Rep Paul Ryan will end Medicare as we know it … we better hope so!

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What happens if we don’t end Medicare as we know it?The following is copied and pasted here from the 2012 Medicare Trustees Report.  Keep in mind that the Trustees include the Secretary of the Treasury, the Secretary of Labor, Secretary of Health and Human Services and the Commissioner of Social Security.  Take the time to read this carefully.  I have placed in bold several statements that are of special interest. Do you think Medicare can or should continue as we know it?

From the Trustees Report:

The financial outlook for Medicare is also uncertain because some provisions of current law that are designed to reduce costs may not be sustained. The clearest example of this issue is the sustainable growth rate (SGR) formula for physician fee schedule payment levels. The projections in this report assume that, as required by current law, CMS will implement a reduction in Medicare payment rates for physician services of more than 30 percent at the start of 2013. However, it is a virtual certainty that lawmakers, cognizant of the disruptive consequences of such a sudden, sharp reduction in payments, will override this reduction just as they have every year since 2003.

The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, is another, and even larger, source of policy-related uncertainty. This legislation, referred to collectively as the “Affordable Care Act” or ACA, contains roughly 165 provisions affecting the Medicare program by reducing costs, increasing revenues, improving certain benefits, combating fraud and abuse, and initiating a major program of research and development to identify alternative provider payment mechanisms, health care delivery systems, and other changes intended to improve the quality of health care and reduce its costs to Medicare.

The Board assumes that the various cost-reduction measures—the most important of which are the reductions in the payment rate updates for most categories of Medicare providers by the growth in economy-wide multifactor productivity—will occur as the Affordable Care Act requires. The Trustees believe that this outcome, while plausible, will depend on the achievement of unprecedented improvements in health care provider productivity. If the health sector could not transition to more efficient models of care delivery and achieve productivity increases commensurate with economy-wide productivity, and if the provider reimbursement rates paid by commercial insurers continued to follow the same negotiated process used to date, then the availability and quality of health care received by Medicare beneficiaries relative to that received by those with private health insurance would fall over time, generating pressure to modify Medicare’s payment rates.

Given these uncertainties, future Medicare costs could be substantially larger than shown in the Trustees’ current-law projection. Medicare’s costs under the Trustees’ current-law assumptions rise from their current level of 3.7 percent of GDP to 6.0 percent in 2040 and 6.7 percent in 2085. If the SGR restraint were overridden, as described above, Medicare costs would rise to 6.5 percent of GDP in 2040 and 7.8 percent in 2085. Under the full scenario, in which adherence to the ACA cost-saving measures also erodes, costs would rise to 7.0 percent of GDP in 2040 and 10.3 percent in 2085. As the preceding discussion explains, and as the substantial differences between the Trustees’ current-law projections and those for the alternative scenarios illustrate, Medicare’s actual future costs are highly uncertain and are likely to exceed those shown by the current-law projections in this report.

Therefore, the Board recommends that readers interpret the current-law projections as an illustration of the very favorable financial outcomes that would be experienced if the physician fee reductions were implemented and if the productivity adjustments and IPAB measures in the Affordable Care Act could be sustained in the long range. Readers are also strongly encouraged to review appendix V.C for further information on this important subject.

Where possible, the Trustees illustrate the potential understatement of Medicare costs and other projection results by reference to these alternative projections. Total Medicare expenditures were $549 billion in 2011. The Board projects that, under current law, expenditures will increase in future years at a somewhat faster pace than either aggregate workers’ earnings or the economy overall and that, as a percentage of GDP, they will increase from 3.7 percent in 2011 to 6.7 percent by 2086 (based on the Trustees’ intermediate set of assumptions). If lawmakers continue to override the statutory decreases in physician fees, and if the reduced price increases for other health services under Medicare are not sustained and do not take full effect in the long range, then Medicare spending would instead represent roughly 10.4 percent of GDP in 2086. Growth of this magnitude, if realized, would substantially increase the strain on the nation’s workers, the economy, Medicare beneficiaries, and the federal budget.

Now you can decide if the current approach to dealing with Medicare is viable or if we truly need to end Medicare as we know it … which by the way does not mean the end to Medicare.


Categories: Government, Healthcare

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