Just before they jetted off for the holidays, Congress and the president brokered a $33-billion deal that extends the payroll tax cut, provides additional unemployment benefits, and spares physicians from steep cuts in Medicare reimbursements.
Unfortunately, the compromise simply postpones the day of reckoning for all three issues until March. For the next two months, Congress will bicker about how to avoid hiking payroll taxes and slashing doctors pay by 27.4 percent.
If history is any indication, physicians dont have much to worry about. Over the past decade, Congress has passed 12 doc fixes delaying cuts in Medicare reimbursement rates.
Each has kept Medicare afloat temporarily. But taxpayers capacity to absorb such fixes will soon run out, given the out-of-control growth in the programs cost. To save Medicare from bankruptcy, Congress must reinvent the program to focus on our nations neediest seniors.
The doc-fix saga began in 1997, when Congress established the Sustainable Growth Rate (SGR) formula for determining Medicares annual budget. Designed to control spending on the enormous entitlement, the SGR tied Medicare expenditures to the growth rate of the economy.
But Medicare spending exploded at a rate twice that of Americas national income. Adherence to the SGR quickly became impossible.
Lawmakers knew that reductions in reimbursements as prescribed by the SGR formula would drive physicians out of the Medicare program and thereby jeopardize American seniors access to care.
To maintain physician participation in the program, Congress has made a habit of ignoring the SGR. In 2010 alone, extra funding was required on five separate occasions to prevent reimbursement rates from plummeting.
Despite the constant deferment of pay cuts, many physicians still find it challenging to see people covered by Medicare. They receive substantially less from the government to treat Medicare patients just 81 percent of the private insurance rate.
As a result, some physicians have abandoned the program altogether. A 2010 Houston Chronicle report revealed that more than 300 doctors in Texas stopped participating in Medicare between 2008 and 2010.
The American Medical Association states that nearly a third of primary care docs limit the number of Medicare patients theyll see. And the American Academy of Family Physicians (AAFP) reports that the number of doctors refusing to take part in Medicare has doubled since 2004.
Absent a doc fix, many more physicians would surely join them on the sidelines. A 2010 AAFP survey noted that six in ten physicians would stop accepting new patients if reimbursements were cut.
For the nearly 50 million Americans who receive health benefits through Medicare, an exodus of physicians from the program would be devastating.
And yet, something must be done to shore up Medicares disastrous finances.
Without reform, Medicares hospital insurance trust fund will be exhausted by 2024. According to a 2011 report from the Medicare Trustees, the programs long-term unfunded liabilities amount to $36 trillion.
The Trustees caution that this figure could be much worse: The actual future costs for Medicare are likely to exceed those shown by the current-law projections in this report.
Obamacare purports to take on these financial challenges. But its proposed remedies will fail.
Take the laws new Independent Payment Advisory Board (IPAB). An effectively unaccountable board of 15 appointed officials, the Board will be tasked with reducing the rate of growth in Medicare spending. If the programs costs surpass set levels, the board must offer recommendations to rein in spending.
But IPAB is prohibited from raising taxes, restricting the treatments covered by Medicare, or raising the retirement age. This leaves the board with one option: reducing payments to health care providers.
Sounds an awful lot like the lead-up to the doc fix each year, doesnt it?
Federal officials have proven incapable of controlling Medicares costs. So why not give patients responsibility for doing so?
The feds could grant every senior a voucher whose value would be determined by factors including age, income, and health status. Younger, wealthier seniors could receive smaller vouchers, while older, poorer seniors could receive more generous subsidies. They could then purchase insurance plans that suited their unique needs.
These vouchers would not only empower enrollees to take control of their health but also create an environment in which both insurers and health care providers would have to compete for business. Over time, costs would come down and the quality of care would improve.
The doc-fix ordeal exemplifies whats wrong with our Medicare system. Injections of cash in the short term wont preserve seniors access to care in the long term and will instead hasten the programs bankruptcy.
Nothing less than fundamental reform is needed.
Forget The Doctor Fix, We Need A Medicare Fix
Sally C. Pipes
Just before they jetted off for the holidays, Congress and the president brokered a $33-billion deal that extends the payroll tax cut, provides additional unemployment benefits, and spares physicians from steep cuts in Medicare reimbursements.
Unfortunately, the compromise simply postpones the day of reckoning for all three issues until March. For the next two months, Congress will bicker about how to avoid hiking payroll taxes and slashing doctors pay by 27.4 percent.
If history is any indication, physicians dont have much to worry about. Over the past decade, Congress has passed 12 doc fixes delaying cuts in Medicare reimbursement rates.
Each has kept Medicare afloat temporarily. But taxpayers capacity to absorb such fixes will soon run out, given the out-of-control growth in the programs cost. To save Medicare from bankruptcy, Congress must reinvent the program to focus on our nations neediest seniors.
The doc-fix saga began in 1997, when Congress established the Sustainable Growth Rate (SGR) formula for determining Medicares annual budget. Designed to control spending on the enormous entitlement, the SGR tied Medicare expenditures to the growth rate of the economy.
But Medicare spending exploded at a rate twice that of Americas national income. Adherence to the SGR quickly became impossible.
Lawmakers knew that reductions in reimbursements as prescribed by the SGR formula would drive physicians out of the Medicare program and thereby jeopardize American seniors access to care.
To maintain physician participation in the program, Congress has made a habit of ignoring the SGR. In 2010 alone, extra funding was required on five separate occasions to prevent reimbursement rates from plummeting.
Despite the constant deferment of pay cuts, many physicians still find it challenging to see people covered by Medicare. They receive substantially less from the government to treat Medicare patients just 81 percent of the private insurance rate.
As a result, some physicians have abandoned the program altogether. A 2010 Houston Chronicle report revealed that more than 300 doctors in Texas stopped participating in Medicare between 2008 and 2010.
The American Medical Association states that nearly a third of primary care docs limit the number of Medicare patients theyll see. And the American Academy of Family Physicians (AAFP) reports that the number of doctors refusing to take part in Medicare has doubled since 2004.
Absent a doc fix, many more physicians would surely join them on the sidelines. A 2010 AAFP survey noted that six in ten physicians would stop accepting new patients if reimbursements were cut.
For the nearly 50 million Americans who receive health benefits through Medicare, an exodus of physicians from the program would be devastating.
And yet, something must be done to shore up Medicares disastrous finances.
Without reform, Medicares hospital insurance trust fund will be exhausted by 2024. According to a 2011 report from the Medicare Trustees, the programs long-term unfunded liabilities amount to $36 trillion.
The Trustees caution that this figure could be much worse: The actual future costs for Medicare are likely to exceed those shown by the current-law projections in this report.
Obamacare purports to take on these financial challenges. But its proposed remedies will fail.
Take the laws new Independent Payment Advisory Board (IPAB). An effectively unaccountable board of 15 appointed officials, the Board will be tasked with reducing the rate of growth in Medicare spending. If the programs costs surpass set levels, the board must offer recommendations to rein in spending.
But IPAB is prohibited from raising taxes, restricting the treatments covered by Medicare, or raising the retirement age. This leaves the board with one option: reducing payments to health care providers.
Sounds an awful lot like the lead-up to the doc fix each year, doesnt it?
Federal officials have proven incapable of controlling Medicares costs. So why not give patients responsibility for doing so?
The feds could grant every senior a voucher whose value would be determined by factors including age, income, and health status. Younger, wealthier seniors could receive smaller vouchers, while older, poorer seniors could receive more generous subsidies. They could then purchase insurance plans that suited their unique needs.
These vouchers would not only empower enrollees to take control of their health but also create an environment in which both insurers and health care providers would have to compete for business. Over time, costs would come down and the quality of care would improve.
The doc-fix ordeal exemplifies whats wrong with our Medicare system. Injections of cash in the short term wont preserve seniors access to care in the long term and will instead hasten the programs bankruptcy.
Nothing less than fundamental reform is needed.
Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.