa.org/doctors-as-engineers/.
2. John C. Goodman, “Why the Pilot Programs Fail,” John Goodman’s Health Policy Blog, January 30, 2012. Available at http://healthblog.ncpa.org/why-the-pilot-programs-failed/.
3. Andrew J. Rettenmaier and Thomas R. Saving, “Medicare: Past, Present and Future,” National Center for Policy Analysis, Policy Report No. 299, July 1, 2007. Available at http://www.ncpa.org/pub/st299.
4. Medicare’s unfunded obligations were more than double Social Security’s. Pamela Villarreal, “Social Security and Medicare Projections: 2009,” National Center for Policy Analysis, Brief Analysis No. 662, June 9, 2011. Available at http://www.ncpa.org/pub/ba662.
5. “Lessons from Medicare’s Demonstration Projects on Disease Management, Care Coordination, and Value-Based Payment,” Congressional Budget Office Director’s Blog, January 18, 2012. Available at http://cboblog.cbo.gov/?p=3158.
6. Andrew Rettenmaier and Thomas Saving, “Medicare Trustees Reports 2010 and 2009: What a Difference a Year Makes,” National Center for Policy Analysis, Policy Report No. 330, November 18, 2010. Available at http://www.ncpa.org/pdfs/st330.pdf.
7. For example, Todd Ackerman, “Texas doctors fleeing Medicare in droves,” Houston Chronicle, May 18, 2010. Available at http://www.chron.com/news/houston-texas/article/Texas-doctors-fleeing-Medicare-in-droves-1718866.php.
8. John D. Shatto and M. Kent Clemens, “Projected Medicare Expenditures under an Illustrative Scenario with Alternative Payment Updates to Medicare Providers,” Centers for Medicare and Medicaid Services, U.S. Department of Health and Human Services, August 5, 2010. Available at http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/ReportsTrustFunds/downloads/2010TRAlternativeScenario.pdf.
9. Joseph P. Newhouse, “Assessing Health Reform’s Impact On Four Key Groups Of Americans,” Health Affairs, Vol. 29, No. 9, September 2010, pages 1,714-1,724. See also Richard S. Foster, “Estimated Financial Effects of the ‘Patient Protection and Affordable Care Act,’ as Amended,” Centers for Medicare and Medicaid Services, Office of the Actuary, April 22, 2010. Available at http://www.cms.gov/Research-Statistics-Data-and-Systems/Research/ActuarialStudies/downloads/PPACA_2010-04-22.pdf.
10. Todd Ackerman, “Texas doctors fleeing Medicare in droves.”
11. Devon M. Herrick and John C. Goodman, “The Market for Medical Care: Why You Don’t Know the Price; Why You Don’t Know about Quality; And What Can Be Done about It.” National Center for Policy Analysis, Policy Report No. 296, February 2007. Available at http://www.ncpa.org/pdfs/st296.pdf.
12. In 2004, the Medicare Payment Advisory Commission (MedPac) noted that “Medicare beneficiaries may even be more vulnerable to quality problems because they are often frail and have more complex medical needs.” MedPac also said, “Although the Medicare program is working to improve quality, current efforts are largely grafted onto a payment system that is neutral or negative toward quality.” See Glenn M. Hackbarth, “Report To The Congress: Medicare Payment Policy,” Medicare Payment Advisory Commission, March 2004, Chapter 2, “Quality of Care for Medicare Beneficiaries.” Available at http://www.medpac.gov/documents/Mar04_Entire_reportv3.pdf.
13. Devon Herrick, “Health Care Entrepreneurs: The Changing Nature of Providers,” National Center for Policy Analysis, Policy Report No. 318, December 2008. Available at http://www.ncpa.org/pdfs/st318.pdf.
14. “Cash & Counseling Moves Into the Mainstream,” Alliance for Health Reform, April 2006. Available at http://www.allhealth.org/publications/pub_2.pdf.
15. Jeffrey S. Crowley, “An Overview of the Independence Plus Initiative to Promote Consumer-Direction of Services in Medicaid,” Kaiser Family Foundation, November 2003. Available at http://www.kff.org/medicaid/upload/An-Overview-of-the-Independence-Plus-Initiative-to-Promote-Consumer-Direction-of-Services-in-Medicaid.pdf.
16. John Goodman, “Patients Managing Their own Health Care Budgets,” John Goodman’s Health Policy Blog, April 12, 2010. Available at http://healthblog.ncpa.org/patients-managing-their-own-health-care-budgets/.
17. Christopher Conover, “Chronic Health Spending: Fact of the Week,” Enterprise Blog, December 8, 2011. Available at http://blog.american.com/2011/12/chronic-health-spending-healthcare-fact-of-the-week/.
18. John Goodman, “Chronic Care,” John Goodman’s Health Policy Blog, Health Alerts, June 29, 2009. Available at http://healthblog.ncpa.org/chronic-care-2/.
20. John Goodman, “How Doctors Are Trapped,” John Goodman’s Health Policy Blog, January 16, 2012. Available at http://healthblog.ncpa.org/how-doctors-are-trapped.
21. John Goodman, “Hot Spots,” John Goodman’s Health Policy Blog, March 9, 2011. Available at http://healthblog.ncpa.org/hot-spots/. Also see Atul Gawande, “The Hot Spotters,” New Yorker, January 24, 2011. Available at http://www.newyorker.com/reporting/2011/01/24/110124fa_fact_gawande.
22. Ceci Connolly, “Health System Program That Guarantees Doing Things Right the First Time, for Flat Fee, Pays Off,” Washington Post, March 31, 2009. Available at http://www.washingtonpost.com/wp-dyn/content/article/2009/03/30/AR2009033003008.html. And Reed Abelson, “In Bid for Better Care, Surgery With a Warranty,” New York Times, May 17, 2007. Available at http://www.nytimes.com/2007/05/17/business/17quality.html.
23. Vanessa Fuhrmans, “A Novel Plan Helps Hospital Wean Itself Off Pricey Tests,” Wall Street Journal, January 12, 2007. Available at http://online.wsj.com/article/SB116857143155174786.html.
24. John Goodman, “10 Steps to Free Our Health Care System,” National Center for Policy Analysis, Brief Analysis No. 669, July 30, 2009. Available at http://www.ncpa.org/pub/ba669.
25. John Goodman, “Free the Doctors,” John Goodman’s Health Policy Blog, February 27, 2009. Available at http://healthblog.ncpa.org/free-the-doctors/.
26. Thomas Saving and John Goodman, “A Better Way To Approach Medicare’s Impossible Task,” Health Affairs Blog, November 15, 2011. Available at http://healthaffairs.org/blog/2011/11/15/a-better-way-to-approach-medicares-impossible-task/.
27. See Teladoc at http://www.teladoc.com/.
28. John Goodman, “You-Just-Can’t-Make-This-Up Feature of the Day,” John Goodman’s Health Policy Blog, May 16, 2011. Available at http://healthblog.ncpa.org/you-just-cant-make-this-up-feature-of-the-day/.
29. Virginia Traweek and John C. Goodman, “The Doctor’s Out. Where’s the Nurse?” National Center for Policy Analysis, Brief Analysis No. 757, November 10, 2011. Available at http://www.ncpa.org/pdfs/ba757.pdf. See also Devon Herrick, “Retail Clinics: Convenient and Affordable Care,” National Center for Policy Analysis, Brief Analysis No. 686, January 14, 2010. Available at http://www.ncpa.org/pdfs/ba686.pdf.
30. Devon M. Herrick, “Critical Condition: Primary Care Physician Shortages,” National Center for Policy Analysis, Brief Analysis No. 706, May 25, 2010. Available at http://www.ncpa.org/pdfs/ba706.pdf.
31. The so-called Stark laws (after Representative Pete Stark) make it illegal for a physician to refer a patient to a clinic in which the doctor has a financial interest. It is also illegal for a physician to reward providers who refer patients to him, or to a hospital in which he has a financial interest. See Devon M. Herrick, “Medical Tourism: Global Competition in Health Care,” National Center for Policy Analysis, Policy Report No. 304, November 2007. Available at http://www.ncpa.org/pdfs/st304.pdf.
32. Devon Herrick, “Medical Tourism: Have Insurance Card, Will Travel,” National Center for Policy Analysis, Brief Analysis No. 724, September 22, 2010. Available at http://www.ncpa.org/pdfs/Medical-Tourism-Have-Insurance-Card-Will-Travel.pdf.
33. John Goodman, “An Online Market for Medical Care,” John Goodman’s Health Policy Blog, February 29, 2012. Available at http://healthblog.ncpa.org/an-online-market-for-medical-care/.
34. Adam Atherly and Kenneth E. Thorpe, “The Impact of Reductions in Medicare Advantage Funding on Beneficiaries,” Emory University, April 2007. Available at http://c0540862.cdn.cloudfiles.rackspacecloud.com/Medicare_Advantage.pdf.
35. “A Preliminary Comparison of Utilization Measures Among Diabetes and Heart Disease Patients in Eight Regional Medicare Advantage Plans and Medicare Fee-for Service in the Same Service Areas,” America’s Health Insurance Plans, September 2009. Available at http://www.ahipresearch.org/pdfs/MAvsFFS.pdf.
36. John Goodman, “Health Policy Schizophrenia,” John Goodman’s Health Policy Blog, August 17, 2011. Available at http://healthblog.ncpa.org/health-policy-schizophrenia/.
37. John Goodman, “A Framework for Medicare Reform,” National Center for Policy Analysis, Policy Report No. 315, September, 2008. Available at http://www.ncpa.org/pdfs/st315. This was later modeled by Milliman, Inc. and updated in Devon M. Herrick, “Medicare Reform with Personal Accounts: Milliman’s Actuarial Analysis,” National Center for Policy Analysis, Issue Brief No. 117, forthcoming January 2013. Also see Mark E. Litow, Allen J. Schmitz and Barbara Collier, “Actuarial Analysis of National Center for Policy Analysis Proposal for Medicare,” Milliman, Inc., October 16, 2012.
38. Andrew J. Rettenmaier and Thomas R. Saving, “Medicare: Past, Present and Future,” National Center for Policy Analysis, Policy Report No. 299, July 1, 2007. Available at http://www.ncpa.org/pub/st299?pg=8.
39. Andrew Rettenmaier and Thomas Saving,“A Medicare Reform Proposal Everyone Can Love: Finding Common Ground among Medicare Reformers,” National Center for Policy Analysis, Policy Report No. 306, December 2007. Available at http://www.ncpa.org/pdfs/st306.pdf.
40. John C. Goodman, Priceless: Curing the Healthcare Crisis (Oakland, Calif.: Independent Institute, 2012).
41. John C. Goodman, “A Framework for Medicare Reform.”
43. Mark E. Litow, Allen J. Schmitz and Barbara Collier, “Actuarial Analysis of National Center for Policy Analysis Proposal for Medicare.”
44. Devon M. Herrick, “Medicare Reform with Personal Accounts: Milliman’s Actuarial Analysis.”
45. Roberta Herzberg and Chris Fawson, “Accountable Care Organizations: Panacea or Train Wreck?” National Center for Policy Analysis, Brief Analysis No. 769, August 14, 2012. Available at http://www.ncpa.org/pub/ba769.