Health Reform: The Medicare-Medicaid Triple Pickle

The potential for cuts highlights the pickle facing federal lawmakers as they try to expand healthcare coverage while simultaneously reining in soaring healthcare costs.

"Potential Cuts to Medicaid Outlines by Administration 'Cruel'”, Healthwatch, March 27, 2011

July 6, 2011 - "A pickle", according to my dictionary, is a difficult or awkward situation. As part of the current budget negotiations, the Obama administration has a real pickle on its hands: how to cut tens of billions of dollars from Medicare and Medicaid without alienating its core constituencies and appearing to cruel and heartless.

Federal negotiators say they can do this without imposing new costs , cutting benefits, or threatening access to care.

How would they do this?

• Cutting Medicare payments to hospitals for uncollectable patient debt.

• Reducing payments to hospitals for training of doctors.

• Cutting payments for specialized services like trauma care and organ transplants.

• Eliminating “overpayment”to nursing homes.

• Reducing federal share of Medicaid spending to states.

• Restricting states’ abilities to finance Medicaid.

• Imposing taxes on hospitals and doctors.

Triple Pickle

These proposals pose a triple pickle for federal lawmakers.

One - Can they grasp the “third rail” of American politics, entitlement programs, in this case Medicare and Medicaid which cover 100 million Americans, and which are poised to explode in growth by as much as 50 million for Medicaid in 2014 and to reach 76 million for Medicare by 2019, without being electrocuted politically? We shall see.

Two - Can they threaten the very survival of American hospitals, which derive 55% of their revenues form Medicare and Medicaid? This is why hospitals are spending $1 million a week to defeat the proposals.

Three – Can they maintain access of care in the states , already cutting back on Medicaid to balance broken budgets, to the most vulnerable – children, seniors, the poor, and the disabled, while causing more doctors to drop out of Medicaid and Medicare because of lowered reimbursements. I doubt it. Doctors surveys indicate as many as 40% to 60% of doctors may opt out of Medicare and Medicaid.

The AMA and AARP have joined hospitals and nursing homes in the fight against proposals that would cut federal spending as a percentage of GDP. That percentage is now 23%, and it is growing relentlessly and uncontrollably.

In good times, it is easy for politicians to giveth, but it is hard to taketh away.

Politicians are confronted with a formidable and bitter-tasting Triple Pickle.

One, how to avoid third rail electrocution when squeezing the Federal Nickel.

Two, how to keep from devastating the states by decreasing the downward Medicaid Trickle.

Three, how to prevent massive doctor shortages while cutting their pay with a federal a Hammer and a Sickle.

No longer can fickle politicians down the road the can kickle.