What Baucus Got Right

Liberal critics of the proposal Senate Finance Committee chairman Max Baucus (D-Mont) released this week see it as a dead end in the health care reform debate. But if President Obama actually signs legislation revamping the health care system, it's more likely that the Baucus plan eventually will be seen as the foundation.

The reason is that Baucus' draft bill offers the most fiscally sustainable framework yet devised for expanding coverage. It progresses much further than any other Congressional bill toward solving two fundamental and inter-related problems: creating a revenue stream that rises as fast as health care costs, and reshaping the incentives in the medical system in ways that should help "bend the curve" on those long-term cost increases. Without those two elements any coverage expansion will prove unaffordable, and thus unsustainable, over time.  "Whatever its other pros and cons," said one senior Obama administration official integral to the health care debate, "the [Baucus] mark provides proof of concept that you can significantly expand coverage in a fiscally responsible way."

On many fronts, it's likely that the final bill will be tilted more toward Democratic priorities and preferences because Baucus crafted his plan partially to attract bipartisan backing and it now appears that if any bill passes, it will do so without support from many, and perhaps any, Republicans. Most glaringly, Baucus devotes too little money to help uninsured middle-class families buy the health insurance they would be required to obtain under the individual mandates included in all major bills. He also asks too little of larger employers who don't provide insurance for their workers.

But those inevitable adjustments should not obscure Baucus' achievement in creating what could be a fiscally durable framework for expanding coverage while simultaneously reforming the medical system. The bill represents by far the most serious effort to implement the innovative thinking from the community of health care reformers looking to move the medical system away from today's fee-for-service model toward a system that ties payments to providers to results for patients. It contains about a dozen major ideas-most of them implemented as national programs under Medicare, not merely as pilot projects-to nudge the medical system toward adopting the integrated models used by institutions such as the Cleveland and Mayo clinics and the Geisinger Health System to deliver high quality care at lower cost.

"You are not going to replicate Geisinger everywhere, but you can replicate their functions and that's what this bill is doing," says Kenneth Thorpe, chairman of the health policy department at Emory University's Rollins School of Public Health. "They are building many of the same payment and incentive models that you see in these integrated practices that have been very effective."

Mark McClellan, director of the Brookings Institution's Engelberg Center for Health Care Reform, and the former Medicare and Medicaid director under President Bush, was similarly impressed. While the Baucus proposal didn't move as boldly as McClellan would prefer on some fronts-like reforming medical liability laws-he said the plan substantially tracked the recommendations of a widely-praised bipartisan report that he recently released outlining strategies to slow long-term spending growth. "It does bend the [cost] curve in the long term," McClellan said. "They clearly are working hard to make fiscally responsible decisions about health care reform."

The senior administration official agreed, giving the plan an overall "a-minus" grade for structural long-term reform. "The big things are all there," said the official. "Maybe the reason it's only an "a-minus" is they are not always there full blown. But it is the legislative process, and along these dimensions, it is about as good as one is going to find in a real proposal."
The Baucus bill incorporates most of the major ideas that reformers have offered to encourage long-term cost-savings in the medical system. Two common themes link these ideas: shifting the reimbursement model away from volume to value, and encouraging physicians to work more closely in teams to manage the overall health of patients, particularly those with expensive chronic conditions. The bill would implement these ideas within Medicare, though advocates hope that if these practices prove effective, private insurers will adopt hem as well.

One set of proposals would reward Medicare providers who deliver care more efficiently and penalize those who don't. Starting in 2013, the bill imposes payment penalties on hospitals who readmit too many patients for preventable reasons after treatment. It imposes more modest penalties on hospitals whose patients acquire the most infections within the hospital itself. Another proposal addresses the concerns popularized by surgeon and New Yorker writer Atul Gawande on the vast divergence between spending on medical services in different communities: that provision would compare the amount all physicians spend on patients with similar conditions, and starting in 2015 cut Medicare reimbursements by five per cent for those who order up the most care. Hospitals would receive similar treatment. Today's law requires hospitals to record whether they meet a list of quality measures, like providing aspirin to heart patients. The Baucus bill, for the first time, would link their reimbursements to their actual performance on those measures.

It's possible to quibble about whether these ideas are implemented fast enough or provide persuasive enough incentives. But their direction universally draws praise from reformers. "I love the signal because it says we are not going to tolerate business as usual," says Len Nichols, director of the health policy program at the centrist New America Foundation. And each of the four ideas discussed above are implemented in the Baucus bill as national programs, not just pilot programs. The bill does use the pilot mechanism for another big reform: it authorizes a voluntary national test on bundling payments that would provide incentives for doctors, hospitals and nurses to coordinate care for a patient admitted to hospitals. The bill would encourage such providers to work together by allowing them to share in any savings they produce.

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Ronald Brownstein is Atlantic Media's editorial director for strategic partnerships. More

Ronald Brownstein, a two-time finalist for the Pulitzer Prize for his coverage of presidential campaigns, is Atlantic Media's editorial director for strategic partnerships, in charge of long-term editorial strategy. He also writes a weekly column and regularly contributes other pieces for the National Journal, contributes to Quartz, and The Atlantic, and coordinates political coverage and activities across publications produced by Atlantic Media.

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