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Medicare Should Pay for Patients, Not Treatments

Author: Peter R. Orszag
May 1, 2013


The recent deceleration in U.S. health-care costs appears to be at least partially structural, and not entirely due to a still-lackluster economy. That offers some hope that the slowdown will continue. Still, more needs to be done to encourage the trend.

Two new bipartisan proposals for the next round of health- care reform may point the way. Last month, the Bipartisan Policy Center released a set of ideas for improving value in health care. And just this week, the Engelberg Center for Health Care Reform at the Brookings Institution put forward its own set of initiatives.

The Engelberg proposals -- spearheaded by Mark McClellan, who ran the Medicare program under President George W. Bush -- have been embraced by health-care leaders including former Health and Human Services Department Secretaries Michael Leavitt and Donna Shalala, as well as former Congressional Budget Office Directors Dan Crippen and Alice Rivlin. (I am also part of the Engelberg group.)

The proposals from the Engelberg group have four general aims. First, the initiatives would expand the country's electronic infrastructure, promoting data exchange and more evidence gathering on the costs and quality of various treatments. Second, they would create incentives for providers, partly by making an important change to Medicare and reforming medical-malpractice rules. Third, they would redesign health coverage to increase the value for consumers. And finally, they would change the tax treatment of employer-provided insurance.

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