Sunday, January 13, 2013

Medicare's Expenses Increased by 0.4%? Really? And It's All Because of the Affordable Care Act?

If you're the head of Google and you want to teach about the internet, North Korea is a swell place to visit.  If your goal is air travel safety, the 787 Dreamliner is the plane for you.  If you would like to get the puck from an opposing professional hockey player, saying "please" helps.  And if Medicare costs dip, the Affordable Care Act (ACA) obviously deserves the credit.

Writing on an HHS website, Richard Kronick and Rosa Po announce that 2012 Medicare expenditures per beneficiary grew only by 0.4% over the 2011 baseline.  They credit the ACA's value-based payment (VBP) system, attacks on fraud and abuse, reduced payments to Medicare Advantage plans, cutting hospitals payments and "innovation."

The Disease Management Care Blog isn't too sure about that.

1. This Kaiser Health News article notes the VPB program withholds 1% of hospital payments and uses that fund to award bonuses in what is really a zero sum game.  And this Health Affairs article suggests the overall financial impact of VPB on hospitals is quite minimal anyway. 

2. While there have certainly been some big fraud and abuse busts, there's plenty of reason to still be skeptical about the ability of Medicare's ossified bureaucracy to catch up with the sophisticated criminal enterprises that are routinely fleecing billions from the U.S. taxpayer.

3. As for the one-time payment cuts to providers and insurers, the DMCB is confident that they'll figure out ways to get their money back.  They always do.

4. The innovations are in demonstration phase.  It's too early to tell.

In addition, the DMCB is surprised that Medicare's 2012 insurance claims were ready to be rolled up and quantitated in early 2013. Check out this telling quote from the website:

"2010 and 2011 statistics are calculated on a calendar year incurred-basis. 2012 statistics are calculated on a fiscal year cash-basis, because calendar year incurred-basis data are not yet available." (bolding from the DMCB).

Last but not least, the DMCB believes the lackluster economy has probably had the biggest impact on consumers' willingness to use their Medicare benefit.  While Kronick and Ro state" Medigap" insurance benefits have protected the beneficiaries from the financial pain of Medicare's out-of-pocket expenses, the expense of using a hospital or seeing a doctor is more than the sum of all those medical bills.

Is the DMCB being too skeptical?  Perhaps, but this particular HHS spin is built on assumptions that are backed by associations that are biased by partisan loyalty.  Taxpayers deserve better.

Image from Wikipedia

1 comment:

Bob Hertz said...

I appreciate your attention to detail.

Let me add one more point.

Even if there is actual slow growth in expenses per-person, Medicare also has a demographic challenge.

There are 36 million persons in the USA between ages 55 and 65.
All those who do not die will come onto Medicare, plus anyone who stays in Social Security disability for two years (a growing number)

The result is that sheer demographics will cause Medicare spending to go up 3-4 per cent a year.

This is true even if the cost per person stays flat, which as you point out is very unlikely.

We still will need more taxes to pay for Medicare!

bob hertz, The Health Care Crusade