Medicare Cannot Be Used as America's Health Care Piggy Bank

Medicare Cannot Be Used as America's Health Care Piggy Bank
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With the opening of the 115th Congress, the easy campaign talk of “repeal and replace Obamacare” has become the challenging policy and procedural aspects of actually getting it done. Few would argue that, at a minimum, the Affordable Care Act needs a major overhaul. What counts as politically acceptable “repeal” will be fought out on the nation’s op-ed pages, radio call-in shows, and among Republican and Democratic members on the various cable channel talk programs. 

A few markers probably have to stay in place. The provisions to allow children up to 26 years old to remain on their parents’ policy and the requirement to offer insurance notwithstanding pre-existing conditions probably top that list. But, the basis of the accounting (which probably made Bernie Madoff jealous) was that, like any insurance pool, a lot more people have to pay in and use little or none of it, to offset those who pay little and use a great deal. 

On the other side of the two-column ledger is the matter of curtailing the growth of Medicare. In 1995-1996 when Speaker Newt Gingrich suggested that as a way to claw the nation toward a balanced budget, President Bill Clinton’s White House accused him of cutting and gutting Medicare.  Now that the fiscal shoe is on the other foot, “reducing the rate of growth” has become a benign approach. 

The fact is, according to a Kaiser Family Foundation study, “between 1989 and 2014, Medicare spending per enrollee grew at an average annual rate of 5.5 percent, somewhat slower than the 6.3 percent average annual growth rate in private insurance spending per enrollee over these years.” 

Keeping in mind that the Budget Control Act of 2011 (which introduced the word “sequestration” into the national Sunday morning lexicon) reduced payments to providers and plans by 2 percent beginning in 2013 would seem to account for the difference in Medicare and private insurance spending.  Those reductions had nothing to with the quality of care and had everything to do with meeting budget goals.  

But doctors, clinics, and hospitals have to operate in the real world.  People have to be hired, equipment has to be purchased and maintained, drugs and consumables have to be at hand, and so on. 

In the current drive to “repeal and replace” the ACA, designers must be careful not to add to the burden of hospitals and clinics by ignoring the significant cuts to Medicare Democrats issued to make the ACA budget numbers work. The challenging economics of hospitals and physicians are being made even more difficult by the changes to Medicare mandated by the ACA. According to the National Center for Health Policy Analysis in a 2015 article, “21 percent [of physicians] are not accepting new Medicare patients.”

But while a physician can opt out of Medicare or private insurance plans, a hospital cannot.

A trip to the hospital ER, whether it is for trauma or for an acute condition that will require admission is treated regardless of the patient’s ability to pay.  That delta is typically made up by government payments: Medicare or Medicaid. But those payments aren’t keeping pace.

Many Republicans running in 2016, along with promising to “repeal and replace” Obamacare, also ran against $700 billion in “Medicare cuts” that came along with the ACA. Now it’s time for Republicans to keep both of their promises – to replace Obamacare and restore Medicare funding, especially to hospitals. 

With Americans living longer, almost every family in the nation has at least one member that is at least 65 years of age and, thus, eligible for Medicare.  Their children might be willing to help defray the Part A, B, or D premiums and even cover the start-of-the-year deductibles, but they will soon run out of patience (and money) if they have to be the insurer-of-record for mom and dad. 

And smaller hospitals, especially those in rural and medically underserved areas, are facing new Medicare cuts while simultaneously facing new pressures from growing epidemics like opioid overdoses. 

Republicans have won. Now, they have to demonstrate to the voters that they can govern. HHS’ Administration for Community Living reports that Americans 65 years or older now account for 14.5 percent of the population. That works out to over 46 million. But, it also estimates that by 2040 that proportion will grow to 21.7 percent. Even if population growth were to stop today, that would represent over 70.5 million people. 

That number will undoubtedly stretch the capacity of the health care system in America. We cannot afford to tear that system to shreds by continuing to ask Medicare to pay for politically expedient policies. 

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