Asymmetrical Information - Megan McArdle
10.05.12 3:01 PM ET
Facts, Damned "Facts", and Fact Checkers
Post debate, there is the expected wailing and gnashing of teeth from the losing side, the protests that their opponents are such outrageous liars that they can hardly be expected to share a planet with them, much less the United States government. In this latter claim they are aided by "fact checkers", such as this piece from the LA Times:
Fact check: Romney repeats erroneous claims on healthcare
Mitt Romney repeated a number of erroneous claims during Wednesday’s debate about President Obama’s healthcare law, including that it relies on a board that will decide "what kind of treatment” patients can get.
This is a myth advanced repeatedly by critics of the Affordable Care Act and debunked consistently by independent fact-checkers.
The board – known as the Independent Payment Advisory Board – was set up to recommend ways to reduce Medicare spending if it increases too rapidly.
The panel of independent experts is empowered to suggest cuts to how much the federal government pays healthcare providers. These cuts would go into effect unless Congress votes to overturn them.
But the panel is explicitly prohibited from cutting benefits for people on Medicare.
And there is no provision in the law that empowers the advisory board to make any decisions about what treatments doctors may provide for their patients.
This season's "fact checkers" have an increasingly unfortunate tendency to confuse "statements by the administration about their intent" with "facts". During the convention, they leaped to condemn the GOP for claiming that the administration was gutting work requirements, on the grounds that, well, the administration said publicly they didn't want to do any such thing, and issued a hasty follow up memo saying that waivers would only be available to states that moved more people off the roles. Mark Hemingway has demonstrated why Republicans may reasonably believe that the administration wants to ease the work requirements. Maybe they're wrong! But that is more of an "opinion check" than a "fact check".
It rather reminds me of those touching people who occasionally show up in my comments to say that the Democrats did too make the electric grid more robust, or George Bush absolutely reduced the deficit . . . and cite, in support of these surprising claims, some piece of legislation called "The Infrastructure Modernization and Electric Grid Reinforcement Act of 2010" or "The Job Creation and Deficit Reduction Act of 2004". If they called the bill that, then obviously that's what the bill did . . . so why would we bother looking at, I dunno, the actual deficit numbers, or the state of the electric grid?
Sadly, as marvelous as Barack Obama is, his very words do not have the power to conjure reality from the primordial mist oozing through the corridors of power in Washington. So let's look at how IPAB wil actually work, rather than simply repeating how the administration says they would like it to work.
Oops! That's a bit hard to do. We won't really know how IPAB will work until it's in place; its authority and methods will be decided by the people in charge of the agency, the undoubted court challenges that will follow, and legislative pressure, possibly including follow-up legislation. But what we know so far is that if health care cost growth exceeds the statutory target--which it almost certainly will--IPAB will come up with a package of payment cuts to providers. Those go into effect automatically unless Congress overrides them, at which point they supposedly have to come up with their own package of cuts.
There is some reason to be skeptical that any of this will happen--Congress can, at any time, simply agree to change the law and override the cuts without finding offsetting cuts elsewhere. But no one's making this argument, because the administration wants to claim they are bending the cost curve, and the GOP wants to claim that the Administration plans to euthanize any old people who, say, nod off during a Murder She Wrote marathon. So let's assume, for the nonce, that IPAB actually manages to survive long enough to propose some cuts.
The administration line is that they aren't cutting benefits, just payments to providers. I hope that LA Times fact checkers are not so economically naive as to believe that you can simply decide to pay less for something, without any effect on the quantity or quality of what you are purchasing. (If they are, memo to the LA Times: you can apparently cut fact checker Noam N. Levey's salary by 2/3, and he'll still keep working for you).
If you are tempted to believe this, here are some actual facts: Medicaid reimbursements are substantially lower than Medicare's in most cases, and Medicaid patients have a hard time--a very hard time, in many states--finding doctors who will treat them. The opinion of virtually every health care economist I have ever met is that those two things are causally related.
Now, let us pause for a moment and consider why IPAB was created, and how it will implement its mandate to find cost-savings in the health care system. If health care costs rise 2% faster than the target rate, is IPAB going to simply recommend a 1.96% across the board cut in provider payments?
I believe that a director could choose to do that within the law as written; but it's far from clear that they will--and if that is how they work, then IPAB is unnecessary. If we just wanted blind mathematical cost-cutting, then we wouldn't need IPAB; we'd just need a law mandating commensurate across-the-board payment cuts every time health care cost inflation exceeded its targets. No, the point of IPAB is to recommend targeted cuts: big cuts for some providers and some services, no cuts for others.
The services that see big cuts will probably get done less often. I mean, to be sure, the fact checker is right that doctors "may" provide any service they want--as long as they don't expect to get paid. IPAB won't stop them--just their shrinking bank balance.
Which is, as far as I have ever understood it, the whole point. Medicare already has a payment-setting body; they don't need a special independent board to tell them that the rates on everything should be 2% lower. What they need, or at least want, is a body insulated from political pressure that will start cutting the reimbursements for some services so deeply that providers will stop offering them, or at least, stop offering them so indiscriminately.
In other words, IPAB is probably going to cut benefits for Medicare patients, and determine which treatments they can get. We're just calling it something that sounds a little bit less like "Fire up the mobility scooter, Harry! We're going down to Congressman Smith's office to give him a piece of our mind!"
The administration is essentially arguing that IPAB will cut costs only by reducing provider incomes, not by curtailing in any way the consumption of Medicare beneficiaries. This is possible, I suppose, but it is not supported by either economic theory, or historical evidence. (And indeed, the early discussons of health care reform, as well as my interactions with the administration's very smart economists, make me suspect that they, too, believe that IPAB will curtail service provision . . . but also believe, correctly, that saying so would be political suicide.)
A fact checker is free to say that they disagree with me, and that IPAB is going to do across the board reimbursement cuts, or it will take it 100% out of provider pockets. Fair enough. But this is not a "fact". It is your opinion about how a still-somewhat nebulous agency description will actually be implemented, and what effects their as-yet unknown actions will have.
From my perspective, it looks like the "fact checkers" have somehow annointed the least likely outcome as a "fact" about the future.
This is, as others pointed out during the welfare kerfuffle, the great problem with fact checkers. They have no particular policy domain knowledge, so when the administration tells them that well, the law explicitly forbids IPAB from rationing treatments, they are in no position to understand that this doesn't really make any sense.
There's nothing wrong with opining based on the information you have; the problem is with calling the results a "fact". The even bigger problem is that other journalists then treat it as such, transforming a shallow understanding without roots in history or theory, into a known thing, no different from stating the color of the sky or the height of Mount Rushmore. Then, of course, they're free to declare that anyone who disagrees is lying.