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Cold War lessons can help cut medical costs

As the Cold War came to an end and the Soviet Union collapsed, the United States had to adjust significantly to new and dangerous threats to our national security. In doing so, our country learned valuable lessons about how to restructure the military in order to cut waste and streamline our forces. I believe we can now apply this lesson to fixing the broken American health care system, allowing us to cut waste in medical spending while simultaneously improving the quality and value of health care.

At the end of the Cold War, the Department of Defense no longer needed many of the 3,800 military bases it used to win World War II and defend against the threat of war with the Soviet Union. But despite broad consensus that closures needed to occur, not one major military installation was shuttered between 1977 and 1991. No bases were closed, despite the billions of dollars in projected saving to taxpayers because Members of Congress could not offer up a base in their district for the good of the country as a whole.

The deadlock was finally broken by the work of an independent commission and a fast-track, no-amendment vote in the Congress. The Base Realignment and Closure Commission, made up of military experts, examined the facts and made recommendations, which Congress had to vote straight up or down without making any changes.

The BRAC commission helped take the politics out of the decision-making process, resulting in the recommended closure of 98 major bases and hundreds of smaller installations, saving American taxpayers an estimated $57 billion over two decades.

So, how does this military base closure lesson help us reform health care and cut unnecessary medical spending today? To answer that question we look at the misguided financial incentives created by how Medicare pays doctors and hospitals for the care they provide. The current way Medicare pays doctors and hospitals contributes to an estimated $700 billion a year in wasted health care spending.

Under the current Medicare payment formula, doctors and hospitals are reimbursed at a set rate for each separate medical procedure or test provided. This fee-for-service scheme perversely encourages hospitals and doctors to provide more and more medical care, regardless of the quality or outcome of that care.

For more than a decade, the Dartmouth Institute for Health Policy and Clinical Practice has studied extensively the delivery of health care across America. When looking at Medicare data specifically, Dartmouth concluded that more care does not necessarily mean better care, just as more bases does not necessarily equal better national security. Health care systems in some parts of the country are delivering more and more care at higher and higher costs without necessary producing better outcomes.

Minnesota hospitals and doctors are some of the nation’s best-performing hospitals. We generally provide higher-quality, lower-cost care when compared to our counter parts elsewhere, according to Dartmouth.

But changing the financial incentives in Medicare to get less efficient hospitals and doctors around the country to cut wasteful spending and improve the quality of care will be hard politically. Members of Congress who represent these less efficient medical providers have long fought changing the way Medicare reimburses them out of fear they will lose revenues.

The status quo is not sustainable. We can’t afford the level of growth in spending in Medicare and on health care in general. Paying hospitals and doctors for performance, as opposed to the amount of care, is part of the solution.

That’s why sections 1159 and 1160 of the health care bill that passed the U.S. House of Representatives set up a BRAC-like approach to cut waste in Medicare and promote pay for performance for doctors and hospitals.

This provision of the bill, which is backed by Mayo Clinic, requires the independent, nonpartisan Institute of Medicine evaluate why Medicare is paying more in some areas for lower-quality results. The highly-respected, non-government medical experts working at the institute must make recommendations to replace the current fee-for-service payment model in Medicare with a model that promotes the delivery of high quality, evidence-based, patient-centered care.

The new Medicare payment model will be submitted to Congress by the middle of 2012 for review and will go into effect unless Congress can muster a two-thirds majority to stop it.

This up-or-down vote to change the Medicare payment system, much like the BRAC, is insulated from politics, driven by experts, and based upon the principle of paying for performance. This type of expert-driven commission worked in the 1990s to strengthen our national security and we should use it again today to improve the quality of health care at lower cost for all Americans.

Tim Walz, DFL-Mankato, is the congressman for the 1st District of Minnesota.