Medicare Cuts

I was reading about how the federal tax bill would cut Medicare. That is disconcerting, as this is a vital health program for many seniors in our country. I hate being told things by political pundits but having no data or evidence to back up there views.

So I was curious what a cut to Medicare really mean for both today’s seniors and generations to come, including myself in another 30 years? First off, a cut to Medicare does not mean a reduction in benefits or higher co-pays for consumers. It’s a cut payments to physicians and hospitals. Your doctor gets the hair cut, and depending on how you view these cuts, it might reduce access to care. Or it might not. Certainly doctor and hospital lobbyists would protest any cut to their fat. As the AARP explains:

The Senate tax proposal would add $1.5 trillion to the federal deficit over the next 10 years. Under PAYGO, if this bill were to become law, the government would have to lop off $150 billion in spending every year for 10 years.

Medicaid, Social Security, food stamps and other social safety net programs are exempt from the PAYGO law, which went into effect in 2010. But Medicare and other programs — such as federal student loans, agricultural subsidies and the operations of the Customs and Border Patrol — are not exempt.

The law caps how much the government can trim from Medicare at 4 percent. That’s $25 billion the first year, according to a report by the nonpartisan Congressional Budget Office. The annual amount could increase in subsequent years depending on the size of the deficit and Medicare’s budget.

The $25 billion reduction would affect the payments that doctors, hospitals and other health care providers receive for treating Medicare patients. Individual benefits would not change and neither would premiums, deductibles or copays. But with so much less money going to providers, the cuts could have major impacts on patient access to health care — such as fewer physicians accepting Medicare patients.

Source: https://www.aarp.org/politics-society/advocacy/info-2017/senate-tax-medicare-cuts-fd.html

So cuts to Medicare could affect seniors, by denying them access to new doctors who might decide not to take new Medicare patients. It’s not clear though if doctors are actively dropping Medicare patients.  This 2015 article from Kaiser foundation looks at how many doctors currently accept Medicare patients.

The vast majority of non-pediatric primary care physicians (93 percent) say they accept Medicare—comparable to the share accepting private insurance (94 percent) (Figure 1). A majority of primary care physicians also say they are also taking new Medicare patients (72 percent), but this share is somewhat lower than the share of primary care physicians accepting new privately insured patients (80 percent).

Source: https://www.kff.org/medicare/issue-brief/primary-care-physicians-accepting-medicare-a-snapshot/

While doctors often have high malpractice insurance costs, not to mention all the costs of education debt, most doctors in America live fairly well off. Other medical professionals not as well, but their employers usually aren’t struggling for cash. Many medical facilities and doctors probably could survive on lower Medicare payments, but they would have to trim fat from their businesses. But would they? Or would they focus more on private insurance business or those who paid with cash? Maybe. But seniors need the most medical care, so it seems unlikely they would leave the government money on the table, even if it was reduced levels from years past.

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