Medicare’s War on Seniors

From: WatchdogWatch.org

is CMS leading a major Medicare program into disaster? That’s not a rhetorical question. The agency is nationally expanding a program for acquiring life-sustaining home medical equipment (oxygen, mobility equipment, diabetes test supplies, etc.) that is heading for failure because of basic design errors by the agency.

A senior Congressional Budget Office official has already issued a warning about the CMS program by stating, “I think there is a high probability of failure in the near future. There is near certainty of failure sometime down the road.”

Over two-hundred economists including several Nobel laureates have written to President Obama to warn him that the “competitive bidding” program he is responsible for “violates all of the principles [of Executive Order 13563], especially the principles of transparency and of basing regulations on the best available science. Indeed, the current program is the antithesis of science and contradicts all that is known about proper market design.”

The Center for Regulatory Effectiveness has called for a federally-sponsored “clinical test” of the program so that it can be independently evaluated prior to nationwide expansion.

Now a new study by researchers at CalTech, funded by the Gordon and Betty Moore Foundation with additional support from the National Science Foundation, has concluded that the “CMS auction fails to generate competitive prices of goods and fails to satisfy demand.”

Moreover, the researchers also concluded that “the CMS auction is not a good auction” and that “the CMS auction cannot be easily fixed.”

Why did CMS, after being tasked by Congress with establishing a competitive bidding program, create a program that fails to generate competitive prices? Why, in the face of all evidence, is CMS refusing to reform the program?

A final question is when will political leaders recognize that the democratic process ensures that they will be held accountable for the unchecked arrogance of a few officials?

• See CalTech study, “The CMS Auction: Experimental Studies of a Median-Bid Procurement Auction with Nonbinding Bids”