Cost Containment: What Medicare Seniors Should Worry About

For years, the bureaucrats in Washington have been trying to control rising Medicare (and Medicaid) costs by underpaying doctors, diagnosticians, and hospitals for their services using some false assumption that those healthcare professionals will find a cheaper means to provide services.  But the healthcare system can't cheapen their services because, to do so, would open itself up to more and more costly malpractice suits.  So, more often than not, this Medicare cost containment tactic is like squeezing a balloon.  All that happens is that non-Medicare patients are billed at higher rates to compensate for the losses incurred in taking care of Medicare patients.  But, at some point, those medical professionals will find that the other private insurers won't pay more either.  When that happens, they are likely to drop their Medicare patients to avoid going broke.  For example, in 2010, the prestigious Mayo Clinic announced it was no longer taking Medicare patients at one of their hospitals because they had lost a total of $840 million in the previous year.  Right now there are no comprehensive statistics as to how many doctors and hospitals are refusing to provide healthcare to Medicare seniors; but it is happening and gaining speed.

However, what is really ridiculous is that the Democrats and Obama have decided to double-down on this cost containment tactic that is causing so many health care professionals to refuse Medicare patients.  When they crafted ObamaCare they created something called the Independent Payment Advisory Board or IPAB.  IPAB is basically a 15-member board of bureaucrats that will determine what Medicare will pay out for certain medical procedures and devices. By law, they must find ways to cut costs if those costs exceed actuarial estimates for any given year.  In effect, IPAB has the authority to independently tell the health care industry which procedures will be covered by Medicare and for how much.  Congress cannot block or overrule them unless they pass legislation that would meet or exceed the IPAB's recommendations for any given year.

The problem with all these cost containment gimmicks, like IPAB, is that they don't address "why" costs are going up as fast as they are.  You can't mandate a bunch of free annual check ups and free diagnostics and expect Medicare costs to be lowered.  Sure, early diagnosis might avoid some future expenses but, many experts have concluded that widespread recommended diagnostic routines are not cost effective and are not necessarily preventative.  With mammograms, for example, the U.S. Preventive Services Task Force (USPSTF) set new recommendations in 2009 that effectively removed the testing regimen of having bi-annual mammograms for women over 40.  Their new recommendation is for bi-annual mammograms for women over 50.

In my opinion, the USPSTF is better able to make cost-lowering recommendations rather than IPAB.  IPAB will only result in more seniors being dropped by doctors, hospitals, and diagnosticians.  The result will be to force Medicare patients into "cattle-car" clinics with extremely long wait time and less qualified doctors.  In fact, seniors will probably wind up seeing physician assistants rather doctors. This is what every senior should fear as a result of ObamaCare.

One last thing.  Healthcare costs are being driven by doctors practicing defensive medicine as a safeguard against being sued for malpractice.  Unless there is tort reform, costs will continue to rise at rates faster than inflation.  But, ObamaCare never included tort reform because the Democrats are in bed with the trial lawyers for campaign donations.

For Further Reading:

Mayo Clinic Bridles at Medicare Payments: http://www.cbsnews.com/8301-505123_162-43841043/mayo-clinic-bridles-at-medicare-payments/

Wikipedia On IPAB:  http://en.wikipedia.org/wiki/Independent_Payment_Advisory_Board

U.S. Preventive Services Task Force Website: http://www.ahrq.gov/clinic/uspstfix.htm