Obamacare

Will ObamaCare's Medicare Cuts Work?

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When the Congressional Budget Office released its early scores of what eventually became the new health care bill last year, it frequently included a caveat cautioning that, yes, the law could reduce the deficit if executed exactly as written. But based on historical evidence, the CBO said, that's not very likely to happen.

Hey, but it'll totally work this time!

In today's Washington Post, former Bush HHS Secretary explains why the bill's arbitrary Medicare cuts, and the independent commission that's supposed to ensure they happen, are historically unlikely to produce the intended results:

This kind of arbitrary cost-cutting in Medicare doesn't work. Since 1989, Congress has tried to put a lid on total fees paid to physicians. The use of physician services has soared under Medicare's fee-for-service arrangements. The automatic formula has tried to offset the higher costs with lower fees, across the board. But the cuts are so draconian that they drive physicians out of the program and reduce beneficiaries' access to care. The result is a bipartisan rush to undo the cuts every year. Why would we expect a different result from arbitrary cost-cutting in the new health law?

The administration has also pointed to the Independent Payment Advisory Board as a "game changer" for Medicare and the broader health system. The 15-member board is charged with finding savings in Medicare to keep spending growth below fixed targets, starting in 2015. Its recommendations will take effect automatically unless overruled in a new law.

Although Congress handed off substantial power to the board, lawmakers did so by removing its potency. The board can change only Medicare's payment rates for services and products (and it can't touch hospitals until 2020). The board can't change the nature of the Medicare entitlement or try to impose more market-based discipline on the program. That means the only way it can hit the budget targets is with reductions in reimbursement rates for those taking care of patients. That approach never works to control costs because the volume of services used is left unchecked. This undermines quality by penalizing high and low performers alike.

Supporters of the health care overhaul have criticized Republicans for pushing to repeal the commission. There's definitely an element of pandering in some of those calls, and in general, Republicans, with a few exceptions, have been far too willing to defend Medicare as untouchable. But at the same time, the PPACA's supporters have largely failed to make a convincing case that the Medicare payment commission will actually achieve its goals.

NEXT: Battle of the Sucky School Stats

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  1. Here’s a novel idea: pay physicians based on results. No cure, no fee.

    1. I think results probably have a place in medical payments. But I’m skeptical that results should be the sole factor; medicine is too complicated to price that easily. Think of cancer treatments, some of which work only sometimes. And often enough, providers don’t know for sure why a treatment worked in Case A but not in Case B. There are an incredible number of outside factors at work, some of which only the patient can control — everything from diet and exercise to stress levels and family history. With a lot of diseases, it would really complicate things to pay doctors if and only if the treatment was perfectly successful.

      1. I’m with Peter on this one, for the reasons he states and one other:

        Diagnostic work doesn’t have “results” other than the performance of the test, which is generally negative.

      2. “Think of cancer treatments, some of which work only sometimes.”

        Think of drug development, which only produces something successful sometimes. They just have to roll the cost of failure into the charge for success. The main problem will be clueless leftists who think they are gouging by doing so, but there’s nothing to be done for it.

  2. the PPACA

    Can we go back to calling it “Obamacare”?

    1. Srsly, since I hate shorthand for things. Although, I do wish there was another “c” word in there so we could call it pee pee kaka.

  3. This will totally work this time because we intend to liquidate some kulaks!

    1. Wreckers! Spies!! Saboteurs!!!

  4. it would really complicate things to pay doctors if and only if the treatment was perfectly successful.

    As if it’s not complicated now.

    Obviously, not every medical condition can be dealt with this way, but for every long and complex cancer treatment, there are plenty of sore throats and broken fingers.

    There is also an inevitable overlap between legitimately unsuccessful treatments and incompetence. One of my friends had a little mishap involving a piece of wood being driven into his hand by a power tool. The first doctor did such a shit job it was necessary to have a second doctor go back in and fix it. In a rational system. Doctor A would have refunded all fees, and paid every penny of Doctor B’s “fix”.

    That’s not what happened.

  5. When the Congressional Budget Office released its early scores of what eventually became the new health care bill last year, it frequently included a caveat cautioning that, yes, the law could reduce the deficit if executed exactly as written.

    Sorta like those old Revell kits – you COULD put together a Spitfire like the one pictured in the box if you followed the instructions EXACTLY as pictured…

    …except that the instructions were depicting some other reality because you still had to tweak those damned parts anyway. I suspect the same about the law and its implied “precision”…

  6. Do we want it to “work?” I think that if we have to sacrifice even more liberty for a modicum of budget sanity, then there is something fundamentally wrong with the system as it is. Medicare and PPACA should be phased out (the former) and repealed (the latter). I think that would solve the deficit problem more easily.

  7. Trying to come up with national rules for paying for medical services is like trying to come up with a single building code for the entire country, that assumes houses prices and labor costs are uniform – one can see the extreme pitch of roofs in Florida now.

  8. The administration has also pointed to the Independent Payment Advisory Board …”

    aka the Death Panel.

  9. If only Hitler had won the war, we wouldn’t have had all these problems all these years.

  10. We should all do our part in helping to control health care costs. For ideas, check out Whatstherealcost.org.

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