Widgets Magazine

Medicare’s Worsening Finances: The Other Shoe Drops

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“Provider Payment Crunch. First, the flawed Sustainable Growth Rate (SGR) formula calls for scheduled reductions to physician payments, which in 2012 would cut physician reimbursement by a stunning 30 percent. The Trustees assume the cuts will occur, but the Actuaries warn that if they did, Medicare payment rates would fall to 57 percent of private insurance payment rates in 2012. That’s in the neighborhood of Medicaid, the government’s biggest welfare program, which physicians are fleeing in droves. If the SGR formula was applied consistently over the long-term horizon, rates would fall as low as 27 percent of private insurance payments by 2085—half of what Medicaid currently pays. Congress has delayed these Medicare physician payment cuts continually since 2003 to avoid these harmful effects, and it is reasonable to assume they will continue to do so.  The Medicare Actuaries also question the feasibility of Obamacare’s “productivity adjustments” to Medicare’s fee-for-service program, which would reduce reimbursement for hospitals and other providers based on economy-wide productivity gains. OACT explains,

“Based on the historical evidence of health sector productivity gains, the labor-intensive nature of health care services, and presumed limits on the extent of current excess costs and waste that could be removed from the system, actual health provider productivity is very unlikely to achieve improvements equal to the economy as a whole over sustained periods.”

Obamacare’s across-the-board cuts would cause 15 percent of hospitals, skilled nursing facilities, and home health agencies to become unprofitable by 2019. This number would climb to 25 percent in 2030 and 40 percent by 2050.”

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Comments

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