Medicare's Flawed Bidding Plan Moves Forward

On Friday, August 19, the Centers for Medicare and Medicaid Services (CMS) announced what may be the worst perversion of a good idea to come out of the government in quite some time: something called Round Two of "The Competitive Bidding Program for certain Durable Medical Equipment, Prosthetics, Orthotics, and Supplies."

The new bidding process--read more about it here--governs the way Medicare pays for medical devices used mostly outside of hospitals (things like walkers and oxygen equipment) and, as designed, it will reduce spending on these items. That said, the rules are so poorly written that nearly every academic bidding expert who has taken a close look at them (nearly 250 at the last count) has signed a letter urging that they be suspended and modified.

Essentially, because of these oddball rules that create misleadingly low prices, Medicare's bidding process seems likely to put medical device companies out of business, slow innovation, and make it difficult for people to get the care they need. After realizing a few billion dollars in front-end savings, the program will likely end up costing billions more in reduced life expectancy and increased hospitalization.

Bad consequences from poorly designed government efforts, of course, are nothing new. But this disastrous program, unlike many other health reform efforts--everything from "Obamacare" to the Ryan Medicare plan--didn't arouse much controversy when Congress created it. Although the current CMS program is supported by the Obama administration and was slightly expanded under the Patient Protection and Affordable Care Act (Obamacare), the fundamental idea for the process, its origin, and its chief authorizing legislation were all developed under the Bush administration, supported by George W. Bush's CMS, and had widespread support from Republicans in Congress.

Furthermore, unlike the issues that excite both party bases, it's actually going into force now while most major Obamacare provisions don't take effect for two and a half years and the Ryan health care plan has no chance of becoming law anytime soon.

While the Medicare bidding process, of course, isn't as consequential as the very intrusive laws currently in statute or the radical changes to Medicare-as-it-exists that Ryan proposes, its exactly the type of issue that true policy wonks in Congress should engage on and fix if they want to show they're serious about governing.  After all, both parties bear roughly equal responsibility for the mess and will pay a stiff price if the process implodes in the way most experts predict. Fixing things now, however, will require the common sense that seems to be in all-too-short supply in Washington.