Former Obama administration budget director Peter Orszag is worried that under Paul Ryan’s Medicare plan, seniors might have a harder time finding a doctor thanks to Medicare’s payment rates, which are lower than the rates paid by private insurers. In other words, he is concerned that what might happen under the Ryan plan is what is already expected to happen under Medicare as we know it thanks to ObamaCare.
He doesn’t mention this (why bother, really?), but Medicare’s chief actuary, Richard Foster, has already sounded the alarm on a number of occasions.
In an actuary’s note at the end of the Trustee’s report this year, for example, Foster addressed ObamaCare’s health provider reimbursement cuts, warning that “there is a strong likelihood that certain of these changes will not be viable in the long range.”
The likely outcome? Without some sort of expensive legislative fix, we’d see far fewer doctors and other health providers, and seniors would experience “severe” significant access problems. Here’s Foster:
Specifically, the annual price updates for most categories of non-physician health services will be adjusted downward each year by the growth in economy-wide productivity. The best available evidence indicates that most health care providers cannot improve their productivity to this degree—or even approach such a level—as a result of the labor-intensive nature of these services.Without unprecedented changes in health care delivery systems and payment mechanisms, the prices paid by Medicare for health services are very likely to fall increasingly short of the costs of providing these services. By the end of the long-range projection period, Medicare prices for hospital, skilled nursing facility, home health, hospice, ambulatory surgical center, diagnostic laboratory, and many other services would be less than half of their level under the prior law. Medicare prices would be considerably below the current relative level of Medicaid prices, which have already led to access problems for Medicaid enrollees, and far below the levels paid by private health insurance. Well before that point, Congress would have to intervene to prevent the withdrawal of providers from the Medicare market and the severe problems with beneficiary access to care that would result.
Orszag’s specific concern is that under the Ryan plan, seniors will have the opportunity to switch into private Medicare plans. Those plans will pay more than traditional Medicare, which the Ryan plan would retain as an option. Orszag points to evidence suggesting that doctors are more willing to take Medicare beneficiaries because there are so many of them. So if lots switched to private plans, he argues, that would dilute traditional Medicare’s market power and thus make doctors less willing to take those patients.
But Medicare beneficiaries already have pervasive provider access problems. A Health Affairs study published last month found that 17 percent of physicians would not take new Medicare patients last year. A 2009 study of doctors in Alaska found that 11 percent had opted out of Medicare and would only take patients who paid in cash.
If Medicare’s own actuary is to be believed, Medicare’s current fiscal path is likely to make those problems worse. And on that path, seniors won’t have the option to leave traditional Medicare for a private plan that may ensure better doctor access. Either way, traditional government run Medicare is a sinking ship. Ryan’s plan, at least, would offer the possibility of some lifeboats.