More Medicare Cuts* - a primer on the debt deal's health-care bookkeeping

Discussion in 'Healthcare/Insurance/Govt Healthcare' started by Trajan, Aug 4, 2011.

  1. Trajan

    Trajan conscientia mille testes

    Jun 17, 2010
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    The Bay Area Soviet
    right or left, when the nominees become elected, its as though they have instead become victims of the Pod, they are body snatched, and reprogrammed to forget any sensible fiscal process(es) or seat of the pants lessons life has taught them....and, woe is us ....if I were a doctor or inst. I would not stand for this, medicare the soon to be medicaid.

    More Medicare Cuts*

    *Well, not really. A primer on the debt deal's health-care bookkeeping.
    * AUGUST 4, 2011

    Most everyone seems to agree that the debt deal's "super committee" is supposed to reform the entitlement state, somehow. "Yes," President Obama said Tuesday, "that means making some adjustments to protect health-care programs like Medicare so they're there for future generations." Now there's a statement of vaulting ambition.


    But what this exercise is more likely to expose is the fiscal and intellectual exhaustion of the health-care approach of both parties over the past three decades. President Reagan and a Democratic House imposed Medicare price controls in 1983—and the standard cost-control method since then of crude, arbitrary cuts to doctors, hospitals and other providers is now in collapse.

    Under the terms of the deal, the 12-member joint select committee is supposed to reduce the 10-year deficit another $1.5 trillion by November. If it doesn't, or if Congress rejects or Mr. Obama vetoes the package, spending would be cut by $1.2 trillion automatically, including 2% across-the-board cuts to all Medicare providers. Benefit cuts and cost-sharing for seniors are excluded.

    Ponder that one for a moment, though we realize it is by now routine. Congress would decree that U.S. medicine must provide the same level of services to patients but do so for 98 cents on the current government dollar. And that dollar is already below actual costs. For the same hospital services, private insurers on average pay $1.49 today, according to Medicare data on relative public and commercial rates. A doctor to whom Medicare pays $1 would receive $1.25 from a private carrier for delivering the same care. The rest of the economy does not work like this.

    The fiscal distortions of such central planning are even worse. All politicians—but these days especially Democrats—like to pretend they'll pay providers somewhat less in the future, despite knowing that is unlikely to happen in practice. Medicare's prospective payments are low enough that further reductions may jeopardize access to care and in many cases threaten the viability of hospitals and physician practices. So the main effect of these "cuts" is merely to move future spending off the federal balance sheet.

    The ur-example is the "sustainable growth rate," which was created by Bill Clinton and the Gingrich Republicans in the 1997 budget deal. This formula is supposed to squeeze Medicare reimbursement rates for doctors if spending rises too fast. But since 2002, Congress has always passed a temporary "doc fix," often multiple times in a given year. In January 2012, physician payments are scheduled to be cut 29.4%.

    The Affordable Care Act created a mirror version for hospitals, to help hide the costs of this new middle-class entitlement. Because of a technical change to the "productivity adjustments" formula, payments for inpatient treatment will grow 1.1% more slowly than they otherwise would, a factor that will compound over time. By the end of the decade, Medicare rates will drop below Medicaid rates, which many providers already refuse to accept.


    So the debt-deal super committee is supposed to downsize the Medicare budget from a fantasy baseline where doctor payments will fall overnight by a quarter and change and hospital payments will drag down to the levels of the worst health insurance program in the country. Oh, and this week the Administration cut home health payments by 11.1%. At this point the only thing left to do is end Medicare not "as we know it," but altogether.

    On paper, that would zero out $7.67 trillion in obligations from 2012 to 2021 and more than erase the $6.74 trillion in deficits that the Congressional Budget Office projects over the same period. Then Congress can override this Medicare "cut" every few months.

    more at-

    Review & Outlook: More Medicare Cuts* -

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