What docs are hearing about healthcare reform’s finances

September 27, 2011 – 10:32 AM | By Mark McCarty | No comments yet

Healthcare reform has as a million audiences, and it’s interesting to see what some of them are reading about the Patient Protection and Affordable Care Act (ACA). Let’s look at an opinion piece appearing recently in the New England Journal of Medicine penned by a trio including Michael Chernew, PhD, perhaps the most influential healthcare economist in Washington.

Chernew and his co-authors remind that calculations of Medicare costs typically consists of a comparison of the world with and without the ACA, stating that the ACA has to do better than healthcare inflation of about 5.5% in order to impress the audience.

The article states that the assumptions about ACA’s ability to “bend the curve” are based on scoring provided by the Congressional Budget Office rather than the Office of Chief Actuary at the Centers for Medicare & Medicaid Services. CBO, as the reader will recall, gets its mathematical marching orders from the text of the legislation, which encodes numerous assumptions based on reforms that to date have a mixed record.

Also of note is that CMS’s chief actuary Rick Foster doesn’t think much of CBO’s scoring thanks to CBO’s failure to account for the SGR/Part B “doc fee” dilemma. CBO furthermore counts healthcare savings twice, once to prop up the sagging Medicare Part A trust fund and again to finance expanded coverage.

Chernew, et al don’t mention this, but state that caution “is clearly warranted” where the ACA’s assumed savings are concerned. They cite first that savings associated with a CMS physician group practice demonstration had more to do with changes in coding practices than with changes in care delivery, an interesting message to (or shot across the bow of) the readership of NEJM. Another source of pressure on the CBO score is that the SGR overhang comes to at least $300 billion over the next decade and that the failure to deal with this means that “proposed Medicare reforms must cut at least” that amount “before they’ll be scored as saving a dime.”

The article states that the primary driver of Medicare cost increases in the years ahead will have more to do with Baby Boom demographics than with increases in per-capita spending, but that the savings derived from the ACA are “likely to fall short of the $300 billion associated” with the interminable SGR headache.

Chernew et al are unimpressed by market-based plans, describing them as likely to shift costs to beneficiaries, whom they point out are not always equipped to determine which plan is best for them. One interesting piece of timing in connection with this is another opinion piece, this one penned by Mike Leavitt, Secretary of Health and Human Services during the George W. Bush administration, and Tevi Troy, who also worked for the Bush White House. They write in a Sept. 20 item at the online edition of The Hill that as the deficit supercommittee “struggles to meet its budget targets, politicians on both the left and the right should look to the [market-based] Medicare Part D model as a valuable example of a bipartisan, effective and economical healthcare reform.”

So why should a device maker care about Chernew’s views? Because the most influential healthcare lobby in the history of the U.S., namely the physician lobby, cares about it.


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