Diana Furchtgott-Roth: Medicare "fix" is just a gimmick 

Just as the first baby-boomers (born in 1946) are preparing to sign up for Medicare in 2011, Congress is once again threatening to cut the fees that Medicare will pay to physicians, thereby ensuring that docs take fewer Medicare patients.

Dr. Brian Avin, listed as one of the area’s top neurologists in The Washingtonian, who practices at the Neurology Center in Wheaton, Maryland, told me in a phone conversation, “Our practice will stop seeing new Medicare patients if these cuts go through. It’s very confusing to doctors and patients.”

The Senate has approved a bill to delay until November 30 cuts of 21 percent in Medicare payments to doctors, cuts that went into effect on June 1. And the Senate also voted to give doctors who participate in Medicare a 2.2 percent fee increase.

This action illustrates Congress’s dilemma: its sense of fiscal discipline, which tells the lawmakers to reduce Medicare spending, and its disinclination to take actions that will raise the cost of health care for seniors—and reduce the quality and availability of care.

Before the cut, an anesthesiologist’s time was reimbursed at $91.60 per hour. Now, he earns $72 per hour. That’s less than a plumber or an electrician, whose training costs a fraction of medical school fees. Doctors cannot passively absorb such losses of income.

Speaker Nancy Pelosi hasn’t passed the Senate bill. She seeks to hold Medicare fees hostage to induce Senators to vote for a House-passed “jobs” bill, increasing the deficit by $134 billion over 10 years.

In another example of budget gimmickry, Ms. Pelosi’s bill would increase Medicare physicians’ fees by 1 percent through December 31, 2011, freeze them in 2012 and 2013, and then reduce them by 35 percent in 2014 to approximately the level they would have been in the absence of the 2010-2013 increase. This would cost $65 billion over the next five years.

No one believes that Congress would reduce reimbursements by 35 percent in 2014, lowering Medicare reimbursements to real rates unseen since the inception of the plan.

It’s likely that sometime this summer Congress will suspend the Medicare fee cuts retroactively. Doctors would resubmit bills to Medicare to collect remaining payments, costing millions in Medicare processing fees and doctors’ administrative costs.  

This farce will play again next year and well into the future as the Congress tries to conquer the rising cost of Medicare without saddling seniors with bigger bills.

To create the appearance of fiscal discipline in the new health care bill, enacted in March, Congress assumed $455 billion of Medicare and Medicaid cuts—73 percent of them in Medicare—over 10 years.

So, physicians’ reimbursements affect not only doctors and seniors and Medicare’s price tag, but also the cost of the new, national health-care plan, which the Congressional Budget Office estimated would reduce the budget deficit by $143 billion over 10 years.

Freeing Medicare physicians from future cuts could cost $250 to $400 billion over ten years, depending on how much the government allows doctors’ payments to rise.

And the projected cost of Medicare is staggering, with Medicare’s unfunded obligation over the next 75 years totaling $38 trillion.

Dr. Avin believes that the path to lower health care costs begins at childhood, by teaching children a lifestyle that includes routine exercise and a nutritious diet. “Healthy lifestyles for children would be a big step in controlling Medicare costs when they retire,“ he said.

Today’s physician reimbursement debate is the canary in the coal mine for Medicare—a warning of serious fiscal problems ahead. So far Congress is offering only budget gimmicks, with no serious solutions. But the sooner we address this problem, the better for all of us.

Examiner Columnist Diana Furchtgott-Roth, former chief economist at the U.S. Department of Labor, is a senior fellow at the Hudson Institute.

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