Critics pounce on Medicare reports touting the program’s positive outlook
Critics take Obama administration to task on Medicare projections
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.”