Medicaid and Medicare at the Crossroads

From the beginning, the health reform law has been about extending Medicaid and saving Medicare. In 2014, it will extend care to 32 million more Americans, 16 million of whom will be on Medicaid rolls.

In 2010, Medicaid covered 68 million Americans and cost $406 billion. Under the health care law, 85 million Americans will on Medicare in 2014, growing to 100 million by 2021, according to the CBO. (Medicaid and CHIP Payment and Access Commission. Report to the Congress, http://www.macpac.gove/reports).

In 2010, the total spent on social welfare programs, including Medicaid, Medicaid, Social Security and federal welfare programs was $1.879 trillion, 50.5% of the total federal budget of $3.520 trillion. ( Ferrara, P, America’s Every Expanding Welfare Empire, Forbes Magazine, April 22, 2011).

This is not exactly stingy, despite liberal protests of federal spending as being “shamefully small” and “contemptibly austere.” Many Americans think differently. With a federal budget deficit of $14.3 trillion, American voters are asking for cuts in spending and smaller government.

Over the next 10 years, the Obama administrations proposes to cut Medicare by over $500 billion thorough “savings,” by ending Medicare Advantage plans and through Accountable Care Organizations and reducing physician and hospital payments.

This year 78 million baby boomers started entering Medicare, at the rate of about 1200 each day. By 2014, Americans on Medicare will approach 50 million.

The numbers entering Medicaid and Medicare, which may eventually amount to nearly 50% of all Americans, pose two massive problems.

• How to finance Medicaid and Medicare, given the current $14.3 trillion federal debt, which will continue to grow.

• How to care for Medicaid and Medicare beneficiaries, given the current primary care shortfall of 50,000, which promises to mount as less than 10% of medical student enter primary care.

The first problem, national debt, is obvious to the public and to both political parties. It is the main point of contention in the current debate about reducing federal spending and raising the debt ceiling.

The second problem, the doctor shortage, is not as obvious to the public. Physicians are aware of it because they often have trouble handing the current patient load, because of the failure to fix the SGR (Sustainable Growth Rate) formula which calls for over 20% cuts in Medicare reimbursement in future years; and because the ACA proposes to reduce doctor reimbursements to rates less than those of Medicaid by 2019.

By 2014, when ACA kicks in full force, 16 million Medicaid beneficiaries will become eligible. Then the problem of who to care for them will hit.

Here is how John Iglehart, national correspondent for the New England Journal of Medicine, describes the scope of doctor shortages (Iglehart, J, Medicaid at a Crossroads, New England Journal of Medicine, April 28, 2011).

“According to the National Center for Health Statistics, only 65% of office-based doctors were accepting new Medicaid patients in 2009, as compared 74% and 88% for patients covered by Medicare and private insurance, respectively. A study concluded that the growth in Medicaid enrollment under the ACA will greatly outpace the growth in the number of primary care physicians who are willing to accept new Medicaid payments. On the basis of survey responses from 4700 physicians, the study also concluded that temporary increased in Medicaid reimbursements meant to lure more primary care doctors into the program won’t make much indifference in the states facing largest enrollment jumps.”

By 2014, and probably by the November, 2012, presidential elections American voters will have to decide how much they are willing to support Medicaid, Medicare, and social welfare programs for its citizens, and how much they are willing to pay doctors to care for them. Somehow these programs must be cut or restructured as block grants or voucher programs, and somehow the supply of primary care physicians must increase. Unless something is done, access to physicians will become a political crisis of unprecedented magnitude.

Tweet: Because of the primary care doctor shortage, Medicaid and Medicare are at a crossroads and at the edge of a massive political crisis.