Raiding Medicare: How seniors will pay for Obamacare

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The following is an excerpt from the new book “Beating Obamacare: Your Handbook for Surviving the New Health Care Law.”

Everyone knows that if you don’t pay attention to maintaining and repairing your car, you limit its life. The same is true of human beings as they age. We need medical care to avoid becoming clunkers — worn out, parked in wheelchairs or nursing homes.

For nearly half a century, Medicare has enabled seniors to get that care. But the Obama health law removes over half a trillion dollars in future funding from Medicare over the next decade. The new law: slashes what doctors, hospitals, homecare agencies, hospice care, and dialysis centers are paid to care for the elderly; penalizes hospitals for providing generous care; and cuts support from Medicare Advantage plans.

These cuts are being made just when 30 percent more people will be entering Medicare, as baby boomers turn sixty-five. The numbers do not add up. Baby boomers who are counting on Medicare will get less care than seniors currently get. Data from the Obama administration’s own actuaries indicate that Medicare will spend $1,431 less per senior in 2019 than if the law hadn’t passed.

Across-the-Board Payment Cuts

Doctors, hospitals, hospice care, nursing homes, and dialysis centers will be paid substantially less to care for seniors than if the law had not been passed, and in some cases even less than Medicaid pays. The Obama administration’s own Chief Actuary of Medicare, Richard S. Foster, bravely warned Congress that the cuts would reduce seniors’ ability to get the care they need. Foster warned that unless these cuts are repealed, about 15 percent of hospitals could stop accepting Medicare. Where will seniors go if their local hospital stops taking Medicare?

Other hospitals will be forced to operate in an environment of scarcity, with as many as 40 percent in the red, according to Foster. That will mean fewer nurses on the floor, fewer cleaners, and longer waits for high-tech diagnostic tests. It will affect all patients. Obamacare’s defenders say that cutting Medicare payments to hospitals will knock out waste and excessive profits. Untrue. Medicare already pays hospitals less than the actual cost of caring for a senior, on average 91 cents for every dollar of care. No profit there. Pushing down the reimbursement rate further, as the Obama health law does, will force hospitals to spread nurses thinner. When Medicare reduced payment rates to hospitals as part of the Balanced Budget Act of 1997, hospitals incurring the largest cuts laid off nurses. Eventually patients at these hospitals had a 6 to 8 percent worse chance of surviving a heart attack and going home, according to a National Bureau of Economic Research report.

Peter Orszag, a former White House budget director and an Obamacare supporter, ignores this evidence and tries to reassure seniors that Medicare spending could be cut by 30 percent without harming seniors. He cites the Dartmouth Atlas of Health Care 2008, which tries to prove that patients who get less care — fewer hospital days, doctors’ visits, and imaging tests — have the same medical “outcomes” as patients who get more care. But read the fine print. The Dartmouth authors arrived at their dubious conclusion by studying the records of patients who had already died. Of course the patients treated at the high-spending hospitals and the low-spending hospitals had the same end result. They were all dead!

Fortunately, researchers have set the record straight. Data published in the Archives of Internal Medicine show that seniors treated in hospitals providing more intense care and greater spending have a better chance of recovering, going home, and resuming their lives. Seniors treated at the lowest-spending hospitals die needlessly. Researchers found that 13,815 California seniors treated at low-spending hospitals would have survived and left the hospital had they received the extra care provided at higher-spending hospitals. Reducing care at the very end of life may be wise, but these across-the-board Medicare cuts will result in reduced care for all patients, including those who could survive their illnesses and go home if they get the care they need.

New Medicare Efficiency Measures

In addition to the across-the-board cuts in payments to hospitals, Section 3000 of the Obama health law actually awards bonus points to the hospitals that spend the least per elderly patient. The bonus system went into effect on October 1, 2012. Hospitals that spend the least “per Medicare beneficiary” get rewarded, and hospitals that spend more get whacked with demerits. This despite the evidence that patients have a better chance of surviving at higher-spending hospitals. Hospitals will even be penalized for care consumed up to thirty days after patients are discharged — for example, for outpatient physical therapy following a hip or knee replacement.

Dr. Betsy McCaughey is the author of Beating Obamacare: Your Handbook for Surviving the New Health Care Law.

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