Wednesday, July 16, 2014

Saving Medicare Becomes Doctors' Burden

The Congressional Budget Office released a new report yesterday and it was all good news for Medicare. According to the CBO, the government healthcare program for the elderly and disabled will remain financially solvent for five more years than previously predicted. Instead of going bankrupt in 2025, it is now going to fall into the abyss in the year 2030. Hmm, that's right about the time I'll become eligible for the program. But anyway, that's beside the point.

The reasons the CBO gave for increasing the longevity of Medicare aren't anything to celebrate though. The agency states that Medicare will be helped by a lower than projected rate of economic growth. Since people spend more on health care when their incomes go up, a worse economy will cause people to use less, thus saving the government money. Sinking the economy to improve a government program doesn't sound like such a great bargain in my opinion.

The CBO also says that interest rates are likely to fall since the economy won't be as robust as predicted. This will save the government billions in interest payments. I find this hard to accept since interest rates are already being kept at near zero by the Federal Reserve. How can the rates possibly go lower over the next quarter century? Even if they did fall from its current miniscule yield, I'm not sure how much money the government will save if rates fall from 0.25% to 0%.

Then the agency gives the healthcare industry a kick in the guts when it finally states what will help keep Medicare solvent for the next fifteen years--lower payments to doctors and hospitals. It is counting on Congress holding the line on sustainable growth rate reimbursement cuts to take place next April. That means a 24% chop to doctors payments unless they do another doc fix. According to the report, "Evidence suggests that hospitals and other providers may be able to achieve significant productivity gains or to restrain the growth of their costs in some other way."

In other words, work harder, make less money. They are projecting the number of patients using Medicare will increase by the millions every year for the next fifty years. However they are counting on doctors seeing all those new patients for the same amount of money they are getting now. The best deal the AMA could get to fix the SGR formula last spring was for reimbursement increases under the level of consumer price inflation for five years then a pay freeze for the next five. Even with defeatist negotiating tactics like that, the AMA still couldn't get Congress to pass a doc fix, which both political parties pledged they wanted.

So if you think you are working to the point of exhaustion already, the federal government has news for you. This is the golden age of healthcare reimbursements for doctors and hospitals. The situation is likely to deteriorate badly in the near future. And if doctors don't accept their duty to see patients for whatever price is dictated to them, then they will be the ones responsible for the eventual bankruptcy of Medicare.

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