Truth and Consequences
Mar 1st, 2010 | 72 responses
Brian Beutler reports on the consequences of the 21% cut in Medicare payments to doctors that takes effect today:
The American Medical Association warned of this last week: “A Medicare meltdown now seems certain, as the U.S. Senate has left early for the weekend, abandoning seniors, military families and baby boomers,” reads an AMA statement from Friday. “The Senate failed to repeal the Medicare physician payment formula that will cause a drastic 21 percent payment cut to physicians who care for Medicare and TRICARE patients. On Monday, the 21 percent cut goes into effect, forcing many physicians to limit the number of Medicare and TRICARE patients they see in order to keep their practice doors open.”
Before they left early for the weekend, Democrats in the Senate were trying to pass a temporary extension of the funding for these Medicare benefits, as well as for unemployment benefits and COBRA coverage for millions of unemployed Americans. Sen. Jim Bunning (R-KY) was asking the Democrats to explain how they would pay for the temporary extension. He did not think it was a good idea to pass the extension if it was not paid for. (Former Pres. Bush had passed two tax cut packages and funded two wars without explaining where the money was coming from, and Sen. Bunning did not think it was a good idea to do that again.)
Sadly, the Democrats refused to tell him. So Sen. Bunning decided that in all good conscience he could not permit the extension to be passed, although the funding in it was needed to help Americans who had lost their jobs and could not pay for food and other essential expenses, and despite the fact that he was the only one who opposed the extension. Bunning’s fellow Republicans begged, pleaded, and cajoled, but he just would not listen to reason. The Democrats, being the majority in the Senate, could have forced Bunning to stop withholding his consent when the Democrats asked for unanimous consent to pass the extension, but whether out of malevolence or incompetence, they didn’t. And now look what’s happened as a result of the Democrats’ reluctance to physically remove Bunning from the Senate chamber or at least put several thicknesses of duct tape over his mouth:
On a conference call with reporters this afternoon Rep. Chris Van Hollen (D-MD) put it this way: “By his actions, Bunning has prevented people from receiving Unemployment, health care access, transportation projects from going forward, and Doctors who provide Medicare services from getting paid.”
Today, for the seventh time, Bunning objected to a request for unanimous consent to temporarily extend benefits. In addition to cutting doctor’s fees, his exploitation of the Senate’s filibuster rules has cost thousands of out-of-work Americans their benefits and has even put thousands of federal employees out of work.
Look, it was silly and maybe even mean of Sen. Bunning to do this, but the Republicans did everything they could to get him to change his mind, and they just could not. The Democrats, by contrast, refused to make him change his mind, and now we have a big huge mess.
This is what happens when the Democratic majority plays partisan politics.
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72 Responses to “Truth and Consequences”
I agree with both parts of that statement Polimom given what your definition of “real reform” probably is.
“given what your definition of “real reform” probably is”
Hmmm…. Gotta be careful with those assumptions.
: )
Most people who I've seen use the words “real reform” argue for a vastly more intrusive government role in health care than is present in the Senate bill. If you have a similar point of view to those people, we probably won't agree.
I think if nothing gets done now….it will not be touched again for a decade, no matter how bad things get. The HC industry will keep things just barely patched up enough to keep enough Americans convinced they are getting good health care, while millions go without and thousands die because of the lack of HC. The HC industy pays a lot of people to figure how much they can squeeze out of Americans before they revolt. They also pay a lot for PR and politicians.
I don't think waiting for the system to completely crash is the answer.
I do think your points are very clear and logical….I just don't think they take into account the strength of the HC industry to stifle reform.
Shannon,
I understand your point of view. In the end, you must believe the Senate bill is better than nothing because that's your perception of the choice. Personally, I disagree with that point of view because I think the biggest risk is cost inflation and, on that front, the Senate bill is actually worse than nothing.
But, as on most issues, reasonable people can disagree.
I don't like a lot of what is in the current Senate bill, but it is all we have. If we start from scratch, nothing will get done. We won't touch HCR until the next Dem Pres rolls around.
I actually think that is a reasonable response – I don't agree with it, but it is reasonable. The problem I have is that Democrats are trying to claim the health care bill will not increase the deficit when it almost certainly will. The cost of fixing the SGR was estimated at 210 billion over 10 years – the Democrats are leaving that expense out of their plan's budget.
Now you are saying “OK, I know the expense is there but we'll deal with it later since the health care plan is important” – that's reasonable since you are portraying the situation honestly. Where I have trouble is with Obama/Reid/Pelosi portraying this dishonestly to curry support for the bill. The bill will not be deficit neutral unless the 21% cut goes into effect, something that will likely not happen.
Sort of…
It rather depends on what the baseline is. If both sides use the SGR as the baseline, the bill is deficit neutral on a current law basis since the bill implicitly and the CBO explicitly assume SGR will happen on a going forward basis assuming of course, which I would not, that the Cadillac tax will happen in 2018 and the cuts in Medicare growth will be made.
It's the same if you assume SGR won't happen on both sides of the ledger. However, it is also true that the likely cost of government provided healthcare is higher than what is represented in the bill's CBO score but this is because the CBO has to assume that the law will govern our behavior while Congress does not.
SI and DG.
Dems must control costs or else risk being blown out of government. I really don't think they have a choice in the matter. I agree that they do not have a great track record, but I am ready to take that risk in order to get reform.
I guess we'll see what Obama puts on the table and go from there. Maybe he wants to start from scratch? Will he get an honest partner if he does?
If a genuinely effective HCR reform package came down the pike, in order to be effective it would probably also have to be fairly draconian – meaning the cutting of doctors fees, cutting non-essential testing, cutting this, cutting that, etc. If you think that demonizing is bad now, just try to imagine what it would be if real HCR was proposed.
Shannon,
I don't think we'll be able to answer your last question because I don't think he will start over. I don't think he can bring himself to do it. My hypothesis is partially yes but mostly no. The reason is that there really is a difference in how the parties position themselves on this and many other issues.
I genuinely believe that many Republicans believe that the Federal role in managing market outcomes should be as limited as possible even if that means there are bad outcomes for some. I equally believe that many Democrats believe the government should intervene to ensure better outcomes, even if that means that some people are no longer allowed to do what they perceive to be in their best interest.
Let me use the debate about exchanges to illustrate my point. There is agreement that bringing more buying power to insurance purchasing is a good thing because it moves money from the insurance companies to the consumers.
The Republican perspective is let's allow the creation of purchasing coops that people can join in order to buy insurance. Currently such things are not allowed. Sure some people will not have access to a coop and some coops may do a bad job negotiating on behalf of their members but this would make the situation better than it is today and leave people as free as we can to pursue what they perceive as their best interest.
The Democratic view is let's have the government create the coops (exchanges) and lets have the government set a minimum insurance threshold for the coops so that nobody can buy through a coop a policy that doesn't cover “enough”. This will produce better insurance outcomes on average (more things covered for more people) but at higher economic costs and will prohibit some people from pursuing health insurance the way they choose to (those who would prefer to buy a policy at lower cost and lower benefits than the minimum).
To reconcile those two positions is actually quite complicated because it basically comes down to three pretty fundamental points. Should coops be allowed or mandated?; Should the government run the coops?; and Should there be a minimum policy standard to participate in a coop?
To be honest, I don't know how an partnership negotiates those three questions except to horsetrade on the answers. Almost regardless of the outcome, both sides will claim they didn't get what they wanted/needed.
It looks like you are right. Obama wants to add some Rep proposals.
I think you're right about financial incentives driving the medical profession too far, although I'm not sure what the correct fix is for that. I'm not sure I believe that the costs of medical education would fall with physician pay caps. I wouldn't object though to govt subsidization of education for FPs (so that those who want to specialize can pay out of pocket and invest to get the higher salary returns, but we'd probably also get more of the people who used to go into medicine out of passion and desire for service, who'd take advantage of the free or low cost education.) And then of course there could also be 'payback' requirements like serving a certain amount of time either for the VA, or practicing in underserved communities or taking just Medicaid/Tricare/Medicare patients for a period of time. Seems like a win-win to me.
“things just weren't broken enough”
In fact, many are satisfied with their current arrangement, and even more this year, many don't see things broken enough to justify anything rash — and even those dissatisfied were expressing fears their situation might be made worse. Things weren't (aren't) broken enough to dispel those fears.
* * *
What might come next with Medicare?
Report to the Congress: Medicare Payment Policy
found here:
http://www.medpac.gov/
“I don't think he will start over. I don't think he can bring himself to do it”
Nor can Congress. With a number of elements, deals have been made with affected parties, no doubt.
Wow, who knew a reasonable policy debate would break out on the comments thread? Only at TMV. I'm sorry I seem to have missed the meat of the debate, and I wish I had more time to discuss some of the details that have come up.
But I would like to weigh in the doctor payment issue, since a few weeks ago I did some research on the subject and that would just be wasted time if I didn't share.
According to the BLS (http://www.bls.gov/oes/2008/may/oes290000.htm), high-skill labor costs make up 480 billion of health care costs, which is 21% of the 2.2 trillion health care expenses overall. That's likely undercounting the number, however, because it doesn't count the labor cost of device manufacturers and IT professionals that work for vendors (me!) and such. Looking at the numbers here (http://www.worldsalaries.org/), it seems to me that health care professionals make on average 40% more (depending on the profession and the other country) than in other countries we're often compared to. So, if you do the math that means that higher labor costs accounts for at least 137 billion of the difference, or $453 dollars per person, which is about 15% of the difference between Canada and the US. Again, this is likely undercounting the role of high-cost high-skill labor.
So, one could argue that we could cut off 15% of the difference between us and Canada by slashing provider payments to Canada's level (assuming other health care professionals took a similar hit). But before we do that, we have to ask ourselves why health care professionals make more in the US? But to answer that question, we have to ask whether this trend is unique to the health care industry. The answer is yes and no. Wages in the US are generally higher than other places in general (http://en.wikipedia.org/wiki/Median_household_i…), so that explains some of the difference. However, I suspect the rest is due to our unusually high income gap between high-skill and low-skill labor. If you look at the worldsalaries link above, you'll notice that in high skill jobs, Americans generally get paid more than their foreign counterparts. But in low-skill jobs, the salaries are comparable. Therefore, the main reason we pay doctors and nurses and other health care professionals a lot is because we pay all of our high-skill workers a lot. Why is that? That's a tough question, but it is my opinion that we have a shortage of high-skill workers, a problem that needs to be addressed over the long term through education reform, but that's a separate topic.
This is one example of the fallacy that the difference between what the US spends on health care and what other countries spend can be explained soley based on the problems/inefficiencies in our health care system. There are many factors not directly related to the system itself that contribute to that gap. Some of those aren’t even necessarily bad things (higher demand for health care due to higher wealth over-all is not a bad thing, and is not the result of anything the health care system does or doesn’t do), and some are problems but are beyond the scope of HCR (the income gap). I've written a lot more about that topic here: http://sovereignmind.wordpress.com/2009/11/23/w…
So, if the high cost of labor in the health care system is not mainly due to a problem with the health care system, what would happen if we artificially restrained the labor cost? As others have pointed out, some potential doctors and nurses might choose other professions, leaving us with a shortage of doctors and (perhaps even more importantly) nurses. I've seen articles on nursing shortages especially. Anecdotally, all of the doctors and nurses I know are way over-worked. I've known several medical students who have said they would have chosen another profession if they had understood how demanding medical school would be, but that it was too late for them now that they were so invested. What if they faced the prospect of having their future incomes slashed?
I’m in favor of controlling health care costs, including labor costs, but not through wage/reimbursement controls. Our education system has to be fixed to produce more high skill workers to compete for those jobs, but that’s a long term process. In the short term, we’d have to find ways to encourage more people to choose healthcare professions (while I think the benefits of tort reform are overstated by republicans, it would help in this area). I know some others feel that the AMA puts undue restrictions on who can become a doctor, specifically to reduce the supply and therefore increase the price of doctors. I’m not an expert in that area but it’s something to look at.
Sorry for the long comment, and thanks to anyone still reading.:)
“It rather depends on what the baseline is”
I agree that it really depends on how you look at it. Although, as I pointed out in my first comment, it's clear that Democrats took out the doc fix from HCR just to make the bill look fiscally better, there is an argument to be made (although I don't agree with it) that it shouldn't count toward the score because it just continues what has been done every other year. It all depends on what you think the President meant when he promised the the HCR would be deficit neutral. Did he mean to include the temporary reform that happens every year as part of “reform”? It's a political debate with no real “right” answer.
But, actually what concerns me more than that are the other gimmicks in the bill to make it look better fiscally. Taking savings out of Medicare that should be used to help sustain Medicare and using it instead to finance a new entitlement program. Creating a new long-term care insurance program so that people can start paying into it now, but since people won't make claims for a long time (by definition) we can use those premiums to fund entitlement programs. Assuming the cost savings will be realized so that medicare payments will rise slower (even disregarding the doc fix), which really adds up. This is the main reason, along with the tax on high-end insurance plans (which over time are not-so-high-end), that the second decade deficit numbers look really good. It's taking money out of one pot and putting it into another, which is the same game Washington always plays. I understand that the CBO doesn't care about that–it only cares about the bottom line for the over-all theoretical fiscal picture–but the rest of us should care that the mechanisms to fund reform create even more unsustainability in the system.
Right on! The only thing I would add is that the second decade savings largely come from the assumption that the IMAC will restrain Medicare cost inflation to 6% from the current policy baseline assumption of 8%. Nobody knows how that will be done much less whether Congress would approve the changes but it seems reasonably unlikely.
Great comments, adelinesdad and steveinch. They should be mandatory reading for anyone who doesn't understand why people are objecting to the Dems HCR plans.
Once again. Medicare pays doctors 19% less than private insurance, yet 97% of doctors take new Medicare patients, while 97% of doctors take new PPO patients (yes, just as many docs will take a new Medicare patient as a privately insured). Medicare pays 25% less to hospitals than private insurance yet “nearly all” hospitals and clinics take new Medicare patients. Private insurance 17-30% overhead and profit v.s. 3.3% for Medicare. The combination is over 1/3 total cost savings of Medicare v.s. private insurance. I already listed many of the costs of private insurance that contribute ABSOLUTELY NOTHING to actual patient care. It is, in a word, waste. From the standpoint of our national goal of caring for our populace's health, there are billions in WASTE. Conservatives don't consider it waste, because their goal is not the national goal. It's to preserve profitability. Profit before people.
Conservatives whipped up concern like some of the concern trolls here, about taking money from Medicare, as if they wanted to assure no Medicare patient got any cuts at all. Were they lying? Then they exaggerated the waste and fraud of Medicare, which appears to be less than private insurance fraud. So which is it? Medicare cuts hurt the solvency of the program, Medicare cuts will hurt seniors, or Medicare is riddled with waste and fraud that can be cut?
I've also addressed the concern about doctor and nurse shortages. We make it harder than anywhere on earth to become a doctor. There are thousands of people each year, smart, capable and dedicated people, denied entrance to med school despite good grades and skills. Any time we want we can stop making med school such an exclusive club and turn up the supply of docs. Or we can simply allow immigration of some of those poor doctors abroad who have to deal with lower pay and -gasp- “socialized medicine.” There should be millions of docs who would love to leave England, Canada, France and Germany to get into the doctoring for big bucks game here, right?
In fact both patients and physicians abroad are happy with their systems, despite all the wailing here that somehow government involvement in health care will destroy health care in America (>40% of Americans are already in a government run system).
Finally, just like the attacks about Medicare waste and fraud, wherein the attackers ignore the fact that private insurance has at least as much, The scholarly-sounding concerns about costs and solvency of a public system never include any scrutiny of the cost and sustainability of the private system. It's like the insurance companies warning (threatening) that if the Dem bill is passed, insurance rates will go up 111% in 10 years then without a peep from the right, they raise rates nearly 40 % in a single year. Have a look at steveinch's worries that Medicare cost may go up to what private increases just surpassed.
Our medicine for money system is broken. It's riddled with waste, fraud and policies that hurt us all.
“97% of doctors take new Medicare patients”
Phffft. Laying aside what normal people like me notice and live with and must face every day, (valid) compiled numbers are at hand.
We know what's (obviously!) threatened, too, in the future. Example:
http://www.cns.org/advocacy/…/NSMedicareSurveyNewsRe...
http://www.aans.org/legislative/aans/…/MedicareSurve...
I have an IQ above fifty and observe what is happening where I live, as well as where I have lived before, all over the nation. Plus, I'm about to qualify for Medicare and risk being dumped on it and have to plan for losing my current providers or having more difficulty finding others as needed, as I and my current providers have been discussing; I'm not about to rely on delusions and denial of the reality.
The last thing I really need is anyone deliberately telling me blatantly false statements about what is true all over the USA, but which affects me directly. Don't tell someone sliding downhill things fall up.
I don't know if you're responding to me specifically, but the question of how much waste is in Medicare is tangential to my point. I don't know how much “waste, fraud, and abuse” there is in Medicare. My point is that if you're going to reform Medicare to save money (whether that money comes from waste or not), the savings should either be used to make the program more solvent, or else there should be a corresponding cut in taxes that people pay for Medicare. If we're are going to use the savings to fund new entitlement programs, at the very least we shouldn't say that the savings are going to help the solvency of Medicare (which would be a lie), because as the CBO has clarified, both cannot be true at the same time.
“We make it harder than anywhere on earth to become a doctor.”
As I said in the comment, I'm all for measures that help reduce the cost of labor in health care by scrutinizing the barriers on the supply. I'm not for reducing the cost of labor by capping the price on labor, which can only serve to reduce the supply. The CMS says 97% of docs accept Medicare patients. That doesn't count how many have cut back (http://money.cnn.com/2010/02/24/news/economy/do…), or how many will cut back if reimbursement continues to grow slower than medical inflation. We can argue about how much less supply they will be, but there's no doubt there will be less.
As for the immigration issue, it's something to consider as well, but there are some concerns to be resolved. For one thing, it wouldn't be fair for a doctor to get trained in a country where the government pays for her education, and then move to the US and compete with doctors who had to take out loans. Of course the foreign doctor will be able to charge less, because she was subsidized by the people of the other country. That is not fair to us or them. But again, I'm not against the idea if concerns like that one can be resolved. I understand our immigration system already gives preference to high-skill workers, but I'm not saying more can't be done there.
One thing to note about the supply side of medical care, too, is the effect of demographics. Even if I accepted GD's premise that there is currently no shortage of doctors who are willing to see Medicare patients (I don't, but for the sake of argument let's leave that aside)…we have a population timebomb about to go off with the baby boomers entering the Medicare system, and longevity increasing. If I remember correctly the projections have the number of enrollees doubling by 2030, so even if we currently have enough physicians to serve them, we soon will see dire shortages if we don't increase the supply side. Cutting the rate of reimbursement (often below what the physician's claim is their break even point), is certainly not the way to increase supply (quite the contrary.) At best you'd have to start mandating that all physicians see Medicare system, but even then something would have to give and wait lists would grow longer and longer as there were more patients vying for care from the same small pool of physicians.