Saturday, December 27, 2014

Who Will Pay for Medicare Cuts? Possibly You and I

Any deal to tame the federal deficit will have to cut Medicare. The hard part is not whether to slice but how. Medicare cuts could affect our entire health care system.

Who Will Pay for Medicare Cuts? Possibly You and I

Any deal to tame the federal deficit will have to cut Medicare. Its costs keep growing like weeds in summer. Eventually, it could eat up more tax dollars than any other government program. And like a weed, it will start to crowd out everything else.

Most members of Congress on both sides of the aisle agree. The hard part is not whether to slice but how. Medicare cuts could affect our entire health care system.

And guess who could end up paying for Medicare savings, if they aren’t devised carefully. You and I.

One way to cut Medicare is with a sledgehammer. That is the approach proposed by House Majority Leader Eric Cantor (R. – Va.).

He would slice payments to hospitals, especially those that treat large numbers of poor and uninsured patients and those in rural areas. He would also cut payments to nursing homes.

What would these hospitals and nursing homes do? Some would go out of business, making it harder to find one when we need it. Others would limit services. Many would shift costs to private insurers, which would pass them along through higher premiums.

Patients would also pay more. The plan adds copayments for lab tests and home health services. It also places new limits on Medicare supplemental insurance (also known as Medigap), which might cover them.

So, the Cantor approach would save money for the federal government by shifting costs to almost every private citizen. He seems to feel this is somehow different from a tax increase. I don’t think my wallet, and probably yours, could tell the difference.

Rep. Cantor’s plan does leave us the freedom to refuse to pay the higher bills. We would then get the bluntest cost control approach of all – rationing. Isn’t that something else he once said we should avoid?

Instead of trying for an easy fix with a sledgehammer, we could address the root causes of runaway Medicare spending. There are two big ones – rising health care costs and an aging population.

Of course, underlying cost drivers are much harder to change. We’ve only begun to devise solutions. But a lot of promising ideas are out there.

For example, Medicare could pay providers based on health outcomes rather than on the number of procedures and tests they perform. That would encourage efficiency and a clearer focus on achieving results.

Or, Medicare could carefully analyze whether expensive new treatments work before agreeing to pay the bill. We know that many new drugs and devices are no better than older and cheaper ones. Sometimes, they are actually worse. Medicare wastes a lot of money on such useless care.

Or, Medicare could help providers to better manage chronic diseases. These conditions add more costs than anything else.

Obamacare, as imperfect as it is, made a start at true Medicare reform in each of these areas. While the provisions are limited, they at least attempt to address the real drivers of higher costs.

We have yet to hear anything comparable from Obamacare’s opponents. The Cantor plan contains no novel ideas. It will leave a bigger health care mess that we will have to clean up in the years ahead.

We need serious solutions for complex problems. Simple fixes like the Cantor plan would leave Medicare’s underlying problems firmly in place. Instead of planting flowers, they would let the weeds take over completely.

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About this blog

Check Up covers regional health news and a wide array of healthcare topics from pharmaceutical happenings to patient safety. Read about some of our bloggers here.

Portions of this blog may also be found in the Inquirer's Sunday Health Section.

Robert I. Field, Ph.D., J.D., M.P.H. Professor, School of Law & Drexel School of Public Health
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