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.