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Medicare pays too much, not too little
You can feel it in the air. It’s that time of the year again, isn’t it? I don’t mean the coming of the holidays — Thanksgiving, Christmas, New Year’s. No, it’s that time of the year when we face the “sword of Damocles” in the form of the Medicare sustainable growth rate.
Established in the Balanced Budget Act of 1997, the SGR was devised to control Medicare spending on physician services. Estimates vary, but 25% is quoted most commonly as the SGR cut in Medicare reimbursement that we will face Jan. 1. Each year, such double-digit percentage numbers are bandied about. And then, at the last minute, Congress comes up with a temporary “fix.” Will that happen this year? At the time of this writing, we don’t know.
Richard O. Dolinar
Medical societies have fought the SGR for years. They have made many visits to Washington, D.C., and written countless letters to Congress. The strategies employed have consistently been based on the assumption that, “If Congress only knew how truly valuable our services are for the patients, they would surely increase Medicare’s reimbursement rates. If they only understood us and what we do, this issue could be easily resolved.”
That approach hasn’t worked, probably because we don’t understand how people in Congress think. Let’s look at this from their perspective. The www.usdebtclock.org website shows in real time various aspects of the rapidly increasing debt our nation faces. On the left of the screen, the national debt is stated to be $17 trillion — an amount actually larger than the entire yearly US national economic output, which makes up one-quarter of the world’s economy. At the bottom of the screen, the unfunded liabilities are identified. Medicare is short $87.5 trillion. Medicare Part D owes $22 trillion beyond projected revenues. Unfunded Social Security is $16 trillion — at the moment. To comprehend a trillion, note that going back 1 trillion seconds in time takes us before the time of Christ. And that is only 1 trillion.
Congress terrified to act
The legislators in Congress know this, but they are obviously terrified of tackling the real problem, which is the huge commitment of entitlement costs they and previous Congresses and presidents have created in the past few decades. Thus, their response has largely been to make small but absurd spending cuts.
One example is the ongoing “sequester.” It caused a 2% decrease in Medicare reimbursement for us, but there have been much more severe consequences. The US Air Force has endured massive cuts in spending, culminating in a readiness crisis. Flying-hour funding for the remainder of this year was slashed 30%, resulting in 33 flying squadrons being grounded. After spending billions of dollars to establish these squadrons, they now sit idle due to lack of funding for fuel. These include 12 actual front-line combat-coded squadrons, of which, it is my understanding, there are only a total of 38.
Many pilots have not flown for more than 100 days because of the spending cut. In such situations, it can take up to 6 months to regain proficiency. Meanwhile, the Air Force Weapons School (the Air Force’s “Top Gun” school) at Nellis AFB in Nevada had to cancel classes. This has had a cascading effect because upon returning to their squadrons, graduates disseminate the new information they’ve learned, information that can save lives in air combat. As a result of this, in mid-June, Lt. Gen. Burton Field reported that less than 50% of the Air Force’s “primary fighting forces” were at desired readiness levels.
“Atrophied skills elevate risk and stagnant proficiency will only grow over time if we can’t restore some sense of budget normalcy,” said Gen. Mark Welsh III, Air Force chief of staff.
Gen. Michael Hostage said, “I can’t even use good, commonsense business practices to deal with the issues, because politics won’t let me.” They almost sound like physicians, don’t they? These important service cuts have been the result of inane spending cuts that take the place of real spending reform.
Economic reality hits home
Thus, both fighter pilots and doctors are smashing up against the same wall: economic reality. In the case of Medicare and Medicare Part D, the total unfunded liability of $109 trillion dwarfs our current debt of $16.9 trillion and is approximately double the size of the entire world’s economy. How can the government possibly extract enough out of the taxpayers for Medicare to pay this much for health care? Clearly, Medicare is already paying much more than the public can afford, and the promises of future spending are simply preposterous. The Affordable Care Act established an Independent Payment Advisory Board (IPAB) to limit Medicare’s spending, but it is not allowed to ration care or change the benefits of seniors to achieve this goal. Its only option is to decrease physician reimbursements. Thus, many believe severe cuts in reimbursements are inevitable.
According to the American Medical Association, Medicare reimbursement rates have remained essentially flat since 2001, whereas practice costs rose by more than 20%. Given these financial realities and competing interests, what could possibly be said in letters and visits to Congress that would persuade them to stop further cuts in reimbursements and instead pay us more?
Many physicians have responded to this dilemma by leaving Medicare and ending their dependence on government reimbursements. In 2012, more than 9,500 physicians left, triple the number who left in 2009. More are expected to leave this year. Considering the millions of dollars the government saves because it does not have to pay the physicians who have opted out, doctors leaving Medicare might be seen as engaging in an act of patriotism.
The remaining physicians who accept Medicare patients may well increasingly ponder a statement often attributed to Henry Ford: “Any man who thinks he can be happy and prosperous by letting the American Government take care of him, had better take a closer look at the American Indian.” In the years to come, each SGR season is likely to be worse than the previous one.