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  • Obamacare, Save Money? Not Likely.

    Newly-elected conservatives heading to Washington next year have a lot to do to curb the size of government and get federal deficits under control.  Requisite to achieving these goals is the full repeal of Obamacare.

    According to Peter Orszag, former Director of the Office of Management and Budget under President Obama, leaving the health law intact would create savings.  But this couldn’t be farther from reality.

    Orszag claims that Obamacare will reduce the federal deficit and Medicare spending.  What isn’t mentioned is that, though it’s true that spending on Medicare will be reduced by $575 billion over the next decade, savings are used to offset spending on new programs.  So really, there are no savings at all.

    Moreover, proponents of Obamacare expect the new law to reduce spending by cutting provider reimbursements and expanding bureaucracy through top-down delivery system changes aimed at increasing efficiency in the system.  In reality, the former will negatively affect seniors’ access to quality care, while the latter will be flat-out unsuccessful at reducing spending.

    Obamacare reduces payment updates for hospitals and other providers under Medicare.  But rather than changing the value of the service provided, cutting how much Medicare pays does nothing but shift costs elsewhere.  When payments become too low, providers stop accepting Medicare patients altogether.

    Medicare’s Chief Actuary reports that, “providers for whom Medicare constitutes a substantive portion of their business could find it difficult to remain profitable and, absent legislative intervention, might end their participation in the program (possibly jeopardizing access to care for beneficiaries).”

    In light of these consequences, cuts to Medicare are unlikely to occur, especially if Congress’ perpetual delay of currently scheduled physician reimbursement cuts is any indicator.  Last summer, Congress delayed cuts to physicians payments for six months to avoid jeopardizing seniors’ access to care, and they will have to act again in the near future to again avoid this negative outcome.  If the cuts don’t occur, Obamacare would substantially increase the federal deficit

    Obamacare also includes the creation of the Independent Payment Advisory Board, which Orszag describes as a “panel of independent experts who will look for more ways to improve Medicare’s cost-effectiveness.”  But the IPAB’s recommendations are strictly limited to implementing further detrimental cuts to provider payments.

    The new health law also includes an attempt to create savings in Medicare by rooting out inefficiency.  Obamacare includes a pilot program to test accountable care organizations (ACOs), and the creation of the Center for Medicare and Medicaid Innovation, which will vet pilot programs and demonstration projects for widespread delivery system reform.  Just as the IPAB’s recommendations will automatically go into effect, the Administrator of the Centers for Medicare and Medicaid Services will be able to implement chosen strategies nationwide without further action from Congress.

    Not only do these changes represent a massive increase of power within the Medicare bureaucracy, but they are also likely to be ineffective.  Health policy and budget expert James Capretta writes that, “there is nearly half a century of experience with the Medicare program indicating that con­fidence in ‘government-engineered’ efficiency improvement is entirely misplaced. Efforts to control costs from the top-down have always devolved into price setting and across-the-board payment-rate reductions, which is detrimental to the quality of American medicine. Price controls drive out willing suppliers of services, after which the only way to balance supply and demand is with waiting lists.”

    The new law will be ineffective at increasing efficiency, instead succeeding only at creating further bureaucratic micromanagement of seniors’ care. The only way for the new Congress to eke out savings from health care is to repeal Obamacare and replace it with bottom-up, consumer-driven approach to reform.

    Posted in Obamacare [slideshow_deploy]

    9 Responses to Obamacare, Save Money? Not Likely.

    1. Steven Jacobs 104 e. says:

      Does this take into consideration all the waivers being handed out by the administration to let some of the largest work providers off the hook, including teacher's unions ? Doesn't this fly in the face of the American citizens who have a right to equal treatment under the law ?

    2. Andy, NC USA says:

      You would think liberals would be all over this post trying to assail your facts and well reasoned arguments – but alas, they are unable to – so all you hear is *crickets*. The truth hurts, doesn't it libs?

    3. Greg McMorrow San Jo says:

      What I find so crazy is the lack of focus on medicare fraud by individuals. Medicare goes to great lengths to require providers to prove medical equipment or a procedure is medically justified. Yet, when patients get equipment or treatment that is not medically justified, there is no effort to hold them accountable.

      We have reported to Medicare incidents of paitents receiving the same or similar equipment. While Medicare denies the claim, the patient's get off scot free

    4. Fuzzy, MA says:

      I wonder how much those commercials cost telling seniors not to give out their MediCare number and, essentially, "if you see something, say something."? Millions probably and for what? Seniors and their families have been reporting fraud and abuse for decades, to no avail. The complaints are always ignored. The commercials are just another big fat waste of our money so the administration can say "Look! We have an effective *cough* public awareness campaign to curb fraud and abuse. We've stopped or thought about stopping millions of cases of fraud." Whatever. Repeal the darn thing and start over.

    5. Thomas A. Coss, Las says:

      Clearly Peter, whom I respect greatly, is more driven by hope and novelty, than by evidence, facts or math. In the manufacturing industry, we have over 50 years of experience of capital investment driving up productivity (and consequently down labor), there is no such evidence in healthcare.

      What is visible is an increasing demand for services, and increasing regulation that impedes the efficiency of existing labor in providing services. We see ongoing defensive medicine fueling studies of limited clinical utility, all with a growing lack of control by patients who, in the end, either live with, or die with the results.

      A solution is to look back to 1950's medical financing, where the government didn't seek to control what it did, and does not understand. Deductibles were higher, enabling patients to self direct a good deal of the basic services they need and desire; and insurance covered the big stuff. Add to this 2010 technology and you have the beginning of an interesting conversation of modest government involvement, and more efficient consumption.

      Thomas A. Coss, RN

    6. Fuzzy, MA says:

      How much, too, will all the commissions and oversight committees, new IRS workers, and the people who will be pouring over our personal bank accounts and income sources . . . how much will all of it *actually* cost? It's going to get just as big and unwieldy (and utterly useless) as every other government agency and program. I also want to know how much all those doctor enticements will cost, the ones that provide an "incentive" (bribe) for doctors to give fewer tests and treatments. And how much will all those government-provided translators and in-home government-appointed nurses who are going to tell people how to care for their children? Actually, I'm not sure that one made the final bill, but it was in HR3200.

      By the way, have all the car retailers been reimbursed for Cash for Clunkers yet? Or are they still waiting? How much time, money, and how many lives will it cost if we put the same morons in charge of our health care that were incapable of running a brief and straightforward car trade program? The same government that, when Post Office customers complained about long waits, took the clocks off the walls. Problem solved. Government-style. Repeal is the only solution, the only way to keep us safe and healthy, actually.

    7. Pingback: Big Propaganda

    8. Dee, San Jose CA says:

      I was disappointed to see that this article did not address the analysis by the non-partisan GAO which finds that the Health Care Law gives "notable improvement" to debt outlook: http://www.gao.gov/products/GAO-11-201SP

    9. W.P.Koch,San LuIs Ob says:


      Congress and the White House should stop squandering the people’s money and use savings to improve quality of basic invested entitlements. Preserve the 2010 tax schedule. Congress should improve basic Medicare. Vote opponents to this “out”. Citizens come first.

      It is time the U.S. reduces its human rites and police activities for the World by lobbying the United Nations, NATO and Interpol to “take on more”. 800 bases in 63 countries across the world should be reduced. Starting with Iraq, continue training for self reliance. After a surge in Afghanistan repeat above and remove corruption starting with monitoring accounts, substituting minerals mining and food crops for drugs.

      If we train make them pay. Decrease forces in selected areas such as Germany, Bosnia and Okinawa.

      Cut bloated federal bureaucracy. Combine CDC, EPA and FDA. Combine the FAA, NHTSA and Transportation Department. Combine GAO and CBO. Phase in outsourcing. Departments should eliminate “must spend all”. Return “unused” yearly budget to the treasury. Cut consolidated department budgets (other than entitlements) on an average of 10%.

      Eliminate all 32 CZARS Mr. president. Reduce your 469 member staff which makes nearly 39 million per year! Halt first lady $180,000 air force one vacation trips. Cancel $ 20,000,000 executive order (HB 1388) to relocate key Hamas members to U.S. Stop “$200 million per day” presidential foreign trips.

      Contribute to only one of: The World Bank or International Monetary Fund or U.S. Agency for International Development.

      Reduce foreign aid bribery. For example, no aid to oil rich -Iraq. $37 billion and increasing with $8.7 billion of Iraq development funds not accounted for. Halt $150 million aid to Palestinians.

      Charge bailed companies (TARP) for their huge executive bonuses at taxpayer expense. Government should sell its shares to recoup for taxpayer. About $154 billion owed.

      Congress should reduce the “stimulus” and monetary expenditures by halting: over budget projects, non relevant earmarks for vote bribery. Do not pay student loans for congressional staff. Please- no private or military jets for congress including Pelosi’s family of $2.1 million for over 2 years. Congress should set commercial travel cost standards and controls.

      Reduce medical cost by: allowing purchasing anywhere in U.S., “tort reform”, and reducing “red tape”. Trace funds to local medical groups for expediting billing cost speed, doctor/patient verification and fraud reduction.

      Federal government should enforce existing immigration laws. Complete the improved fence. Entitlements or benefits should be for only citizens. Deport criminal “illegals”. Only workers on a Visa Program qualify for needed medical benefits.

      Improve medical expense tax deduction for citizens reaching age 65. Provide corporations tax reduction incentives for hiring with healthcare.

      The savings will improve funding for:” Medicare”, “Medicaid, and “Veteran’s Affairs”.

      Healthcare quality should be at least that for Congress or the Federal Employee Health Benefits Program (FEHBP). Additional benefits are: dental coverage, improved visual coverage, no drug “donut hole”, no deductibles and co-pays except for extended skilled level nursing.

      These actions will allow aid for unemployment compensation and Social Security with reinstated cost of living increases.

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