The Medicare near-disaster

July 17, 2008

Alison McKenna explains how Congress and the Bush administration nearly allowed major cuts in Medicare to go into effect.

CONGRESS OVERRODE a veto by George Bush this week to approve crucial legislation covering the Medicare health program for the elderly, ending a weeks-long fiasco that threatened to cut payments to doctors who treat Medicare patients by more than 10 percent.

Under a funding formula passed several years ago by the Republican-controlled Congress, Medicare reimbursements to doctors are automatically cut at regular intervals, unless new legislation heads off the reductions.

Until this year, Congress has stopped the reductions from going through, but as Chicago physician Dr. Anne Scheetz, who treats elderly patients in their homes and is paid through Medicare, says, "Every year, we are faced with cuts in physician pay."

This year, under the funding rule, reimbursements for doctors were sliced by 10.6 percent as of July 1. In the days before, Senate Republicans used a procedural maneuver to block an up-and-down vote on a measure that would have headed off the cuts, and the Democrats fell one vote short of the 60 needed to stop them. Thus, the July 1 deadline passed without new legislation, though the Bush administration delayed implementing the reductions.

Rep. John Dingell speaks, surrounded by fellow Democrats, after George Bush's veto of Medicare legislation was overridden by Congress
Rep. John Dingell speaks, surrounded by fellow Democrats, after George Bush's veto of Medicare legislation was overridden by Congress

But after the July 4 recess, Sen. Ted Kennedy, who is suffering from brain cancer, returned to Washington to break the filibuster, and Republican opposition to the legislation peeled away. The bill went to George Bush, who vetoed it, but both houses of Congress quickly voted with two-thirds majorities to override the veto.

The legislation restores payments to doctors and will raise them by just over 1 percent at the start of next year. The increase is funded by a reduction in "federal payments to insurance companies that offer private Medicare Advantage plans, as an alternative to the traditional government-run program," the Associated Press reported.

Bush and fellow Republicans opposed the legislation because of this provision. But in reality, Medicare Advantage plans are a giveaway to the insurance companies and pharmaceutical companies, who act as middlemen.

According to Scheetz, under Medicare Advantage, the government program "takes money and gives it to insurance companies who charge, on average, 112 percent of what it would cost to treat patients." Patients don't receive better service from the insurance companies, and doctors end up having to deal with additional layers of bureaucracy to get paid.


IF THE 10.6 percent cut in payments to doctors had gone into effect, health care for the elderly would have suffered a serious blow. According to a survey by the American Medical Association, "60 percent of physicians reported that they would have to limit the number of new Medicare patients they treat if payments are cut 10 percent in 2008."

"I will definitely continue to accept Medicare patients," one physician wrote on an Internet discussion group maintained by the American Academy of Home Care Physicians (AAHCP). "This mess was not the results of anything our patients did. I cannot turn them away if they need a visit...I cannot, however, continue to make house calls full time. I've had to supplement my income through nursing home visits and outpatient care."

Another AAHCP doctor gave expression to the rising discontent with a reference to Cindy Sheehan's antiwar protest at George Bush's ranch in Crawford, Texas: "I rather like the idea of a wheelchair sit-in on the Capitol steps."

But as this doctor pointed out, "Restoring the Medicare cuts is only a band-aid."

Scheetz agrees that the Medicare legislation Congress approved in overriding Bush's veto is a "one-time fix"--and doesn't deal with some of the existing problems with the system. For example, as Scheetz explains, because low "relative value scores" are assigned to diagnostic codes for primary care services (such as preventative health care), often times, this means that the reimbursement from Medicare may be less than what physicians must pay in overhead.

What's more, currently, psychiatrists only receive 50 percent payment for mental health diagnosis under Medicare, while primary care physicians have an 80 percent approved fee, so there is less incentive for them to accept Medicare patients.

The legislation passed this week contains some improvements in the program. According to the Older Women's League, it will "strengthen low-income protections against rising Medicare costs; improve access to preventive services; provide mental health parity in Medicare...[and] expand primary care and provide incentives for physicians to provide additional primary care services."

But Medicare still has significant problems--and will remain hostage to Congress taking action to prevent periodic severe cuts in physician reimbursement. This crisis is another reason why many doctors are coming to the conclusion that the solution is a single-payer system eliminating the role of private insurance companies.

"Medicare is not unpopular among doctors," Dr. Seth Foldy, a family practice physician in Milwaukee, told Roger Bybee for an article in the American Prospect. "The concept of Medicare for all [which is how a single-payer plan is often described] is making ideological headway."

More generally, Bybee writes, "[d]octors are experiencing an extreme and relatively sudden loss of control at the hands of insurers and hospital networks, while being snowed under by paperwork and bureaucratic battles with insurance companies over authorization and payments."

According to the Annals of Health Research, a 2007 poll found that "59 percent of U.S. doctors support a "single payer" plan that essentially eliminates the central role of private insurers." This marked a 10 percent increase in just five years.

This is the right conclusion: What we need is a single-payer system that provides health care to everyone who needs it and is able to prioritize human need over the profits of insurance and pharmaceutical companies.

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