Sunday, July 18, 2010

Obama Puts All Eggs in Medicare Basket. Obamacare in Perspective

The Obama administration has put all its eggs for health reform in the Medicare basket.

Medicare is where Obamacare's leverage is. That is what it can control. That is where it can reduce physician and hospital payments. That is where it can ration services based on comparative research of outcomes. That is where savings are presumed to be($132 billion in Medicare advantage cuts, $200 billion in increased provider productivity, more than $200 billion in physician and hospital fee cuts). That is where entitlement-induced health costs are driving the government over the financial cliff. That is where the ultimate path to a single-payer system lies.

There are political risks, i.e. breakable eggs, to the Medicare strategy.

• Seniors, 14% of the U.S. population, are the group most opposed to Obamacare, and seniors are the most reliable voters.

• Seventy eight million baby boomers will become Medicare eligible starting in 2011 at the rate of about 13,000 a day over the next 18 years.

• Obamacare rests on the assumptions that “savings” will salvage Medicare though history shows Congress has little stomach for saving on federal programs.

• Medicare “innovations” like medical homes, electronic health records, and bundled payments to accountable care organizations will make the system more efficient.

• Medicare can set rates of all-payers, commercial payers will follow Medicare, and payment differentials between Medicare and commercial plans will shrink, leaving physicians little choice but to stay in Medicare.

• The states will willingly absorb their share (about 20%) of the costs of expanding coverage to 16 million more Medicaid recipients and will form health exchanges to help the federal government.

• Health plans, which Obama has demonized as the villains of the health system, will meekly follow the Obamacare game plan, can survive with federally imposed profit caps, and are capable of negotiating Medicare-like rates with hospital and physician organizations who dominate local and regional markets.

None of these assumptions are sure things. Indeed, the country’s current anti-government mood makes them “problematical,” a word you may be hearing often until the recession lifts, the economy and jobs return, and the November election approaches. If current polls are predictive, Republicans stand to gain 7 senate seats, 11 governorships, and 30 to 60 House seats.

The big enchilada, the biggest egg-breaker of them all, may well be the physician access crisis. Here is how Robert Berenson, MD, vice-chair of the Medicare Payment Advisory Commission (MedPac) describes the problem.

“Medicare beneficiaries could experience problems obtaining important physician services, as physicians seek the greener pastures of the privately insured, turning away Medicare patients as they do Medicaid patients.” ( “Implementing Health Care Reform – Why Medicare Matters,” New England Journal of Medicine, July 8, 2010)

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