The official who matters most when it comes to controlling U.S. health-care spending has just resigned, leaving behind a program with serious fiscal problems that badly needs further reform. No, not Kathleen Sebelius -- and the program isn't the Affordable Care Act.
The official is Jonathan Blum, and the program in question is Medicare, which next year will replace defense as the largest federal expenditure after Social Security. Blum had started to get Medicare costs under better control, but there's a lot more work to do and there'll be plenty of resistance along the way:
Cost growth per beneficiary has slowed, and the system's fee-for-service payment model, which rewards doctors and hospitals for quantity of care rather than quality, is slowly being shifted. This month's release of physician payment data (after a long court battle) should make it easier to combat fraud and lessen the rewards for waste.
What comes next, though, will be harder. You can see the challenge facing the new guy by looking at what Blum tried, and failed, to do. Under pressure from Congress and the health-care industry, his agency backed down from cuts to both Medicare Advantage and the prescription-drug program. Further efforts to reduce costs will spark similar revolts.
One good thing: The next head of Medicare certainly understands the problem. Blum's successor is Sean Cavanaugh, until this week deputy director for the unit overseeing Medicare's many pilot and demonstration projects. These hold promise for changing the way doctors, hospitals and other health-care providers coordinate the care they provide. Reforms like this can mean better health care for less money.
Unfortunately, the lesson of recent years is that coming up with good ideas is one thing, getting them to stick quite another. Cavanaugh will need to talk health-care providers into accepting the wide-scale adoption of accountable-care organizations, value-based purchasing and other types of payment reform. He'll also have to get the costs of Medicare Advantage in line with those of traditional Medicare -- over the objections of a hyperventilating insurance industry.
It's a critical job. Nobody said it was going to be easy.
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