Critique of the co-chairs' health care proposals for the National Commission on Fiscal Responsibility and Reform
By Don McCanne, M.D.
The projected increases in Medicare spending are of concern to all of us. Although we need to slow the rate of growth in spending, we should do so not only without impairing the program, but by actually enhancing the benefits. Let me explain.
The co-chairmen have advanced proposals that address federal budget deficits related to Medicare, but unfortunately they have done so to the detriment of the Medicare beneficiaries. I spoke to this briefly in my Quote of the Day yesterday (Nov. 10).
They propose an increase in Medicare cost sharing to promote greater consumer sensitivity to health care costs. Medicare is already a relatively Spartan program, paying roughly only half of health care costs for our seniors and those with long-term disabilities. Medicare beneficiaries face significant financial barriers to care, sometimes preventing them from receiving essential health care services. Some with greater health care needs even face bankruptcy because of the high out-of-pocket costs. Shifting more costs from the federal government to patients might reduce the federal budget, but it plays havoc with personal budgets. Cost sharing is merely a polite term for what it really is — cost shifting onto the backs of patients.
Because of the potential financial burden, many Medicare beneficiaries purchase Medigap plans. They provide one of the lousiest values in health insurance, having very high premiums for very modest benefits. The co-chairmen propose that the benefits be reduced further by requiring deductibles, again to create greater consumer sensitivity to costs. If they were really interested in saving money, they would recommend folding the Medigap benefits into the traditional Medicare program, thereby saving the profound administrative waste that characterizes these private Medigap plans. Although that improves patients' budgets without changing the federal budget, policies should be designed to benefit the patients rather than appease the anti-government ideologues.
In many areas of the country physicians are concerned about their relatively low Medicare payment rates, and the lack of a "doc fix" is a very real threat for patients. Our primary care infrastructure is already crumbling, and imposition of the scheduled fee reductions will cause many more physicians to exit the Medicare program. The recommendation to prevent the fee reductions for physicians by imposing fee reductions on physicians is truly disingenuous. Physicians understand simple math when it comes to their paychecks. Patients also understand what it means when physicians' practices are closed to new Medicare patients.
The co-chairmen propose strengthening the pending Independent Payment Advisory Board (IPAB). The board is being given the task of reducing payments in the traditional fee-for-service Medicare program, and has been provided with considerable leverage to impose those changes. Reducing fees in the Medicare program without changing fees paid by private insurers will surely motivate physicians to drop Medicare patients in favor of those privately insured. Strengthening IPAB will only compound this differential. We do need an IPAB that has a mission not to simply reduce payments, but rather to set payments based on value. We need to pay the right amount, not necessarily the least amount. But, to be effective, an IPAB would have to have influence over the entire health care delivery system. That would be possible only with a single payer system, but not with our current fragmented system of financing health care.
Another disingenuous recommendation is to reward physicians for meeting spending targets by reducing their rates further. Disgruntled physicians lack incentives for high quality performance. A "back-up-sequester" (when IPAB recommendations are not adopted) to increase premiums or reduce provider payments is punitive to both patients and physicians and could further impair patients' access to care.
The proposed premium support system for Medicare (basically vouchers for private plans) is strictly another manifestation of the great risk shift – an assault on individuals and families (Hacker). It defeats the solidarity behind social insurance programs.
Although the deficit commission is fixated on the federal budget, what really matters in health care is that our total spending is brought under control – both private and public. If we are paying a reasonable amount for all health care combined, then it really doesn't matter that most of it would appear in the federal budget. It's still our money whether we pay it directly or pay it as taxpayers.
It would be much more efficient and equitable if our national health expenditures were funded through progressive tax policies. We could do that very easily if we simply improved Medicare and then provided it for everyone, as PNHP's congressional fellow, Dr. Margaret Flowers indicated in her testimony before the commission months ago. At least we would have stabilized the health care component of our federal budget.