Regardless of whether they are supporters or opponents of President Obama’s health care law. members of Congress will have to revisit the legislation soon to correct some serious flaws. Here is a revenue-neutral approach to begin the necessary corrections: Delay the scheduled cuts in Medicare spending by five years and pay for that expense by delaying the 2014 start date of ObamaCare by two years.
The reason to delay the cuts in Medicare: all of the pilot programs designed to achieve efficiencies are producing negative or lackluster results, forcing Medicare to fall back on a requirement to reduce doctor and hospital fees to such an extent that will severely impair access to care for the elderly and disabled.
The reason to delay the start date for insuring the uninsured and creating the new health insurance exchanges: almost no state is ready for the scheduled 2014 opening of the exchanges, and a majority have not even tried to get ready.
Pilot Projects Aren't Working
Over the next decade, more than half the cost of ObamaCare is to be paid for by reduced Medicare spending. The Obama administration had hoped to achieve these reductions by increased efficiency, based on the results of pilot projects and demonstration programs.
The problem: the Congressional Budget Office (CBO) has said in three consecutive reports that these projects are not working as planned and are unlikely to save money. These projects are critical to President Obama’s challenge “to find out what works and then go do it.”
These findings are consistent with private sector studies and the experience in other countries. The latest studies find quality report cards don't work and may do more harm than good, that pay-for-performance doesn't work either, and that there is no reason to be hopeful about Accountable Care Organizations.
Even when they work, Medicare pilot programs are often not scalable to every doctor and hospital across the country. One reason: what works for one group of doctors and hospitals may not work for another.
Fee Cuts Will Harm Seniors
When nothing else works, ObamaCare has a fallback mechanism: reduce fees paid to doctors and hospitals. Yet the Medicare actuaries tell us squeezing the providers in this way will put one in seven hospitals out of business in the next eight years, as Medicare fees fall below even Medicaid’s. As Harvard health economist Joseph Newhouse predicts, senior citizens may be forced to seek care at community health centers and in the emergency rooms of safety net hospitals, just as Medicaid recipients do today.
Consider people reaching the age of 65 this year. Under Obama’s law, the average amount spent on these enrollees over the remainder of their lives will fall by about $36,000 at today’s prices . That sum of money is equivalent to about three years of benefits. For 55-year-olds, the spending decrease is about $62,000—or the equivalent of six years of benefits. For 45-year-olds, the loss is more than $105,000, or nine years of benefits.
In terms of the sheer dollars involved, the planned reduction in future Medicare payments is the equivalent of raising the eligibility age for Medicare to age 68 for today’s 65-year-olds, to age 71 for 55-year-olds and to age 74 for 45-year-olds. But rather than keep the system as is and raise the age of e