No ‘AnticrisisObama’ For Medicare in 2016.

In a  February 3, 2015, New York Times article written by Robert Pear, cuts to Medicare in the 2016 budget are outlined. The total is $399 billion in cuts to Medicare, Medicaid.

1.  Increased payments by Medicare beneficiaries for care and coverage.

Examples.: Introducing a co-payment for home healthcare services. Imposing a surcharge on premiums for new beneficiaries who buy private insurance to supplement traditional Medicare. ($4 billion over ten years.) The latter is rationalized as discouraging using the insurance.

2. Reducing scheduled Medicare payments to:

Teaching hospitals, rural hospitals, nursing homes, small hospitals, hmo’s which care for seniors, the disabled.

3. Holding down the cost of prescription drugs. Saving $116 billion. There’s one good idea.

4. Reduced payments toward graduate medical education by $16 billion. Did you know that half of the doctors registered to treat low income Medicaid patients don’t see Medicaid patients, according to an inspector general’s report? Would it not be a good idea to encourage training more doctors??

5. $100 billion in cuts (over 10 years) to doctors/providers who were receiving inflation adjusted payments for seeing patients after acute hospital care.  That sounds like a bad idea if someone is coming home after an operation and follow-up care is being disincentivized (sp?). punished.

6. $43 billion cut from payents to private Medicare managed-care plans known as Medicare advantage plans. 

7. $66 billion over ten years cut by charging higher premiums to higher income beneficiaries.  The danger of means testing is that this precedes turning a universal plan into a program for the poor. CEPR and Dean Baker have shown that this actually does not affect enough people to generate enough savings to justify that transformation of the program into a poverty program.

8.  Facilitate generic drugs which cost less. Saves $11 billion over ten years. Sounds good but ‘octopharma’ does not want to share the wealth.

9.  Continues children’s CHIP program through 2019.  Pays for it with increased tobacco taxes. Another tax on the poor.

10.  Reducing payments to hospitals for ‘bad debt’ patients are unable to pay and cuts Medicare payments to hospitals for the training of doctors. That will mean fewer doctors. Bad idea. More debts on the shoulders of the poor.

11. Recommended coverage of inpatient psychiatric care for Medicare be increased from existing 190 day-lifetime-limit current rule. Cost=$5 billion over ten years.

According to AARP these increased costs to beneficiaries would increase the cost of premiums, deductibles, copays and be detrimental. A hospital representative said that one in three hospitals already run in the red, so implied is the sentiment that these cuts are in the wrong places and in the wrong directions.

Pear does commit an error in not discussing the constraints to the payment rates to physicians going forward over the next ten years, and which are represented as an addition, not a cut to the budget. That is a mistake because medical care is provided by physicians who have to make a living and who already consider Medicare and Medicaid rates to be way too low. (corrected 11:38am)

President Obama presented himself as doing something for the middle class in this new budget, in contrast to years of austerity ideology. His cuts to healthcare are ironic, large and betray that he still resides in the small government, neoliberal camp. Healthcare costs have been going down in the recent years, so these cuts do not address any of the real crises in medical care such as the lack of physicians to provide care to older and lower income patients. He’s no “anticrisis” Obama!


Source: Budget Plan Sees Savings In Changes To Medicare, The New York Times, February 3, 2015, A13. Written by Robert Pear.

UPDATE:  The Center for Medicare Advocacy has seen the actual Medicare budget and reports in more detail and with more accuracy HERE. regarding the impact of the cuts.

Kaiser is noncommittal  and uncritical of the policy implications of the cuts. That said, Kaiser seems to have more of the details and a pie chart HERE.

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