Cuts Would Only Shift Healthcare Costs

I was quoted in Tom Burton’s nice piece in today’s Wall Street Journal along with friends of the firm Gail Wilensky, Bob Laszewski, and Sara Rosenbaum.

The story focuses on how Medicare cuts proposed by House Majority Leader Eric Cantor (R-VA) could impact Medicare beneficiaries and others without addressing long-term costs. At all. It’s the worst kind of budget meat-axe that’s being deployed as we near the default deadline of August 2nd.

First, Medicare already gave at the office. The ACA was funded in large part by cuts to Medicare Advantage and provider payments. If Congressional Republicans are going to continue their dogmatic refusal to look at revenue increases like closing tax loopholes on corporate jets, and we’re going to the Medicare well again on the debt ceiling, then we should at least be thoughtful about it.

We can’t come close to achieving long-term savings in Medicare without structural reforms to the program. The President has put his Deficit Reduction Committee’s recommendation of an increase in the Medicare eligibility age to 67 on the table, to the irritation of his own party. That’s a good start, and he should be commended for it.

Beyond that, we need to look at addressing the root causes of the explosion in Medicare expenditures — primarily, chronic disease and the perverse culture fostered by fee-for-service Medicare payments to providers. Accountable Care Organizations (ACOs) hold some promise here if CMS would get out of its own way, especially on the Pioneer ACO Demonstration, where sophisticated providers like GHG clients Sharp Healthcare and North Texas Specialty Physicians stand ready to lead the way in performance-based capitation.

More capitation in Medicare is a critical structural reform as it brings budget stability. For every beneficiary that’s capitated — whether in Medicare Advantage or an ACO — the government knows exactly what it’s spending, and then CMS shifts the deficits into the private sector via performance-based risk contracts closer to the point of care where that risk can be better managed by skilled providers. It’s political short-sightedness on the Hill and bureaucratic inertia at CMS that stands in the way.

The Journal story concludes with a whopper: the $100 billion Cantor and others think can be wrung out of Federal matching funds for Medicaid. I can’t wait to see how that flies with the 29 Republican governors . It’s the “Red States” that have the most to lose from cuts to the Medicaid match — states like Florida, Arizona, Maine and Mississippi all are dependent on Federal matching funds for Medicaid. Here, too, some thoughtful discourse on the role of performance-based capitation in Medicaid, especially for the “final frontier” of the aged, blind and disabled and managed long-term care, would show a better path to budget stability for these critical entitlements than the meat-axe Cantor is swinging these days.

We’re racing toward another financial cliff on August 2nd. But with supposedly fiscally-conservative Congressional Republicans acting like 6th graders in the back seat, “thoughtful discourse” may be asking too much.

4 Comments
  1. “CUTS WOULD ONLY SHIFT HEALTHCARE COSTS” ….

    This SUBJECT TITLE is politically semi-correct and often used but is incomplete and misleading of the comprehensive issue. WHAT OUR SOCIAL DIALOGUE IS MISSING and our leadership is avoiding is the TOPIC of HEALTHCARE CONSUMPTION, EFFECTIVE HEALTHCARE EXPENSE PERFORMANCE (waste), HEALTHCARE UTILIZATION at our SOCIAL LEVEL, and finally AMERICAN CITIZEN RIGHTS to HEALTHCARE.

    Without the dialogue, we fail to captivate these topics into fabric so our society can establish its thoughts and values juxtaposition to the single threaded debate of HEALTHCARE COSTS, which then becomes defenseless by either side.

    Question: “SO as your title launches the SCARY THOUGHT … “will the Cuts Shift Healthcare Costs” ?

    Answer: In Partial … Yes Yes Yes it will !!! But becuse we have not debated the Consumption Side and enlightened our society to the FULL impact and effects … in this vacuum, BUT IT IS NECESSARY and APPRIOPIATE to a point.

    Unfortunately, the above topic is noteworthy of several thousand pages of complex thoughts, research, and humanitarian soul searching by better experts than I. But as a heathcare provider, taxpayer and a patient … I am professionally insulted, frustrated silly as a human, sick of politicians, and very disappointed in even our healthcare industry

    1. …. sorry continued.

      … healthcare industry in failing to present a complete disclosure of the ISSUES in a transparent discussion so social values can be successfully created to lead the hard decisions ahead.

      Dr. Robert Chan
      Managing Partner
      Health Resource Management, Inc
      Reno, Nv 89519
      hrmchan@charter.net

      1. Thanks for your thoughts Dr. Chan. The title was the Wall Street Journal’s. But I agree with your points. Sadly, thoughtful dialogue is exactly what’s missing in DC these days, especially on complex and costly issues like managing the care of dual eligibles — especially those in long-term care — more effectively.

        The real challenge is ending the “culture of institutionalization” that characterizes most states’ Medicaid programs’ approaches to long-term care — getting the severely disabled and chronically ill/end stage patients back to home- and community-based settings where most would rather be, and where much of the literature indicates quality of care and life can be improved. Medicaid and long-term care are the #1 items in every state budget today, and i actually have more faith that states will step up to address the issue than these weenies in Congress.

        Thanks again for your thoughts.

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