These two paragraphs at the back of the Medicare trustees’ report, in chief actuary Rick Roster’s “Statement of Actuarial Opinion,” are important to keep in mind during this debate. First, from p. 281:
Further, while the Patient Protection and Affordable Care Act, as amended, makes important changes to the Medicare program and substantially improves its financial outlook, there is a strong likelihood that certain of these changes will not be viable in the long range. Specifically, the annual price updates for most categories of non-physician health services will be adjusted downward each year by the growth in economy-wide productivity. The best available evidence indicates that most health care providers cannot improve their productivity to this degree—or even approach such a level—as a result of the labor-intensive nature of these services.
And then, from p. 282:
For these reasons, the financial projections shown in this report for Medicare do not represent a reasonable expectation for actual program operations in either the short range (as a result of the unsustainable reductions in physician payment rates) or the long range (because of the strong likelihood that the statutory reductions in price updates for most categories of Medicare provider services will not be viable). I encourage readers to review the “illustrative alternative” projections that are based on more sustainable assumptions for physician and other Medicare price updates. These projections are available [here].
Also, as Peter Suderman of Reason reminds us, there’s a reason why the CBO alternative scenario assumes that the PPACA’s long-term Medicare savings won’t work.
My final addition to the recommended-reading list on this topic is Tyler Cowen on the doc fix. His point is that, independent of the fight over the CBO score of the health-care bill, the doc fix is too high. In a very unusual move for Cowen, he even says that he “would consider joining a liberaltarian alliance to lower the doc fix.”
I understand that the doc fix is not a net cost of ACA, since we have been doing it anyway, and I understand that the Republicans are being hypocrites on the issue. But I have a broader question. Should we be doing the doc fix at current levels? If I were a supporter of single payer, I would wish to cut the doc fix. That is, after all, how single payer systems save so much money, compared to the U.S. system. They use monopsony to lower reimbursement rates and the quality of outcomes does not always suffer much, if at all.
So are the single payer advocates in fact advocating an end or limit to the doc fix? That is a literal and naive question — I am not pretending I have caught anyone in a contradiction. Is Krugman here endorsing the doc fix? I am not sure, but he does call it “necessary.”
One might argue “cutting reimbursement rates works only when you can do it to all rates.” Otherwise doctors flock to the privately insured patients and ration the rest. Maybe so, but Medicare covers a lot of health care in this country and it’s hard to see most doctors giving up on covering old people. Medicare ought to give the government some monopsony levers and even if supply is a constraint, pushing some elderly further back in the queue does not have to be a bad thing, all constraints considered. Furthermore we are often told that cutting reimbursement rates will work when it comes to pharmaceuticals, so why not doctors?
There is an interesting conversation going on in the comment section.