ObamaCare drains Medicare

Ronald E. Bachman's picture

One of the most controversial parts of the new federal healthcare law is the redistribution of funding from Medicare to other programs. If Obamacare is left unchanged, it will take $500 billion from Medicare over the next 10 years.

Medicare beneficiaries will see higher premiums; doctors, nurses, hospitals and medical suppliers will get lower payments. The Medicare reductions will be used to subsidize expanded Medicaid to low-income recipients and to fund insurance for the uninsured.

For the 78 million baby boomers eligible for Medicare over the next decade, this is more than a redistribution of wealth. It is a redistribution of health and wellness. They will get less healthcare; others will get more.

Payment reductions lower seniors’ ability to access quality preventive services, early intervention and acute care treatments. Many seniors believe Obamacare threatens their health and well-being.

For Medicare beneficiaries who paid for Medicare during their working life and continue to pay premiums, the argument is not whether healthcare is a right or a privilege; it is a solemn contract with the federal government.

Obamacare ignores Medicare’s biggest financial issue: the “doctor-fix.” Beginning this month, Medicare doctors face a 20 percent reduction in fees. On Jan. 1, 2011, doctors face another 6.5 percent reduction. The price tag to make a one-time permanent correction is about $250 billion.

It will dramatically cut access to care and destroy quality of care for the elderly: Up to 40 percent of doctors are likely to reject Medicare patients.

Obamacare included $115 billion in reductions to Medicare Advantage, a private insurance option. About 11 million Medicare Advantage beneficiaries are receiving notices of coverage reductions, high premium increases or cancellations. Millions more covered by company-sponsored retirement health plans are seeing them eliminated or benefits lowered.

In November 2010, voters demanded lower spending, deficit reduction and elimination of wasteful government spending. The lame-duck and new 2011 Congress will face an early challenge: Fix the wrongs of Obamacare and stay true to voters demanding fiscal responsibility. Medicare changes cannot be funded with more debt.

Medicare beneficiaries don’t want their program slashed to subsidize others who already have government subsidized alternatives or could pay their own way.

The “economically needy” can be funded more rationally, with government-subsidized Medicaid, federally qualified clinics, community services, county health departments and free clinics. About 60 percent of the uninsured are under age 35. The fastest-growing population of the uninsured is young people earning above $50,000 per year who choose not to purchase health insurance.

Americans are generous and believe in a reasonable safety net but do not want a system that ignores personal responsibility or eliminates the cost of bad adult decisions. Most support a hand up, not a handout.

The uninsured with pre-existing conditions can be covered at a reasonable cost under a federally supported high-risk pool. Insurance reform should include restrictions on policy rescissions, improved appeal processes, coverage for dependent children, price and quality transparency, and expanded use of information technology. Many of these changes are already in state laws. These administrative changes do not require government expenditures.

There are low-cost insurance options and alternatives available. Health Savings Accounts (HSAs) cost 12-20 percent less than traditional insurance. Allowing purchase of insurance across state lines could reduce costs another 5-10 percent. Litigation and malpractice reform can lower premiums at least 5 percent. Allowing individuals the same tax advantages as group plans would lower the net cost of insurance, premium credits for maintaining health and adherence to medical treatments, even more.

Under Obamacare, federal premium subsidies are available to individuals earning up to $88,000 per year in a “Health Insurance Exchange” (HIE); that would cover 58 percent of the population. Many of those eligible for subsidies can afford to pay their own premiums. In the 10-year budget cycle, these broad-based premium subsidies will cost over $450 billion. This is far more than a safety net.

Then there is Medicare and Medicaid fraud, amounting to $30-$60 billion per year, or savings of $300-$600 billion over 10 years.

Hundreds of billions more could be saved by eliminating the 159 new Obamacare agencies, departments, work groups and commissions established to hand out grants, research projects, costly studies and produce intrusive rules and regulations controlling the delivery of healthcare.

Billions more in administrative costs could be saved if governors unite around a rejection of the Obamacare “Health Insurance Exchanges” in favor of private market “Health Information Exchanges.”

The $500 billion taken out of Medicare can be restored without adding to the deficit by eliminating the subsidies scheduled for the Health Insurance Exchanges. The $450 billion savings would cover the $250-plus billion required to solve the “doctor-fix”, keep the Medicare Advantage option and modernize Medicare.

Medicare is a 1964 plan design that should be transformed into a modern comprehensive medical plan. Restoring funds to Medicare would be enough to increase the Medicare hospitalization coverage from 150 days to 365 days (as provided by most Medicare Advantage Plans). Medicare Part A and Part B could be brought in line with pre-65 employer coverage by combining the deductibles into a single amount and implementing a limited Maximum Out-of-Pocket.

Medicare beneficiaries should be allowed to establish or maintain a tax-advantaged HSA. With Medicare rewards and incentives for following a healthy lifestyle and adherence to physician-developed medical treatments, beneficiaries could see the same 12-20 percent savings being generated by employer plans.

This would free most seniors from the need to purchase Medi-Gap coverage, with the $200-S300 per month premium savings used to fund a Medicare HSA or pay for other living needs.

Nearly everyone agrees on the need for healthcare and insurance reform, despite the differing approaches in Washington. Unfortunately, Obamacare was designed as a vehicle to “Rob Peter to pay for Paul.” Medicare should not be the Peter to the uninsured Pauls.

[Ronald E. Bachman FSA, MAAA, is president and CEO of Healthcare Visions, Inc. and a senior fellow at the Georgia Public Policy Foundation, an independent think tank that proposes practical, market-oriented approaches to public policy to improve the lives of Georgians. He is also a senior fellow at the Center for Health Transformation, the Wye River Group on Health and the National Center for Policy Analysis.]

T-Man
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They come from all walks

Funny since someone took action for those who needed assistance with Health Care how others now come up with their own plans. Why didn't folk's like this Ronald Bachman do something before OBama? This article is only pulling the wool over your eyes as my mother would say. Never did this article really address the child who needs coverage now not later or those who can't get insurance today because of a pre-existing condition. It again goes back to the pre-OBama plan of "we could" not we have done. Action speaks louder than your words. What about the Hospital cost for the uninsured today. Where will this money go when everyone is covered? The hospital and Doctors will gain money that was previously lost when a person couldn't pay their bill. If all are insured in some way then the lost from unpaid hospital bills will go down and maybe services to.

Chris P. Bacon
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T-man, regarding that idiot Bachman

Actually, Bachman DID do something for health care before Obamacare...and Fayette students suffer because of his ineptness.

"Insurance expert" Ron Bachman was the author of a deeply flawed health care analysis that claimed 500,000 uninsured lower income Georgians could gain access to health care via targeted tax breaks. (Google "Ron Bachman" and "HB977" for the whole sordid story).

The resulting legislation, signed into law by Governor Perdue, has been a unmitigated disaster for Georgia. Instead of covering a half million lower income Georgians, the legislation actually covers only 65,000 people, the vast majority of them earning over $50,000 per year, and virtually every single recipient of this tax break was previously insured.

The cost to the state treasury is now estimated to be a loss of $223 million dollars in tax revenue due to Bachman's miscalculations. Needless to say, this money could have helped the state funding crunch that has forced the state to curtail education spending.

Courthouserules
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Doctor's fees. etc.

When one's bill is prepared by hospital clerks for say an operation or testing of some sort, people near the treatment rooms will note a number that was performed or a title no one but them can read.

Then all those forms are sent to a dark dungeon room in the offices where clerks read each form for patient number 123x and pick out one number that was performed, say a 12345673x, and lo and behold a whole list of thing that may have been done during that procedure are in view!
Of course there are certain things that are standard for every operation: use of the room, nurse costs, anesthesia, etc. Overhead and the construction going on outside.

The average number of rubber gloves normally used may be listed, a number of feed bags of some strangely named chemical, hoses. injectors and wipes.
They all are listed as used because no one has time in the OR to list all that stuff, just a number done.

Anyway, the insurance company will automatically say that in their experience only 70% of all that stuff is usually used and that is all they will pay. It is useless to bill the patient although they try before the insurance pays off.

Now there are three or four rooms one progresses through on the way to the knife room and maybe two more on the way out.
All these rooms have charges for socks for one's feet, robes, blanket use, another needle setup--might be needed.
And wake-up juice in one of them.

Now in the old days you would be put into a hospital room to heal. Not now unless your life is imminently in danger. I once was sent home from spinal shots with my lower body numb. Had to stop at the fire department to help me into my bed at home.

Now emergency rooms have a minimum charge of about $2000 dollars for a splinter and the use of 3-4 machines to check. There is no maximum charge. Also involves 2-3 rooms.
There is only 1-2 doctors and a few specialists (only know and do one machine).

Anything to do with implanting is an automatic $120,000 plus.

All I'm trying to say here is this: you can cut the amount paid to a doctor or hospital just about all you want for procedures but there are people in other offices trained in "billing" with MS degrees and technician certificates, who will find whatever is needed to bill to pay the bills and the doctors!

I don't know if sharing fees with other doctors for referring is still done but there are also ways to gather together and support that also.

Then once with a specialist, he will follow up forever to check you. First every month, then every three months, then every six months, etc. You still see your own family doctor but he doesn't mess into the specialist's business. They both bill at least $150 per, up, for which they get $102.

Most are hard workers. A certain number of patients is necessary in order to be "productive according to the hired contracting auditor of charges made and how more can be squeezed out.
It is all on computer software now so they can be viewed easily and manipulated. One doctor to another.
I don't know where they get the time for the Prescription reps by the hordes and equipment salesmen.

They will be OK if they don't drop dead over productivity.

The system obviously needs major reorganization and overhaul, towards the treatment of more patients better, and not towards enhancing pay.

Courthouserules
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Use of emergency rooms

Addendum to above:

One can not find your doctor now for two days a week, holidays, vacations,
nor at any time after eight hours a day!

You are 100% referred to the emergency room. That takes all day or all night generally and cost ten times as much and they aren't familiar with your ailments.

Do the math: out of 365 days, 129 days your doctor isn't available.
Also, never at the other 16 hours a day.

Wouldn't it be great if clinics (not emergency treatments) for ordinary doctoring be available all of the time? Piedmont should have one for instance in Fayette County, manned or womaned by their doctors, and computers.

AtHomeGym
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Court & "Manned or Womaned"

If you're so worried about using the PC term, why not just use "staffed"--that works. BTW, the term "manned" or "manning" does not carry a gender connotation.

Courthouserules
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GYM staff

I don't like the word "staff," and the word "staffed," even worse!

It costs a lot of taxes for staffs, especially if fully staffed.
My staff and my rod are always with me.
Speaking of rods--doesn't the English Parliament have one, a "ROD?"
Music is written on a staff--and I can't read it very well.
Aren't staffs in the Army people who don't shoot? Maybe Staff Sergeants do!
We have a "staff," right here in PTC at the City Hall, etc.
It is fully staffed and stuffed.
Women don't like to be called staff! Men are honored to be staff.

I don't like the word! Looks like you don't like womaned either.

ImFedUp
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How clever!

You could easily be Andy Rooney's successor!

Georgia Patriot
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No Way

Andy Rooney is much Younger and Prettier. -GP