Crit­ics pounce on Medi­care re­ports tout­ing the pro­gram’s pos­i­tive out­look

Crit­ics take Obama ad­min­is­tra­tion to task on Medi­care pro­jec­tions

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Two re­ports re­leased last week by Obama ad­min­is­tra­tion of­fi­cials con­tend that the new health re­form law will tamp down health­care costs and put Medi­care on sub­stan­tially more solid foot­ing.

But a grow­ing num­ber of skep­tics in­sists that the out­look may not be so sunny. In­stead, they ar­gue that the pro­jec­tions ig­nore the of­ten-messy way that leg­is­la­tion gets im­ple­mented. Even Medi­care’s chief ac­tu­ary has sounded a con­trar­ian note, of­fer­ing an al­ter­na­tive take on the Obama ad­min­is­tra­tion’s cheerier claims.

At the core of the cost and sav­ings ar­gu­ment are twin re­ports—one from Medi­care Trust Fund trustees and an­other from the CMS—that es­sen­tially say the pack­age of sweep­ing re­forms signed into law by Pres­i­dent Barack Obama in March would ex­tend the sol­vency of Medi­care longer than pre­vi­ously pre­dicted.

Both re­ports come af­ter the re­form law took back-to-back hits. In Mis­souri, vot­ers go­ing to the polls over­whelm­ingly ap­proved a mea­sure to re­verse the fed­eral pro­vi­sion re­quir­ing the pur­chase of some level of in­surance cov­er­age. And in Vir­ginia, a fed­eral judge ruled that a law­suit against the 4-month-old law could move for­ward, fu­el­ing hope from other state of­fi­cials who have sim­i­lar le­gal chal­lenges against the fed­eral govern­ment.

While it is un­likely that ei­ther event will put a dent in the im­ple­men­ta­tion of the re­form pro­vi­sions, it un­der­scores to law­mak­ers and even Obama that op­po­si­tion to health­care over­haul is still vi­brant.

The two re­ports rely on the as­sump­tion that the ba­sic core of the re­form ef­fort— in­clud­ing changes to how providers are paid, pro­grams to stream­line and im­prove care— would work in lock step to slow ever-ris­ing health­care costs. In the CMS study, the agency found that re­form would save Medi­care al­most im­me­di­ately to the tune of $7.8 bil­lion through 2011 alone and $418 bil­lion over a 10-year win­dow end­ing in 2019.

HHS Sec­re­tary Kath­leen Se­be­lius, dur­ing a news con­fer­ence in Washington, her­alded the find­ings. “Be­cause we be­gan mak­ing changes right away, the sav­ings from Medi­care add up fast,” she said, re­fer­ring to a raft of mea­sures that are in the be­gin­ning stages of im­ple­men­ta­tion.

The CMS re­port fo­cused pri­mar­ily on the de­liv­ery sys­tem changes that will be in­her­ent upon the provider com­mu­nity to im­ple­ment. Those pro­grams meant to help re­duce the num­ber of hos­pi­tal read­mis­sions, re­shape how hos­pi­tals and doc­tors are re­im­bursed and those that tar­get fraud and abuse are ex­pected to re­duce Medi­care spend­ing by tens of bil­lions of dol­lars.

In a sep­a­rate re­port, the Medi­care trustees ex­tended out that sce­nario over decades in their an­nual eval­u­a­tion of the health of the Medi­care Trust Fund.

The trustees con­cluded that un­der an over­hauled health sys­tem, Medi­care’s hos­pi­tal trust fund would stay flush un­til 2029, 12 years longer than pre­vi­ously pre­dicted.

In ad­di­tion, Medi­care’s Part B fund would also see a longer fi­nan­cial life. As is, spend­ing on Part B is equal to about 1.5% of the gross do­mes­tic prod­uct. While prior es­ti­mates pre­dicted that spend­ing would in­crease to 4.5% of GDP af­ter 75 years, the lat­est re­port shows a deep cut, to 2.5%, be­cause of the re­form law.

If ac­cu­rate, an­a­lysts agree that it’s a much rosier sce­nario than those made in the past. In a writ­ten state­ment, the Amer­i­can Hos­pi­tal As­so­ci­a­tion tried to see the bright side of the find­ings, of­fer­ing that the trust fund’s new sol-

Sil­vers says cuts to physi­cian pay are “not go­ing to hap­pen.”

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