The Social Security Trustees’ report for 2013 became available today. The media reports are emphasizing that the insolvency date for the Social Security Trust Fund is unchanged at 2033 while the insolvency date for the Medicare Trust Fund has been pushed back a couple of years until 2026.
When I read mystery stories I don’t skip to the end to see whodunnit but when I read the Trustees’ report I always do because that’s where the Statement of Actuarial Opinion is. Here’s the important part:
In past reports, and again this year, the Board of Trustees has emphasized the strong likelihood that actual Part B expenditures will exceed the projections under current law due to further legislative action to avoid substantial reductions in the Medicare physician fee schedule. While the Part B projections in this report are reasonable in their portrayal of future costs under current law, they are not reasonable as an indication of actual future costs. Current law would require a physician fee reduction of an estimated 24.7 percent on January 1, 2014—an implausible expectation. Further, while the Affordable Care Act makes important changes to the Medicare program and substantially improves its financial outlook, there is a strong likelihood that certain of these changes will not be viable in the long range. Specifically, the annual price updates for most categories of non-physician health services will be adjusted downward each year by the growth in economy-wide productivity. The best available evidence indicates that most health care providers cannot improve their productivity to this degree for a prolonged period as a result of the labor-intensive nature of these services.
Without unprecedented changes in health care delivery systems and payment mechanisms, the prices paid by Medicare for health services are very likely to fall increasingly short of the costs of providing these services. By the end of the long-range projection period, Medicare prices for hospital, skilled nursing facility, home health, hospice, ambulatory surgical center, diagnostic laboratory, and many other services would be less than half of their level without consideration of the productivity price reductions. Medicare prices would be considerably below the current relative level of Medicaid prices, which have already led to access problems for Medicaid enrollees, and far below the levels paid by private health insurance. Well before that point, Congress would have to intervene to prevent the withdrawal of providers from the Medicare market and the severe problems with beneficiary access to care that would result. Overriding the productivity adjustments, as Congress has done repeatedly in the case of physician payment rates, would lead to substantially higher costs for Medicare in the long range than those projected under current law.
For these reasons, the financial projections shown in this report for Medicare do not represent a reasonable expectation for actual program operations in either the short range (as a result of the unsustainable reductions in physician payment rates) or the long range (because of the strong likelihood that the statutory reductions in price updates for most categories of Medicare provider services will not be viable).
or, said another way, the Chief Actuary is saying “pay no attention to the little trustees behind the curtain. Medicare will go broke long before 2026.”
Shocking?
Not really, as is stated in the report, the Doc fix has been around for years — the government gimmick routinely used to assuage too many physicians from bolting, in providing service to current medicare patients. Government solutions, though, only revolve around a lazy-susan of short term band aids trying to keep this entitlement program from becoming insolvent — a pattern embraced by both social progressive politics and impotent republican counter points, over many years. Making any real structural changes to medicare, however, having long term effects, are either ignored or derided by opponents of those proposing them, creating a stalemate towards actually sustaining medicare for others down the road.
Current law would require a physician fee reduction of an estimated 24.7 percent on January 1, 2014—an implausible expectation.
Reynolds would claim that physicians would just work that much harder to get patients – perhaps they’ll go out and start shooting people.
Really, we’re in the very best of hands, and we can trust everything that they say….
Sad to see that some of the famous “wonks” seem to have missed the distinction between “current law” and “likely reality” here. The “current law” model of estimation is never accurate.
James Capretta gives a similar appraisal to the real sustainability of Medicare, as it relates to Obamacare and the new medicare trustees report.
Capretta’s opening sentence literally broadsides Jack Lew’s effusive statement that this report “demonstrates once again the importance of the Affordable Care Act,†by simply saying, “This is nonsense.”
Have you seen this yet, Dave?
http://www.businessinsider.com/a-brand-new-report-shows-just-how-wrong-silicon-valleys-claim-of-a-stem-shortage-is-2013-5
No, I hadn’t. Thanks. It doesn’t much surprise me since I think the “STEM shortage” is mostly a combination of a buyer’s market, a method of chaffering wages down, and a matching problem.
Give me an hour, a computer, and an Excel spreedsheet and I’ll give you whatever result you want.
That’s why I have quipped in the past that I’m not really interested in fancy studies that are authored byagenda driven persons and don’t meet the snicker test.
Nice to see you commenting, Red.
Missed your candid remarks, Drew.
Thanks, folks. Serious illness but now recovering. But I’ve been reading all the essays and comments, including Michael’s self important boycott.
Drew, I was kind of wondering if you were alright, or not. Anyway, am glad that you are in recovery — at least I hope a better kind of recovery than some state the economy is in. Bad joke….