Politics & Policy

Obamacare’s ‘Crown Jewel’ Loses Its Luster

(Image: Dreamstime)
An obscure, unaccountable government agency is radically altering Medicare for the worse.

Former Obama administration official Donald Berwick once called the Center for Medicare and Medicaid Innovation (CMMI) “the jewel in the crown of health-care reform.”

The metaphor is apt: CMMI, more than any other aspect of Obamacare, is an imperial enterprise.

Congress established CMMI in the Obamacare statute with the goal of finding ways to reduce federal spending on medical care without diminishing its quality. That, of course, is the responsibility of Congress, which created the Medicare program and which alone bears responsibility for making legislative changes to it.

But Congress chose to outsource some of its core constitutional responsibilities. It gave CMMI $10 billion and broad license to conduct demonstration projects. It went further, allowing the HHS Secretary to expand a demonstration program nationwide if it has proven to save money in a test of limited scope. Such nationwide expansion is the practical equivalent of amending the Medicare statute, a constitutional prerogative reserved to Congress.

Congress did set some boundaries on CMMI’s legislative powers. It required, for example, that demonstration projects be collaboratively designed and, at least in their initial phase, limited in scope. But the agency soon shook off even these modest restraints. Last spring, it proposed to substantially reduce Medicare payments for chemotherapy and other physician-administered drugs. The scope of the project is hardly limited: CMMI will enforce the new reimbursement scheme — one that effectively rewrites the statutory formula — across 75 percent of the country. And to institute this sweeping change, CMMI has essentially bypassed the required test phase, during which it is supposed to assess “patient-level outcomes” before expanding a demonstration project more broadly.

RELATED: Reminder: Obamacare Is Still a Disaster

Legal and constitutional concerns aside, it seems at best incredibly reckless to change the way Medicare pays for cancer drugs for 75 percent of seniors without first testing the effects of this policy on the care cancer patients receive. But such concerns don’t seem to trouble CMMI. Legal restraints on its power and the potential side effects of its policy forays are distractions from its mission to change the way medical care is delivered and financed, saving the government money.

By the end of last year, the agency had obligated nearly $5 billion of the $10 billion Congress allocated. The cost savings from CMMI’s experiments have so far failed to materialize. But they will start to roll in next year, according to the agency’s unlikely cheerleader, the Congressional Budget Office. Shedding its characteristic skepticism, CBO reckons the program will save the government $38 billion over the next decade.

CMMI, more than any other aspect of Obamacare, is an imperial enterprise.

CBO’s rationale is really quite imaginative. In a June 2015 blog post, two of its functionaries acknowledged that CMMI projects “have not yet yielded noticeable savings,” before assuring readers that the failure to achieve such savings over its first six years is “broadly consistent with CBO’s current estimates.”

Those savings, CBO promises, will materialize soon. Why? “CBO expects that some projects will prove successful and will expand.” And which projects might those be? “CBO cannot predict which projects will work.”

Although no CMMI project has yet worked and CBO can’t think of one that will, it feels that someday some project surely will succeed and that the secretary will expand it, enabling the government to pocket $38 billion over the next decade (less the $10 billion it fronted CMMI).

Unless, of course, Congress were to curtail CMMI’s powers or enact some of its more promising models into law. CBO regards Congress as an impediment to CMMI’s visionary undertakings. It believes that Congressional action would have the effect of “decreasing the likelihood that the model would succeed and reducing the expected savings if the model does succeed.”


In the eyes of the Congressional Budget Office, then, Congress should mind its own business and leave lawmaking to those who inhabit CMMI’s cubicles of excellence.

The CBO is not alone in its infatuation with executive-branch power. Bureaucratic decrees circumvent the messiness and uncertainties of the lawmaking process. Making laws is tedious and constrained by compromise; issuing edicts is fast and direct. Federal regulation is thus the preferred tool of Washington policymakers and their allies in academia. They are supremely confident that they know how best to decide the medical care we receive, where we receive it, what it should cost, and who should foot the bill.

#related#Obamacare’s failures have not dampened this hubris. On the contrary, the very people who brought us the Affordable Care Act are urging government to inflict more of their health-care theories on an unsuspecting public. CMMI provides a ready conduit for channeling faculty-lounge fantasies to the Federal Register.

The Founders recognized that no man is more dangerous than one convinced of the purity of his intentions and the keenness of his intellect. They sought to rein in these impulses by creating a federal government of limited and enumerated powers. They charged Congress and the Supreme Court with restraining the imperial inclinations of the executive branch. Those imperial inclinations have nonetheless flourished, as CMMI illustrates.

The House Budget Committee will look into CMMI’s activities in a September 7 hearing. Here’s hoping the committee offers those who would govern by decree a reminder that the Constitution makes no provision for jewel-encrusted crowns.

— Doug Badger is a former White House and U.S. Senate policy adviser and currently a senior fellow at the Galen Institute.

Doug Badger — Doug Badger is a senior fellow at the Galen Institute and a visiting fellow at the Heritage Foundation

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