Medicare Spending Slows Sharply

[Recursion]

Some good news, for once.

While our elected representatives wrangle over slicing entitlements, virtually no one seems to be paying attention to an eye-popping fact: Medicare reimbursements are no longer accelerating at a break neck-pace. The new numbers should be factored into any discussion about healthcare spending: From 2000 through 2009, Medicare’s outlays climbed by an average of 9.7 percent a year. By contrast, since the beginning of 2010, Medicare spending has been rising by less than 4 percent a year. On this, both Standard Poor’s Index Committee and the Congressional Budget Office (CBO) agree. (S&P tracks healthcare spending with the help of Milliman Inc., an independent actuarial and consulting firm.)

What explains the 18-month slow-down? No one is entirely certain. But at the end of July David Blitzer, the chairman of Standard &Poor’s Index Committee, told me: “I’m hesitant to say that this is a clear long-term trend. But it’s more than a blip on the screen."

...(snip of a CBO spokesperson saying he won't tell Mahar his theory because "you might quote me", which really amused me.)...

Standard & Poor’s Blitzer was more forthcoming. In the S&P report on healthcare spending released on July 21, he wrote: “many participants have indicated that providers are trying to address health care reform and are looking for ways to control costs. If true, this combination certainly would be a contributory factor to the moderation in cost we have witnessed since early 2010.”

Zeke Emanuel, an oncologist and former special adviser for health policy to White House Office of Management and Budget director Peter Orszag, is certain that this is what is happening. When I spoke to him last week, Emanuel, said: “This is not mere chance: this is directly related to the initiation of health care reform.” It is not the result of reform, Emmanuel emphasized. The reform measures that will rein in Medicare inflation have not yet been implemented. But, he explained, providers are “anticipating the Affordable Care Act kicking in.” They can’t wait until the end of 2013: “They have to act today. Everywhere I go,” Emanuel, added, “medical schools and hospitals are asking me, ‘How can we cut our costs by 10 to 15 percent?’

Health Care Reform was the most important debt reduction package the US has ever passed. Lots more at the link.

[phantom power]

1. "hospitals are asking me, ‘How can we cut our costs by 10 to 15 percent?’" == demand destruction

My guess is this is a reaction to the recession and massive unemployment. In other words, it's the same reason that oil prices are declining: demand destruction -- "nobody has any damned money"

[Recursion]

3. Article argues pretty effectively it's not that -- entitlement spending is not cyclical

If anything in the past it's been counter-cyclical as hospitals ramp up Medicare services (at least the ones they don't do at a loss) to make up for flagging private fees.

[amborin]

7. +1

yes...

new rules say: reduce Medicare exp per patient or hosp quality ratings suffer

[kestrel91316]

2. Another possibility is that few doctors now accept Medicare patients at all,

from what I have heard. Because they don't get paid much for their services - particularly specialists like oncologists. So people on Medicare can't get cancer treatment and just die. That will save a LOT of money, but I'm not sure it's where we want to go as a nation.

[madfloridian]

4. I was going say the same thing.

[Recursion]

6. Doubtful; spending is still rising, just not as quickly

And we aren't seeing the rise in ER/Urgent Care usage that a provider boycott would lead to.

[whathehell]

14. I'm not sure that's true, all over..My mother was successfully treated for cancer on Medicare

four years ago. She lived in Philadelphia, Pennsylvania.

[amborin]

5. new Medicare rationalization rules: hosps must show "efficiency" or their quality rating suffers

new requirements state that hospitals must reduce their Medicare expenditures or
their quality ratings suffer

never before did hosp quality ratings include measures of their Medicare spending per patient....

[Recursion]

8. We need the data on how they're doing that

Whether it's by denying needed services or just providing health care more efficiently. On the whole it sounds like a pretty good idea, given how fast costs were rising in the oughts.

[amborin]

9. tell that to the hospitals and physicians who are alarmed by this...

[Recursion]

10. Of course they are; they've been overbilling for years

And the gravy train is being taken away from them.

[amborin]

16. that's b.s. i'm referring to university teaching hosps....

[nc4bo]

11. My mother had a balance due following her cataract surgery this year...

that she didn't have before.

The billing person told us that it was a portion of her treatment that Medicare no longer covered and that she would be responsible for it.

It was only $44 but when you take that $44 with no COLA and increase in the cost of her health insurance and MEDCO increase, these things add up.

I guess basically I'm wondering if this is part of the reduction in Medicare spending, patients will be expected to pay out of their pockets?

[Recursion]

13. Could be, though from what I've seen on the whole user fees are not up nationally

Obviously what happened to her sucks and I don't know why the Medicare board decides to cover this vs. that treatment (and often the doctor doesn't even know which ones are covered -- we need better communication about this). But I don't think on the whole copays are up (at least, the article says they're not).

[frazzled]

12. I've noticed these cost-control measures myself the last year

Okay, not on Medicare (we're still a few years away), but at hospitals.

Last year my husband suffered a serious bicycle accident while on a 60-mile ride. He was taken by police to a hospital in a far northern suburb about 25 miles away and I was contacted. I arrived and after a wait the doctor came in with the results of x-rays and an MRI that had been taken in the emergency room. He explained that my husband had fractured his shoulder (and was unclear whether surgery would be required), broken 4 ribs, and punctured a lung. Then he said, we're releasing him now and you need him to see an orthopedic surgeon tomorrow and a thoracic surgeon by the next day. I was gobsmacked. (The last time a similar thing happened to him, he was hospitalized in ICU for 3 days.) But you know, there was really nothing they could do for him: it was all key on getting checked out by these two types of surgeon. Thousands of dollars of an unnecessary hospital stay were avoided, and we were given the x-rays and MRI to take with us. (As it turned out, a second MRI had to be taken anyway because of the angle, to see if the socket joint had been affected. But still.)

8 months later (bad health year for us!), same husband needed a hernia surgery. He'd had it done 30 years earlier and it involved several days in hospital and a long recovery. New procedures and new policy: it was outpatient surgery this time. We were in at 6 am to register, surgery at 8, and they were throwing us out with graham crackers and juice before 10 am. He was totally back on his feet in 24 hours after a day's rest on the sofa. No recuperation at all, no risk of hospital-stay infection, etc.

These are the things that save money and actually seem to have better outcomes, and though at first it seemed odd and perhaps dangerous to me, in the end I've decided I like these measures.

[Recursion]

15. I've seen some data on limiting hospital time greatly improving outcomes

There's a disturbing amount of iatrogenic illness and even death out there, from infections to mis-medication, and in general being in a building full of sick people can't be very good for you if there's another option.

[Donnachaidh]

17. Medicare patients may also be waiting to go to the doctors - for fear of being stuck with bills

It takes a while for bills to cycle through the process, and if Congress is planning on gutting the system, many fear they will be suddenly stuck with bills they cannot pay.

[Recursion]

18. Is Medicare usage down? (nt)

[Donnachaidh]

19. it stands to reason - if the spending is down, the usage would be down

Doesn't take a genius to figure that out. :shrug:

[Recursion]

20. "It stands to reason" is usually a bad argument in economics

Because mass consumer behavior rarely stands to reason. I don't think it is, and I'll look for some numbers.

[Igel]

21. Reform as a speech act.

What's done isn't reform; it's only true reform when it is officially decreed to be the implementation of reform.

Argh.