The Medicare Sky is Falling.. Accepting Medicare

by run 75441

The Medicare Sky is Falling

Part of the Medicare Sky Falling story is a claim that doctors are refusing to accept new Medicare patients because of low payments. It is common for politicians and pundits to pontificate declaring Medicare is broken. A doctor himself, Wyoming Senator Barrasso made the claim to CNN’s Candy Crowley recently.

Sen. John Barrasso mistakenly claimed that “57 percent of doctors don’t want new Medicare patients,” which isn’t true. His own spokeswoman admits he got it wrong.

National surveys have put the number who don’t take new Medicare patients as low as 14 percent, and a big American Medical Association survey last year showed only 17percent of all physicians said they were ‘restrictin’ Medicare patients (either taking none, or just some).”Senator’s Barrasso’s Medicare Mistake

See also Part 1, Part 2, and Medicare Breaks medical inflation curve

The claim is related to the implementation of the Sustainable Growth Rate formula which adjusts physician payments whenever the aggregate cost of Medicare exceeds the calculated growth rate. The Sustainable Growth Rate is outside of the ACA and since its inception has only been applied once in 2002. Congress has repeatedly delayed the decreases by applying short term fixes canceling out the planned SGR adjustments in reimbursements. The proposed 2012 budget also contained delays in implementation. The SGR was passed as a method to control the increasing aggregate cost of Medicare without consideration for the number of services provided.

On the other hand, 62% of Primary Care doctors said they would stop taking new Medicare patients if the SGR formula reimbursement cuts were implemented. To increase reimbursements for primary care, the ACA has in it provisions to increase primary care doctors reimbursements and at the same time reduce reimbursements for specialists.

Another claim by pundits and politicians is Medicare has been outstripping inflation. This has been true for a number of years; but, a more recent trend shows quite the opposite. Here again pundits and politicians have been claiming the reduction in doctors accepting Medicare patients has been the cause of such a decrease in Medicare cost. I believe we have debunked that claim earlier.

Given that rising healthcare costs drive the cost of Medicare, Medicaid, and even commercial insurance; it is outrageous that people would consider cuts in Medicare and Medicaid as a means to control overall healthcare costs or just give up the fight on rising healthcare costs and sacrifice the poor, the children, and the elderly to vouchers and buyer beware.

How has Medicare been performing recently? Maggie Mahar at Health Beat Blog Deadlock Over The Debt: What It Means to You . . . touches upon the planned cuts in Medicare John Boehner proposes and lesser cuts offered by President Obama as a compromise to break the stalemate in Washington between the Democrats, the Republicans, and the Tea baggers. Wrongly identifying Medicare and Medicaid as the leading cause of rising healthcare costs, the House under John Boehner has sought to impose severe cuts in the programs which will in effect balance the deficit and budget on the backs of the poor, the elderly, and the children who depend upon Medicare and Medicaid heavily. Medicare and Medicaid are still on the chopping block for cuts under the recent compromise.

In an update to its S&P Healthcare Indices (12 month moving average), Standard and Poor’s reports Medicare cost trends decreased with costs growing at a rate of 2.64% annually in May. So, why attack a program whose costs are decreasing and out-performing the Commercial Index (private healthcare) which showed a 7.35% annual cost?

While both the Commercial and Medicare Indexes showed a slight uptick in May of .25 and .16, Medicare has consistently outperformed commercial healthcare insurance in controlling cost. Medicare’s performance comes in light of increased healthcare industry costs and a growing baby boomer population.

As Taken from, “US Healthcare Costs Rose 5.8% Over the 12 Months Ending May 11 According to the
S & P Healthcare Economic Indices

The Commercial Index (private healthcare) mirrors the growing costs of healthcare in the US. From the May 2010 levels, the Commercial Index reflects a 7.35% increase, Medicare 2.64%, and the composite of both 5.35%. The Medicare Index shows a widening gap between it and the Commercial Index which appears to be occurring from its control of costs. In effect, Medicare is dragging down the cost of commercial insurance and acting as a control on overall healthcare costs.

As Taken from, “US Healthcare Costs Rose 5.8% Over the 12 Months Ending May 11” S & P Healthcare Economic Indices

While hesitant to declare an outright victory and a long term trend in Medicare cost controls, David Blitzer of the S & P Indices in a conversation with Maggie Mahar indicated this is more than just a blip on the screen. He went on to add:

We tend to get data from the Centers for Medicare and Medicare about 1 to 1 1/2 years after the fact; this is why there is a widespread perception that Medicare spending is still rising 2% faster than GDP. S&P is giving us more current numbers, and while the S&P index is ‘is not perfect,’ Blitzer says, ‘it’s good.

While there is waste in Medicare, it is conceivable Medicare costs could be reined in even further through the ACA and enough such so as to match GDP growth and no more. To squeeze cost the ACA will look to the Advantage Programs Insurers, overpayments to Advantage insurers, payments for some preventable errors, annual increases in reimbursements to hospitals, nursing homes and other institutional providers, and with systematic changes to the today’s healthcare model which rewards providers for doing more than for better outcomes.

Interesting that S&P downgrades US Credit Rating while at the same time shows proof of entitlement programs driven by the cost of the healthcare industry are decreasing at a faster rate than their commercial counterparts.