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Monday, November 16, 2009


In the newly passed House Health Bill (and certainly in the yet-to-be released Senate bill), the bulk of financing Health Reform comes at the expense of the Medicare program for America’s seniors. Specifically, the House intends to glean $571 billion from the Medicare program.

The Health Care legislation intends to accomplish this gleaning of Medicare in an assortment of ways: through cuts to benefits in the Medicare Advantage program, by reducing payments to providers, and notably, by having a Commission make payment decisions. Over the weekend, the Centers for Medicare and Medicaid Services issued a report casting a long shadow of skepticism over the claim that such savings are truly possible.

The report writes, “It is important to note that the estimated savings shown in this memorandum for…Medicare proposals may be unrealistic….While such payment update reductions would provide strong incentive for institutional providers to maximize efficiency, it is doubtful that many could improve their own productivity…Thus, providers for whom Medicare constitutes a substantive portion of their business…might end their participation in the program (possibly jeopardizing access to care for beneficiaries)."

A piece titled “The Rationing Commission” from this weekend’s Wall Street Journal speaking to the commission charged with making these cuts writes,

“As usual, the most dangerous parts of ObamaCare aren't receiving the scrutiny they deserve—and one of the least examined is a new commission to tell Congress how to control health spending….quietly attempting to impose a "global budget" on Medicare, with radical implications for U.S. medicine.

Like most of Europe, the various health bills stipulate that Congress will arbitrarily decide how much to spend on health care for seniors every year—and then invest an unelected board with extraordinary powers to dictate what is covered and how it will be paid for. White House budget director Peter Orszag calls this Medicare commission "critical to our fiscal future" and "one of the most potent reforms."

On that last score, he's right. Prominent health economist Alain Enthoven has likened a global budget to "bombing from 35,000 feet, where you don't see the faces of the people you kill."

The Senate version will (if the Senate Finance bill serves as the basis) have a 15 member commission appointed by the President. The commission would have to meet certain budget targets each year while limiting spending dramatically until 2019, when it would only be permitted to grow at the same rate as Gross Domestic Product, plus one percentage point.

Not too encouragingly, the just-released CMS report also writes, “Except in the case of physician services, we are not aware of any empirical evidence demonstrating the medical community's ability to achieve productivity improvements equal to those of the overall economy.”

Under the Senate Finance version, in order for Congress to overturn the Commission’s dictates would require a 2/3 vote. Consequently, the Commission, without a vote by the people’s representatives in Congress, could, for example, significantly curtail the Private-Fee-for-Service alternative in Medicare Advantage. Under current law, the private fee-for-service alternative is the only one that permits senior citizens, without being subject to limits that could be imposed by the Center for Medicare and Medicaid Services, to add their own money on top of the government contribution in order to get health insurance that is less likely to limit access to medical treatment through managed care techniques or other means. With the significant cuts in Medicare funding that this legislation imposes in order to finance extending subsidies to cover the uninsured, it is particularly important to preserve this option for older Americans to allow them to protect their own life and health with their own money.

We have seen this kind of cost rationing over again, not only from the National Institute for Health and Clinical Excellence, which rations care in England, but also in the U.S. in Washington State’s six year old cost-controlling board.

Again, from Sunday’s Wall Street Journal article “The Rationing Commission”:

“The Washington commission, called the Health Technology Assessment, is manned by 11 bureaucrats, including a chiropractor and a "naturopath" who focuses on alternative, er, remedies like herbs and massage therapy. They consider the clinical effectiveness but above all the cost of medical procedures and technologies. If they decide something isn't worth the money, then Olympia won't cover it for some 750,000 Medicaid patients, public employees and prisoners.

So far, the commission has banned knee arthroscopy for osteoarthritis, discography for chronic back pain, and implantable infusion pumps for pain not related to cancer. This year, it is targeting such frivolous luxuries as knee replacements, spinal cord stimulation, a specialized autism therapy and MRIs of the abdomen, pelvis or breasts for cancer. It will also rule on routine ultrasounds for pregnancy, which have a "high" efficacy but also a "high" cost.

Currently, the commission is pushing through the most restrictive payment policy in the nation for drug-eluting cardiac stents—simply because bare metal stents are cheaper, even as they result in worse outcomes. If a patient is wheeled into the operating room with chest pains in an emergency, doctors will first have to determine if he's covered by a state plan, then the diameter of his blood vessels and his diabetic condition to decide on the appropriate stent. If they don't, Washington will not reimburse them for "inappropriate care."”

With the threat of rationing contained in the structure of the Medicare Commission, coupled with the unrealistic savings that CMS says the House Health Reform bill is attempting to squeeze, those on Medicare will be at real risk under this sort of dangerous short-sighted financing scheme.

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