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  • What the Debt Deal Means for Medicare

    The congressional enactment of the Budget Control Act to increase the national debt limit was mostly a triumph of process, not substance. But substance cannot be avoided. The looming question is how this process will deal with the biggest entitlement challenge: Medicare.

    On Medicare, Congress has only two options: (1) serious but careful structural reform, or (2) blunt across-the-board cuts that will make matters even worse. After almost 30 years of tiresome debate on this issue, studiously ignoring the findings of independent analysts and presidential commissions alike, Congress has yet another chance to do the hard work on the details of Medicare reform.

    The Goal. Following the initial reduction in discretionary spending, the Budget Control Act creates a special bipartisan Joint Select Committee on Deficit Reduction, a “super committee” that would have the “goal” of producing $1.2–1.5 trillion in 10-year savings. Just as there is no cap on budget savings, surprisingly, there is no real floor, either. As Heritage Vice President for Domestic and Economic Policy David Addington observes, the deficit reduction “goal” is not even legally binding. Nonetheless, the committee is to report its recommendations by November 23 and Congress is to enact them, without amendment, by December 23.

    This is a very fast-track process for some very big thinking and some very big changes. Serious Medicare reform is going to require hard, fast, and extraordinarily competent policy work.

    The Fallback. The bipartisan committee will either reach agreement on how best to reduce the deficit by the target amount or it will not. If it does not, the Budget Control Act authorizes an automatic 2 percent, across-the-board cut in Medicare and other domestic programs (with the exception of Medicaid and Social Security) as well as national security and defense. The across-the-board cuts are to be equally divided between defense and non-defense spending, In the case of Medicare, the budget savings are to come not from benefit reductions but from provider payment cuts.

    More Bad Policy. Politicians cannot control the demand for medical services. They can control only the supply of those services by cutting payment for them. The huge cohort of rapidly retiring baby boomers—the first big batch will be eligible for Medicare enrollment this year—will push the demand for medical services to unprecedented levels, but the boomers cannot get more if their doctors and other medical professionals are being paid less and less for delivering them. Physicians can either cut back on their Medicare practice, reducing senior access and adding to hospital emergency room caseloads, or they can crank up their volume, thus spending even more. A formula for failure.

    Medicare doctors and hospitals are already facing record-breaking Medicare cuts under current law. The Medicare physician payment formula guarantees a 29.4 percent cut in doctors’ reimbursement in 2012, unless Congress overrides its own stupid formula, as it has done routinely since 2003.

    Even so, some seniors are already paying a price. The Medicare Payment Advisory Committee reported a couple of years ago that 28 percent of Medicare patients had problems finding a primary care doctor. Likewise, Obamacare imposes Medicare provider payment cuts that are already projected to yield $575 billion in savings in the first 10 years. Indeed, the Medicare Actuary says that if these Medicare provider payments continue, they will dip below Medicaid levels, where patients routinely struggle to find doctors to take care of them.

    When Congress voted to increase the nation’s debt, it also promised to decrease federal spending. If Members are serious, they should reform Medicare on the principles of choice and competition and secure real savings, avoiding the alternative across-the-board cuts that will only jeopardize seniors’ access to care.

    This is possible if they don’t blow it. Again.

    Posted in Obamacare [slideshow_deploy]

    9 Responses to What the Debt Deal Means for Medicare

    1. Pingback: More Medicare Cuts* – Wall Street Journal « SSA

    2. Lynn says:

      The "debt deal" means that private physician practice will experience escalating " under reimbursement "driving physicians out of practice at an even faster rate because of the political cowardice of both parties.Private physicians have, for a decade, been struggling with Medicare reimbursements which are far too low to sustain their practices. The physicians who toil to take care of the patients, do not have the enormous lobbying resources of Health Insurance and Hospital Industry, who by extensive lobbying have "made out" quite well under Obamacare at the expense of physicians and patients.

    3. Mike, Wichita Falls says:

      I find it interesting, and, at the same time, disturbing, that if the committee or Congress deadlock, which is where the safe money is found, the legitimate, Constitutional functions of our federal government, namely national security and defense, are subject to across-the-board cuts while the illegitimate, unconstitutional and budget-busting federal programs of SS and Medicaid are off limits. While people may argue which party lost this debate, the country no doubt lost on this debate for sure.

    4. John says:

      I completely agree with Lynn. It seems that physicians are being exploited, largely on their good nature, by the political class/rule-makers. By that I mean the policy makers are banking on docs not exercising the nuclear option of shutting out Medicare patients from their practices, something that is counter-intuitive to their daily goal of helping people feel better/stay well. Too busy to "unionize" while they run a practice, docs are unable to coalesce and take a stand, leaving them vulnerable to draconian cuts whose true significance escapes the voting public.

      • Joan says:

        John, most people are unaware that physicians are legally prohibited from unionizing or even discussing their fees within a formal group setting due to FTC anti-trust restrictions initiated during the G H W Bush administration which technically made it illegal for physicians to negotiate with powerful insurance companies except based upon declining Medicare rates. The myth of "cost shifting" does not apply to practicing physicians who are exploited by the political class and insurance industry.

    5. Janice Avery says:

      I am an RN who has experience working in the emergency department of a hospital and I predict there will need to be many changes in the "world" ahead of us since this administration. There is doubt in my mind that the future of health care will be as it is today. Who knows what it will be?

    6. Bobbie says:

      here's a scenerio of waste, not the first time and surely not the last time. Two months ago my father went in for a basic check up and blood test. The doctor calls to inform he found inflammation of the liver? He wanted my father to come in for another blood check. He did and the doctor told him the sign of inflammation was still there and he had to get an ultra sound. So my father goes in for the ultra sound and found nothing. The doctor insisted my father get some type of nuclear mri? My father did and once again, not one thing wrong. My father went in for a check up to which the doctor did ANOTHER BLOOD CHECK and when my father asked, the doctor said "everything checks good." My father didn't elaborate and I'm sure the doctor wasn't expecting him to. My father is old and this is alot of time, trouble and ABUSE put on him for a misdiagnosis of a simple blood test that was taken to the extent. It's as if they're wasting what they can for the waiting crisis around the corner…

      When there's no accountability they abuse the mind, emotions and money… that's why the government sector pays themselves so well. They punch a clock and no matter what happens their pay check will be there. There won't be anyway to sue the government doctor of no accountability. Taxes go up because doctors with government backing them, couldn't make it in the world of "held" accountability and egotistical enough to take the pay they're not worth. Pay for poor performance??? the future of personal health care does not look good in the hands of government.

      • Lynn says:

        Your father had elevated LFTs which is a common scenerio. The tests performed probably were less than $ 500.00 in total and before these tests were available staritng in the 1970's your father may have faced an exploratory surgery or other more invasive and expensive risky treatment option. You and your father should not be afraid to ask questions about these procedures which are ELECTIVE not emergent.
        and therefore up to you as to whether you decide to have them done. the doctor is doing his job in pursuing the abnormal lab result. I am sorry and a bit puzzled that you feel that this was "Abusive". If the doctor ignored an abnormal test result, he would be subject to a medical board complaint or law suit.

    7. Bobbie says:

      thanks Lynn, I hope you get this. Who knows what an abnormal test result looks like except the doctor who was specific to call it inflammation of the liver TWICE, when there's a potential chance and great as it seems in this case, that it might not be? That's what I call abuse. As far as the nuclear test, seems more intense then a regular MRI and on an 83 year old man? Who knows what questions to ask? That's what I call helpless. It seems everyone has to have the same or above the intellect as the doctor who today is paid for his title and not necessarily his work… and my father likes this doctor as we have tried to get him to another, he won't budge. He protects this doctor and his faults and the doctor can take advantage of that.

      Oh, my father was always a healthy guy and didn't have any surgery or operation in my lifetime. The worst of his health started in 2008 when he went into the doctor for a pain from his elbow up his arm. sounded like a common symptom of a heart attack the same doctor told him was a pinched nerve. 3 TIMES! 3 separate office visits! Ended up having a massive heart attack and has been going down hill since… I hope you can understand my lack of trust just with my father's story. I've seen much more in the area of health care that builds that lack of trust…

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