• Something has to give

    If there is a dictionary in the world with an entry for “something has to give,” I haven’t seen it. However, the CMS Office of the Actuary has a two part (two chart, really) definition based on looking at what the 2011 Medicare Board of Trustees Report suggests about the future of Medicare prices, relative to those paid by private insurers:

    There’s just no way Medicare prices will fall as far below those of private health insurance as these projections suggest. Something has to give. Or, as the CMS actuaries put it,

    The immediate physician fee reductions required under current law are clearly unworkable and are almost certain to be overridden by Congress. […W]ithout very substantial and transformational changes in health care practices, payment rates would become inadequate in the long range. As a result, the projections shown in the 2011 Trustees Report for current law should not be interpreted as our best expectation of actual Medicare financial operations in the future but rather as illustrations of the very favorable impact of permanently slower growth in health care costs, if such slower growth can be achieved.

    Hat tip to Don Taylor and his fantastic “On the Record” series. The actuaries’ report was in today’s edition.

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    • Sigh. What’s tragic is that the acceptable thing to say is that Medicare and Medicaid pay too little and need to be “fixed” upward, not that private insurance pays too much and needs to drop.

      Every policy wonk and industry expert knows that we pay roughly twice what other nations pay per unit of care. We all say that we need to get costs down. But when it comes to one of the most direct and obvious ways to do that, which would benefit the customers of private insurance and improve the viability of Medicare and Medicaid, there are crickets.

      Private insurers did this once before in the 90s, but it got demagogued and they surrendered after a few years. Republicans should support them if they try it again, because it shows private industry can improve consumer value and cut costs. Democrats should support them, softly, because it makes balancing the budget a lot easier and deflects some of the anger from government. But unfortunately, I think too many Democrats and even Republicans would help providers and anti-insurance doomsayers to fan populist anger. We aren’t ready yet to do the adult thing, which would be to allow global budgets for care to increase only at the rate of inflation.

    • Austin,

      All this was in the Trustees report published last August. And you are drawing the wrong conslusion. Obama Care pays for health insurance for the young and controls Medicare spending by ridiculous (and politically impossible) cuts in spending on the elderly and the disabled. Which is to say, Obama Care isn’t paid for at all.

      Tom Saving and I have even calculated how much seniors will lose as a result. For example, for someone turning 65 today the loss of Medicare spending is about $36,000 or about three years of benefits.

      See the full article here: http://healthaffairs.org/blog/2011/05/12/what-health-reform-means-for-medicare/

      • Which conclusion of mine is wrong? I wrote that something has to give. Do you think that is wrong?

        • Having said that, and not having reread your Health Affairs post John, I don’t agree that the cost of the doc fix should be applied to the ACA. But, it is a real cost, one that I believe we will pay. Pretending otherwise (and yes, some did that) is silly. But that merely demonstrates that it is a cost independent of the ACA.

    • I would love to see this charted against inflation and medical inflation. That would put private insurance and public insurance pay in context.

      Steve

    • John- You also forget the monies generated by gradually reducing the amount of health insurance premiums which is tax deductible.

      Steve

    • Steve, the excise tax takes a really long time to kick in, and even longer before it starts generating any real revenue. It is just another example of the “we’ll do the easy stuff now but we promise to do the really hard stuff at some point far in the future” approach to reform.

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