We all agree that, with exploding health care costs, it’s more important than ever to find places to save money.
But some approaches are more effective than others. The government’s more successful cost-cutting endeavors usually share a common design: utilizing competition between private companies and consumer choice to create wealth from innovative gains in productivity.
A more common — and much less successful — approach is to foist difficult service cuts from the top down, either politically (i.e. through an act of Congress), or at the agency level.
In both cases, the goal is to do “more with less.” But competition harnesses the profit motive of the free market to make such changes voluntary and rewarding for the people involved, while the latter is just painful to all involved.
As a result, “top-down” service cuts are often unpopular and thus politically unsustainable. The architects of Obamacare, realizing this, sought a solution. But as market skeptics, they turned instead to legal innovations that are, as we will see, both constitutionally suspect and similarly ineffective in actually saving money.
The “Center for Medicare and Medicaid Innovation” (CMMI), sometimes referred to by advocates as Obamacare’s “crown jewel,” is the result of this effort. The Affordable Care Act created this office with an initial $10 billion, a perpetual, “autopilot” funding source, and breathtaking powers to rewrite Medicare law on its own.
On paper, the office is supposed to conduct “pilot studies” on cost-cutting measures, finding which approaches could work to save the government money. The kicker is that, upon deeming one of these studies a success, CMMI can then require it to be implemented across the federal government, impacting hundreds of millions of people without Congress lifting a finger.
Perhaps it’s unsurprising that an office designed to be unaccountable to Congress quickly abused its role, but that is precisely what took place in the first years of CMMI’s existence. Although “pilot studies” are typically conducted on small, voluntary, and isolated populations to study the effects of changes without causing widespread disruption, CMMI’s studies changed the health care services for 75 percent of Medicare recipients in one fell swoop.
The moves were so draconian that the entire Senate Finance Committee, Republicans and Democrats alike (even Chuck Schumer), denounced the office’s shocking power grab, despite the ongoing partisan trench warfare over “repeal and replace.”
And yet, despite all the furor, the office has yet to actually save any money. Having blown through it’s first $10 billion, there is no publicly available evidence that CMMI has saved Uncle Sam a dime.
To the contrary, many of its programs have actually cost money due to implementation difficulties or unforeseen costs.
This is not so surprising when you come back to the underlying structure of assigning bureaucrats — even illegally empowered, unaccountable bureaucrats — the role of decreeing painful service cuts from the top-down.
Most of the government’s health care costs are paid to private companies that provide health care services to patients. Most of the easily achievable cost savings at those companies are known best to the people who own and operate them. CMMI does not possess the expertise or knowledge to save the government money.
Furthermore, CMMI employees, many of them undoubtedly well-meaning professionals, do not profit from saving the government money. They have relatively little incentive to succeed.
Finally, it is unfortunate that Obamacare’s architects sought to solve the difficult problem of exploding health care costs by ignoring the checks and balances of the Constitution. The executive branch is supposed to enforce and implement the law, not write it. CMMI’s role is clearly to write the law. Even if it were succeeding wildly in cutting costs (which it decidedly is not), its decisions would eventually find themselves subject to reversal on this bedrock legal principle.
For all these reasons, CMMI is poorly designed to succeed at its task and legally suspect. They may not be able to completely repeal Obamacare, but Republicans could improve the status quo considerably by targeting this ineffective and dangerous program.