Republican Congressman Paul Ryan’s Medicare voucher program “fix” crashed and burned in a special election in a very Republican district in upstate New York. (More)

To appreciate the dimensions of this electoral earthquake, Democrat Kathy Hochul’s victory occurred in a Congressional district carried in 2010 by NY Republican gubernatorial candidate Carl Paladino. The Ryan plan, supported by all but four House Republicans, and opposed by every House Democrat, is a deeply flawed effort to reign in health care costs and reduce the budget deficit. Unfortunately, his plan does that by shifting costs onto the elderly. Congress’s Joint Economic Committee analysis provides the salient detail.

With the plan fully implemented, the Republican Medicare Voucher Plan would double out of pocket costs for NY Seniors. By 2022, the voucher plan proposed by Republicans would add, on average, $6,518, annually to the individual health care costs of the elderly.

Underlying this Republican effort is the belief, shared by more than just Republican lawmakers, that, the Medicare program, as constituted, is on a clear path to insolvency. The fear is that the oncoming mad rush of the baby boomers and their illnesses will implode the Medicare program. There is probably something to that assertion. Is there a way out that doesn’t cannibalize traditional Medicare?

First, the major underlying assumption is that public policy goals are cast in stone; government priorities can’t and won’t change. Well, perhaps, but an earthquake election, like the one in upstate NY, might actually change priorities. In the electoral aftermath, it will be more unlikely for arguments in support of tax cuts for the rich compared to directing more resources to Medicare to find traction with the larger public. Personally, I’d propose going back to the Clinton-era tax code. I do remember that President Clinton bequeathed a budget surplus to President Bush.

Second, last year’s Affordable Care Act made significant changes to the Medicare program, while leaving the actual traditional program (as well as Medicare Advantage) largely intact.

Some of those changes:

  • New preventive and primary care benefits added, out of pocket costs for these services eliminated or reduced.
  • Medicare prescription doughnut hole coverage gap closed. In 2011, certain drugs discounted at 50%.
  • Extensive anti-waste, fraud, and abuse provisions to reduce plundering of the Medicare (and Medicaid) program.
  • Hospital Medicare payments reduced over the next 10 years.
  • Cuts to the Medicare Advantage program, but with payment bonuses for quality care.
  • Additional select taxes to pay for the above.
  • Payment reforms to transition away from a strict fee-for-service reimbursement methodology.
  • Establishes an Independent Payment Advisory Board.
  • Establishes a Value-Based Purchasing program. Hospitals demonstrating quality improvements will receive quality bonuses.

Thirdly, and the least appreciated, but most exciting to contemplate, significant experiments to explore improvements in the way health care is delivered. Delivering health care in the right setting, with the right provider, at the right time is crucial to wringing out costly inefficiencies. The Affordable Care Act is a cornucopia of health care delivery enhancements.

The Affordable Care Act:

  • Establishes a Center for Medicare and Medicaid Innovation. This center will aggregate known nation-wide health care delivery improvements and offer incentives for other health care providers to implement and improve on these best practices.
  • Recognizes that our current system is fragmented which leads to inefficiencies. The ACA, through several proposals seek to provide more coordination among providers.
  • Provides incentives and resources to build a computerized medical record.
  • Establishes patient-centered models of delivery through mechanisms like Medical Homes and Accountable Care Organizations.
  • Recognizes that Medicare hospital readmissions is a significant driver of expenses so establishes a Community Care Transition Program to ensure that patient post-discharge needs are adequately met.
  • Establishes the Community First Choice option which seeks to moves patients from a costly nursing home setting to the home.
  • Creates programs to increase the primary care workforce and provides for increase in primary care payments.

Dr. Donald Berwick, the Administrator for the Center for Medicare and Medicaid asserts that many significant improvements to health care delivery are occurring throughout the country and that policy goal should be to “scale up those efficiencies.” The example he uses is the infection that sometimes results from a Central Line Venus Catheter. He points out that several hospitals have found ways to eliminate those infections leading to thousands of dollars in savings. This can be replicated throughout the system.

Reducing hospital-based Infections and other health care improvements were never “scored” by the Congressional Budget Office accountants so it is unknown how positively these improvements will have on the bottom line, but they could be significant.

The Affordable Care Act introduces incentives, resources and tools for better care, with less expense.

We can do it.

Flawed Medicare reform proposals and distracting debates about ”death panels” and “government takeover of health care” are political falsehoods that we no longer have the luxury to contemplate. It’s time to roll up our sleeves and get about the business of applying good old fashioned American know-how to health care. And, in the process, improve Medicare.