News That's Too Good To Be True

August 11, 2010

When President Obama signed the Patient Protection and Affordable Care Act (PPACA) he wiped out $53 trillion of unfunded U.S. government liability.  With the stroke of a pen, more than 60 percent of Medicare's long-term deficit vanished.  It's all in the latest Medicare Trustees report.  The news is too good.  It's embarrassingly good.  It's, well, unbelievable, says John C. Goodman, President, CEO and the Kellye Wright Fellow of the National Center for Policy Analysis. 

Taking a closer look, we see that not all sectors were treated equally by the PPACA.  The pharmaceutical industry made out like bandits.  Doctors took a bath.  And the hospital industry got creamed.  But what if you don't care about the lobbyists, the trade associations and the special interests?  What if your main interest is in what kind of health care you're going to get, asks Goodman? 

Well, that's why there was a need for an alternative report -- one prepared by Medicare's actuaries.  And according to this report, there's no such thing as a free lunch, says Goodman.  For example: 

  • The Trustees report assumes Medicare doctor fees will be cut by 30 percent in the next three years and continue to decline in succeeding years.
  • By 2019, Medicare fees will be below the fees paid by Medicaid.
  • By 2050, Medicare fees will be one-half of what they private sector pays.
  • By 2080, they will be one-third. 

So, why will doctors continue to see Medicare patients?  Why will hospitals admit them?  Many won't. And that's why the actuaries say the Trustees report is "unrealistic" and "implausible."  According to the alternative report: 

  • By 2019 one in seven facilities -- hospitals, skilled nursing facilities, home health care agencies and hospices -- will be unprofitable and risk bankruptcy.
  • By 2030, one in four will be unprofitable.
  • By 2050, it will be 40 percent. 

There is no more effective cost control device in the world than the simple expedient of denying people care.  And that is what is being forecast for the future of the elderly and the disabled, says Goodman. 

Source: John C. Goodman, "News That's Too Good to Be True," Right Side News, August 10, 2010. 

For Medicare Trustees Report: 

http://www.cms.gov/ReportsTrustFunds/downloads/tr2010.pdf 

For Illustrative Alternative Report: 

http://www.cms.gov/ReportsTrustFunds/downloads/2010TRAlternativeScenario.pdf

 

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