The ACP Advocate Blog

by Bob Doherty

Tuesday, August 21, 2012

Medicare and the Triumph of Nonsense over Substance

Medicare has suddenly become a centerpiece issue in the 2012 election—but not in a good way.  Instead of an informed debate about Medicare’s present and future place in our health care system, the politicians have subjected us to a daily assault of nonsense over substance:

Let’s start with the nonsense accusation by Governor Romney that "There's only one president that I know of in history that robbed Medicare, $716 billion to pay for a new risky program of his own that we call Obamacare.” This charge has been discredited by independent fact-checkers. 

“The only element of truth here is that the health care law seeks to reduce future Medicare spending, and the tally of those cost reductions over the next 10 years is $716 billion,” Politifact wrote about Mr. Romney’s charge. “The money wasn’t ‘robbed,’ however, and other presidents have made similar reductions to the Medicare program. We rate this statement Mostly False.” 

CNN’s Soledad O’Brien, citing the Congressional Budget Office, www.factcheck.org, AARP, and the statutory language in the Affordable Care Act itself, discredited a similar accusation by former NH governor and Romney supporter John Sunnunu

There also is the inconvenient fact that Rep. Paul Ryan, Romney’s running mate, included the same $716 billion in Medicare savings in the House-passed budget plan, although Mr. Romney has vowed to “restore” them.   

Here are the substantive facts behind the charges and counter-charges.

It’s true that the ACA makes changes in Medicare payment policies that the CBO estimates will slow Medicare cost increases by $716 billion over the next decade.  (In other words, Medicare’s costs will still increase, but by a lesser amount.)   The Medicare savings come from reducing payments to hospitals, Medicare Advantage plans, and some other non-physician providers. (The ACA did not include any new payment cuts to doctors—rather, it temporarily increases Medicare and Medicaid payments to primary care physicians—but it also did not cancel out scheduled cuts from Medicare’s SGR formula, enacted in 1997.)  

But instead of taking money “out” of Medicare, the ACA actually shores up the Medicare Part A Trust Fund, extending Medicare solvency by eight years, according to Medicare’s actuaries.  Without the ACA’s $716 billion in savings, Medicare would go belly up in 2016 instead of 2024.

How can this be so?  Well, the Medicare Part A Trust Fund consists of the dollars that are collected from payroll taxes to pay for current and future hospital-related health care expenses.  If Medicare pays the hospitals less, the money in the Trust Fund is drawn down less slowly and it lasts longer—just as if a cut in tuition costs would allow the savings you have set aside for your kids’ college education to last longer.   

One could certainly make a substantive argument that the way that the ACA (and Rep. Ryan’s budget for that matter, since it includes the same savings) lowers future Medicare costs increases is unwise, because the cuts in payments to hospitals and Medicare Advantage might cause future access problems.  Or one could make the substantive counter-argument that lowering Medicare payments to hospitals and Medicare Advantages plans is necessary and appropriate--and a better way to achieve savings and efficiencies without harming beneficiaries--than cutting benefits. 

One could also have a substantive argument over whether the Medicare savings, if they are to be kept, should be used to finance tax cuts and help lower the deficit, as the Ryan budget proposes to do, or to expand access to the uninsured and improve Medicare benefits (no cost preventive services, phase out of the Medicare Part D donut hole) as the ACA would do.

But such substance is lost when politicians blithely try to scare seniors into believing that benefits are being stolen from Medicare to pay for Obamacare, when the facts show the ACA actually improves Medicare benefits and extends the program’s solvency by almost a decade.

Which brings me to another nonsense accusation—this one from the Obama camp--which is that seniors will pay $6,000 more under the Romney/Ryan Medicare premium support plan, compared to the current Medicare program.  

The journalists at the  www.factcheck.org site report that this is “outdated” claim based on CBO estimate of an earlier version of Rep. Ryan’s premium support proposal, which would have capped the federal government’s premium contributions at a much lower rate of increase than Rep. Ryan’s current plan.  “[The earlier] plan had the premium-support payments, or subsidies, growing with the rate of inflation, and health care costs have risen much faster than that for years” they write, but “Under the new Ryan plan, that premium-support payment would be tied to the second-cheapest health care plan, which can’t grow more than gross domestic product plus 0.5 percentage points. So, Ryan’s plan says the premium support would always be enough to cover the two cheapest plans.”   Plus, the Ryan premium support plan wouldn’t apply to anyone who today is 55 or older, so it is misleading to scare current seniors into believing that they will pay $6000 more for their Medicare. 

But www.Politifact says that it is “mostly true” that Mitt Romney and Paul Ryan want to convert Medicare into a voucher program—just not now, not for current seniors, but for future beneficiaries starting ten years from now!

Again, there are important substantive arguments that could be made about the wisdom of eventually turning Medicare into a voucher program.  Will limiting how much the federal government contributes to Medicare stimulate cost-savings through competition among insurance plans, or result in cost-shifting to seniors who can’t afford to pay more? Is market competition more effective than the ACA’s approach of squeezing payments and piloting new models of delivery and payment?  Will insurance companies under a voucher system be more or less bureaucratic and transparent than the traditional government-administered Medicare program?  And if Medicare premium support is such a good idea, as Mr. Romney and Ryan maintain, why wait ten years to institute it?  (Read more about my thoughts about the potential impact of Medicare vouchers on my wife’s future Medicare, and the secret truth about vouchers that neither party will admit.)

And, speaking of substantive questions, I would ask Mr. Romney, if the $716 billion in Medicare savings from the ACA is to be restored, as you have promised, and Medicare vouchers won’t be implemented for another decade, as you have also promised, then how do you propose that Medicare cost increases be slowed in the meantime to sustain the program’s solvency and reduce its crushing contribution to the deficit? 

And I would ask President Obama, if the ACA’s $716 billion in savings are to be kept, along with the rest of the ACA, and you rule out vouchers as an option, what else should be done to sustain Medicare’s long term solvency and reduce its crushing contribution to the deficit, since the current level of savings is clearly not going to be enough?

Because, as the National Journal’s Margot Sanger-Katz reports, both the Obama and the Romney Medicare plans fail to solve the cost problem.  “Although they won’t admit it, Romney and Obama have pretty similar visions for how much they think Medicare spending should grow in the future” she writes. “Both have backed plans that would cap per-capita spending at about the same rate, though they would use vastly different means to do so. Neither would come close to eliminating Medicare’s projected long-term deficits.”

She hits the nail on the head. How to eliminate Medicare’s projected long-term deficits is one of the most important substantive issues that should be debated by the candidates, but isn’t, since they are too busy trying to discredit each other while reassuring seniors that nothing must change.   Unfortunately, the Medi-scare nonsense being spewed by them will make it even harder to later get the public on board with the tough choices that will need to be made to sustain Medicare while reducing the public debt, which inevitably will involve a combination of reduced benefits, increased cost-sharing, tax increases, and changes in the way that hospitals and physicians are paid.

Today’s question: Do you agree that the Medicare debate in this election has mostly been a triumph of nonsense over substance?

8 Comments :

Blogger Jay Larson MD said...

An important election is coming up. Of course politicians are going to blab nonsense.

We are in a pickle when it comes to Medicare. For years, hospitals and physicians have written off potential income to care for Medicare patients. If Medicare allowed reimbursement at the level of commercial insurance, it would have run out of funds years ago. Medicare reimbursement has gotten so far behind that providers are now seriously considering not seeing Medicare patients to maintain financial stability.

Now that we have the most expensive health care in the world, everyone is running around trying to figure out how to fix it. There will be no easy or painless approach, no matter what political party you favor.

August 21, 2012 at 3:09 PM  
Blogger ryanjo said...

You are never going to get meaningful changes in Medicare if politicians are allowed make changes to buy the votes of seniors.

Today's example from my life: patient comes in, happy he just had a cardiac cath showing only minimal lesions. Has been complaining of nonsense symptoms for months, requires office time & 20 minute phone calls to me and cardiologist (unpaid by Medicare, of course). Finally, he finds another cardiologist who just cathed him (even though his pre procedure note said that there was no finding on cath that would make him recommend anything but medical management.) Cluelessly states "finally someone listened to me".

Lessons learned:
-- patient with no "skin in the game" (i.e., no voucher limiting utilization, no payment for several doctors time, not even a dime paid for a $6,000 procedure) can make a bad choice without consequences. If he heard a noise in his car, and several competent mechanics said it was nothing, would he pay to have his car disassembled? Like a kid in a candy store, his behavior is so predicable. Multiply this by a thousand times a week, and that $710 million "waste" seems realistic.
-- cardiologist #2 likely felt the need to up the ante, he's on the spot, "could get sued if I missed something". Any decent plaintiff attorney could make those 25% occlusions into a fat suit. So why not be sure? No protection from Medicare for making a tough decision, just less money for spending time thinking and discussing.

Bottom line, nothing being proposed, from ACA to ACOs to vouchers, does anything to correct basic flaws in the present system, it just keeps it alive longer (on the backs of taxpayers and providers). The reason for failure -- politicians are making the tweaks, and the rest of us and our professional societies are just trailing along, hopeful that this is the first steps to universal, effective healthcare.

Anything touched by the politicians is tainted. Get them out of the system. The first step is for organizations like ours to simply state the obvious, and begin to marshal public support for rolling back government control, establishing patient control AND responsibility. If those with ethics and a conscience don't do this, can we expect anything but the present mess?

August 21, 2012 at 10:20 PM  
Blogger Ashok V. Daftary, MD, FACP. said...

In all fairness the author iof this blog must state unequivocally that he will use all the skills in his verbal gymnastic reportoire to discredit every attempt by Mr. Obama's opponents to offer him a one way ticket back to Chicago.
In all honesty if we physicians' like pigs at the proverbial trough continue to tolerate the excessive increases in medical entitlement spending we guarantee the bankruptcy of our nation.
This eventually will hinder our patients' access to care and our ability to care for them.
When that day arrives as it surely will we may be the patients' and our children the caregivers.
The ACP In its publications pontificates on how care can be delivered in a quality and cost effective manner, Does it ever evaluate whether it's members ever listen to its exhortations.?
We ask that the inequities of the SGR be corrected. Do we provide concrete examples of how this may be accomplished?
How often have we heard any opposition to the RUC from our own professional societies?
We have now reached a moment of reckoning,
It would be appropriate to occasionally credit Paul Ryan with the the courage to enunciate hard truths that the ACP is unwilling to state and accept.
The ACP should stop being a PAC for any political faction.
The financial impositions imposed by the coming health legislation are legally imposed coercion of a profession cloaked as a charity by a politician eager to get elected spending your dollar and mine.

August 23, 2012 at 12:46 AM  
Blogger BDoherty said...

This comment has been removed by the author.

August 23, 2012 at 5:11 PM  
Blogger BDoherty said...

ACP has been very vocal about the need to reduce federal spending and reform entitlements. As far as I know, we are the only national physician membership organization to represent specific ways to Congress reduce federal spending by hundreds of billions of dollars, while preserving funding for key programs and coverage for the uninsured. Vouchers aren't necessarily the only or best option. See:

<"http://www.acponline.org/advocacy/where_we_stand/policy/medicare_issues_brief.pdf">

<"http://www.acponline.org/advocacy/where_we_stand/policy/medicaid_issue_brief.pdf">

http://www.acponline.org/advocacy/where_we_stand/medicare/super_comm9-12-2011.pdf

August 23, 2012 at 5:12 PM  
Blogger Ashok V. Daftary, MD, FACP. said...

"The US spends the most in the world on healthcare – 17.9% of GDP in 2010 – and has been continually expanding, even during the global economic recession, as other developed countries such as the UK, Germany and Italy have been forced to reduce healthcare expenditure.

Thanks in part to President Obama’s Patient Protection and Affordable Care Act (PPACA), US government spending on healthcare is forecast to continue to increase in size, reaching $1.6 trillion by 2017."

http://www.biospace.com/News/gbi-research-release-800-billion-the-amount-us/270802/source=MoreNews

August 24, 2012 at 10:55 PM  
Blogger book82 said...

Wait a minute. After reading these responses, your comments suggest that Medicare patients are preventing other patients (younger patients, privately insured patients) from receiving proper care. My wife just went through a series of expensive treatments and it was amazing to see the "writeoffs" that hospitals and other providers claimed. I think the real issue is not so much whether Medicare will still be solvent under the current environment, but whether it make sense to have free market health care at all. One only needs to look at the large profits of corporate health care providers and insurance companies and the seemingly arbitrary price structure in medical billing.

September 3, 2012 at 1:55 PM  
Blogger erik fischer said...

Sometimes it's just pointless to put medicare in the hands of people who can't spell the difference between a medical billing specialist and a cashier.

December 10, 2012 at 8:17 AM  

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About the Author

Bob Doherty is Senior Vice President, American College of Physicians Government Affairs and Public Policy; Author of the ACP Advocate Blog

Email Bob Doherty: TheACPAdvocateblog@acponline.org.

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