The Debt Debate

August 6th, 2011 by @lamberts

I doubt many, if any, were spared the widespread coverage of the debt debate that cumulated in legislation passed with just hours to spare before the United States defaulted.  At the core of this discussion is the knowledge that our country is on an unsustainable fiscal path and the question about how to fix it.

As part of the legislation that passed earlier this week, a super-committee of 12 members of Congress have been appointed the daunting task of divvying up $1.5 trillion of cuts over 10 years to many federal programs, and unless their proposal passes the House and Senate and is accepted by the White House by year end, sweeping cuts will automatically take place with an automatic 2% cut to Medicare provider payments.  Though the White House intends to keep these cuts from affecting the 100 million Medicare and Medicaid beneficiaries, many believe that such cuts would trickle down to the patients as well.

What could these cuts come in the form of? Though it is just speculation at this point, we could see cuts in Medigap insurance, high-earning seniors paying higher premiums for Medicare, vouchers to purchase a private plan, or even Medicaid being turned into a block grant program.  It will undoubtedly also cut provider reimbursement for health care services.  Many, like physicians and home medical equipment providers, worry that any additional cuts will create undue financial hardships on their ability to take care of our nation’s most sick and vulnerable.  Home medical equipment, for example, has already had reimbursement cuts of 50% in oxygen alone over the past 12 years. It seems incredibly short-sighted for the government to attack the homecare industry whose utilization prevents higher costs in hospitalization, institutionalization, and readmissions.

Check out this Medicare spending chart on spending over the past several years done by the Centers for Medicare & Medicaid Services (CMS):

Medicare Spending Chart

Do you see that little green line at the bottom?  The flat-lined one with very little growth if any at all?   That’s home medical equipment, the industry responsible for preventing expensive increases in Part A Medicare through increased hospital stays and living in nursing homes.  To continue cutting be it through the debt discussion (or the ill-conceived anti-competitive auction program) just doesn’t make sense.
Government officials look to Medicare and Medicaid spending and see significant costs. In fact, today it accounts for approximately 23% of federal spending. The increase in Medicaid can be contributed to the downturn in the economy and the rise in unemployed who do not have private health insurance plans. For Medicare, this is partially due to our country’ s aging population and also due to a medical model that doesn’t fully utilize the cost-effective option of homecare.

It’s apparent that the surge is partially due to the increase in utilization. Older, sicker, poorer. And we need to be doing something to address the needs of our changing demographics of our nation instead assuming that we can expect more for less from providers.  We need a solvent way to keep options for Medicare and Medicaid beneficiaries long-term.  Running the needed providers out of business is not one of them.  It is the concern of many in the health care provider community that a decrease in reimbursement will only lead to a decrease in services being able to be offered, which detrimentally affects you as their patient.

“Although there may be room for broader reform in Medicare, we’ve gotten so focused on rhetoric about entitlement reform, what’s often lost is that the problem is overall health care spending.”

–Judy Feder, Senior Fellow at The Urban Institute


8 Responses to “The Debt Debate”

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