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Medicare’s Rollout vs. Obamacare’s Glitches Brew

January 2nd, 2014

Editor’s note: In addition to Steffie Woolhandler (photo and bio above), this post is authored by David Himmelstein, a professor of public health at the City University of New York, a visiting professor of medicine at Harvard Medical School, and a cofounder of Physicians for a National Health Program with Woolhandler..

The smooth and inexpensive rollout of Medicare on July 1, 1966 provides a sharp contrast to the costly chaos of Obamacare.

We won’t rehearse the chaos part here, just the costs.

As of March, 2013, federal grants for Obamacare’s state exchanges totaled $3.8 billion. Spending for the federal exchange is harder to pin down because funding has come from multiple accounts, including: the $1 billion Health Insurance Implementation Fund; DHHS’ General Departmental Management Account and General Departmental Management Account; CMS’s Program Management Account and the Prevention and Public Health Fund. CMS estimates fiscal 2014 spending for the federally-operated exchanges at $2 billion. So it’s safe to say that the costs of getting the exchanges up and running, and (hopefully) enrolling 7 million people in the program’s first year will exceed $6 billion.

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Will Pay For Performance Backfire? Insights From Behavioral Economics

October 11th, 2012

Editor’s note: In addition to Steffie Woolhandler and Dan Ariely (photos and linked bios above), this post is authored by David Himmelstein, a professor at the CUNY School of Public Health at Hunter College.

Paying for performance (P4P) has strong intuitive appeal. Common sense and rigorous studies tell us that paying more for, say, angioplasties or immunizations yields more of them. So paying doctors and hospitals for better care, not just more of it, seems like a no-brainer. Yet while Medicare and many private insurers are charging ahead with pay-for-performance (P4P), researchers have been unable to show that it benefits patients.

Findings from the new field of behavioral economics may explain these negative results. They challenge the traditional economic view that monetary reward is either the only motivator or is simply additive to intrinsic motivators such as purpose or altruism. Studies have shown that monetary rewards can undermine motivation and worsen performance on cognitively complex and intrinsically rewarding work, suggesting that P4P may backfire.

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