July 2, 2008

Medicare Cuts Signal Need for an Overhaul

The following editorial appeared in the Minneapolis Star Tribune on Tuesday, July 1:


Senators on Capitol Hill departed for July 4 picnics last Friday with an important unfinished piece of business hanging over the heads of doctors and the millions of seniors who depend on Medicare.

The issue: a large and troubling cut in payments to doctors who see Medicare patients. The 10.6 percent reimbursement reduction was scheduled to take effect today. And while Congress has previously protected physicians from Medicare cuts dictated a decade ago, this time things were different. Snarky comments and shouting matches were the surprising rule of the day as the Senate debated a price fix that easily passed the House. The measure died by one vote. The American Medical Association dubbed it the "Medicare meltdown."

Last Friday, the Bush administration wisely put a temporary freeze on the current payment system to give senators a chance to come back and address the issue. It ought to be the first item on their agenda. No matter what your age, this issue has potentially drastic ripple effects. If you're a senior, it could affect your choice of physicians. The Minnesota Medical Association warns that a 10.6 percent cut could lead many clinics to stop taking new Medicare patients because they'll lose too much money on them. If you're younger, Medicare rate cuts could be passed onto you through higher premiums as providers seek to make up for lost revenue by charging other patients more.

In many ways, the current situation is emblematic of longtime Congressional dithering over managing Medicare in a cost-effective manner. Created in 1965 to serve a relatively small part of the population, it's morphed into comprehensive care and drug insurance for an increasingly large demographic. Politicians from across the political spectrum are rightly concerned about keeping expenses under control.

It was that desire that led to reforms in 1997's Balanced Budget Act, the legislation driving the 10.6 percent cut. It put in place tools to force Medicare cost discipline. Were they the right tools, and did they work? That's open to debate. Medicare physician reimbursements were tied to the nation's gross domestic product rather than a more accurate index of expenses. And with pushes by the powerful medical lobby, Congress has routinely run end-runs around proposed cuts in previous years and has voted to sustain reimbursements.

That's what senators will be asked to do when they return. In this case, it makes sense. Medical costs have gone up, and the cuts would penalize doctors who provide cost-efficient care as well as those who do not. Lawmakers also need to consider a better formula to set reimbursements rates.

Even if they do reach a compromise on these two things, they are mere Band-Aids for a giant federal entitlement program badly in need of an overhaul. What politicians really need to do is seek out better tools for controlling costs while providing the care seniors deserve. Those solutions are not obvious or easy. But a good start would be asking the right questions.

Why don't we reward physicians whose patients are healthier instead of physicians who do the most procedures? Why does Medicare pay for drugs and procedures _ the cholesterol drug Vytorin and CT heart scans, for example _ whose value is unproven? Why are there geographical disparities in Medicare reimbursements, penalizing a state like Minnesota where physicians generally provide excellent, cost-effective care?

Sen. Amy Klobuchar, D-Minn., rightly characterizes the debate that awaits her vacationing Senate colleagues as one of short-term solutions. With the presidential election looming, nothing big is likely to happen this year. But it's not too early to call for the next president to make health-care reform a top priority, an issue Klobuchar has been out front on. She and other reformers will need fortitude and persistence. This is a complex problem, but one the nation can no longer shrink from.


(c) 2008, Star Tribune (Minneapolis)

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