On March 25, 2010, Congress passed sweeping legislation that will fundamentally realign our nation’s health care system. This massive health care overhaul will exacerbate the very problems this reform effort sought to address. It will dramatically alter our deteriorating economic and fiscal conditions for the worse and may irrevocably impair the American identity.
Sky-rocketing health care costs are drowning families, businesses and governments in red ink—leaving millions priced out of the market and without coverage. This legislation—with its maze of mandates, dictates, controls, tax hikes and subsidies—pushes costs further in the wrong direction. It initiates a government takeover of the health care sector (one-sixth of the U.S. economy), intrudes in the doctor- patient relationship, and increases total spending by $2.6 trillion. It raises taxes by more than a half-trillion dollars over the next 10 years—the largest tax increase in American history—and cuts more than a half-trillion dollars from Medicare to finance this new entitlement. All told, this legislation will dramatically add to an already unsustainable rate of government spending that will overwhelm the Federal budget and dramatically change the way Americans get health care.
With the exception of Medicare beneficiaries, the health care bill will have significant and serious consequences on the sustainability of the program and access to medical care. Before the bill’s enactment, the Medicare program was already on an unsustainable path. According to the most recent Medicare Trustee’s report, the Medicare program will be insolvent by 2029 —meaning Medicare will pay out more in benefits than it collects in revenue. Instead of reforming this important program and putting it on a sustainable path so that current beneficiaries will not see a disruption in their services and future generations will be able to plan their retirement around Medicare’s assistance—as I have been advocating for several years—the health care bill treats Medicare like a piggy bank. It double-counts $528 billion in reductions from Medicare—making the false claim of extending Medicare’s solvency while also offsetting costs of the new health care entitlement. For the Medicare Hospital Insurance Fund alone, the CBO has calculated that $398 billion in savings over 10 years is being double-counted. The legislation also includes $202 billion in reductions to the Medicare Advantage Program.
Instead of promoting real competition – which would moderate costs naturally—the legislation nationalizes the regulation of health insurance premiums. This will lead to shortages and rationing and waiting times will replace prices as a means of balancing limited supply and higher demand. Quality will decline as consumers begin facing restricted access to the full range of treatment options. Greater government regulation also will limit incentives for medical innovation.
Yet, despite all the new spending and all the increased taxes, supporters of this law argue that it will actually reduce our current deficit levels. However, the fiscal arguments just do not add up. The only way reduce the deficit, while at the same time having the government pick up the tab for more than 30 million uninsured Americans and subsidize millions more is through the use of smoke and mirrors. In fact, after accounting for the more than $569 billion in tax increases and $523 billion in Medicare cuts, the true costs of this law— concealed by timing gimmicks, hidden spending and double-counting—will make the deficit explode, plunging us deeper into debt.
Medicare Payments to Physicians
Medicare reimburses health care providers for various procedures they perform. These reimbursements are made according to a fee schedule. The fee schedule places a limit on payment per service but not on overall volume of services. The formula for calculating the annual update to the conversion factor responds to changes in volume. If the overall volume of services increases, the update is lower; if the overall volume is reduced, the update is higher. The intent of the formula is to place a restraint on overall increases in Medicare spending for physicians' services. Several factors enter into the calculation including:
* The Medicare economic index, which measures inflation in the inputs needed to produce physicians' services;
* The sustainable growth rate, which is essentially a target for Medicare spending growth for physicians' services;
* An adjustment that modifies the update, which would otherwise be allowed by the MEI, to bring spending in line with the SGR target.
The Medicare system is supervised by the Centers for Medicare and Medicaid (CMS). The current method of determining payments for services used by CMS has resulted in declining reimbursements to many health care providers while at the same time raising costs to Medicare beneficiaries. In fact, Congress has had to “freeze” Medicare payments over the last several years because they have been so low that many providers have been forced to either close their business or refuse to accept new Medicare patients.
I share the justified concerns regarding the annual cuts to physicians who accept Medicare patients. Undercutting physician reimbursement rates would lead to fewer doctors accepting Medicare patients, reduce the quality of care provided to America’s seniors, and further inflate the cost of health care. I believe that physicians should be paid for the work that they do, and they should not have to wait on Congress to act every year in order to prevent pay cuts that are arbitrarily determined by a flawed formula. Additionally, Medicare beneficiaries need to have confidence that they will continue to have access to quality health care professionals without seeing drastic increases in their part B premiums.
On December 9, 2010, the House of Representatives passed H.R. 4994, the Medicare and Medicaid Extenders Act of 2010. This legislation averted scheduled cuts in physicians’ Medicare reimbursements that would have taken place due to the flawed SGR formula.
However, since H.R. 4994 only patched the reimbursement cuts through December 31, 2011, Congress must revisit the issue. If it does not, payments to physicians will be cut. I firmly support reforming the broken physician reimbursement formula, but I am also deeply concerned about our $1.3 trillion budget deficit and $14 trillion national debt. Fortunately, the new Republican Congress has the ability to introduce legislation that reverses the scheduled cuts in a fiscally responsible manner, as was done with H.R. 4994. I am hopeful that Congress will consider deficit-neutral legislation to avert the painful cuts to physicians.
President’s Debt Commission
I was happy to be appointed to serve on the bipartisan commission, along with other members of Congress and policy experts. I believe the proposal offered by the Co-Chairs is a serious and credible plan that advances a sorely needed debate on these critical issues. However, I had concerns with several major provisions in the proposal and was ultimately unable to support it.
Ultimately, I was deeply concerned that the Co-Chairs’ proposal not only lacks the structural reforms needed to reform the explosive growth of existing health care entitlements, but it would actually accelerate the costly and adverse consequences of the President’s recently enacted health care law. For this reason, I worked with fellow Commissioner Alice Rivlin to develop an alternative model to preserve and reform Medicare and Medicaid. The proposal makes no changes for those 55 and older. For those younger than 55, Medicare would provide a list of approved health plans, along with a payment equal to average Medicare costs, so they could select a plan suitable for their needs. According to the nonpartisan Congressional Budget Office, the Ryan-Rivlin plan would help address Medicare’s long-term sustainability by saving roughly four percent of GDP by 2050. It would also give seniors access to the same high-quality health insurance options I have as a Member of Congress.
H.R. 4529, A Roadmap for America’s Future
I first introduced the Roadmap in 2008 to address the greatest threat to our economic and fiscal future—the massive debt burden being driven by the unsustainable growth in entitlement spending. At the time, I argued that years of reckless spending, by both Democratic and Republican administrations, put America on a perilous path. One in which Americans’ health and retirement security programs would soon collapse; future generations would be crushed under a burden of debt and taxes; and our economy would become unable to compete with the rest of the world. Since then, our country has undergone a dramatic financial and economic crisis, unemployment has doubled, and unfortunately, our day of fiscal reckoning has drawn rapidly closer.
We can and must set a different course. The time for talk has passed. We need a real plan with real proposals, real numbers to back them up, and real legislation to implement them. Based on the input of many, I developed A Roadmap for America’s Future to:
* Ensure universal access to health insurance, fulfill the missions of Medicare, Medicaid, and Social Security, and make these programs permanently solvent.
* Return Federal spending growth to sustainable levels and lift the debt burden looming over future generations.
* Promote sustained economic and job growth and put the U.S. in a position to lead—not merely survive—in the international marketplace.
* The Roadmap also proposes much-needed changes to Medicare. First, the Roadmap secures Medicare for current beneficiaries, preserving the existing Medicare program for those in and near retirement—so Americans can receive the benefits they planned for throughout their working lives. Under my reform plan, Medicare would not change for people 55 and older.
* For younger people, Medicare is reformed to work like the health care plan Members of Congress now enjoy. For those currently under 55—as they become Medicare-eligible—it creates a Medicare payment, initially averaging $11,000, to be used to purchase a Medicare certified plan. The payment is adjusted to reflect the impact of medical inflation, and pegged to income, with low-income individuals receiving greater support. The plan also provides risk adjustment mechanisms, allowing those with greater medical needs receive a higher payment. The Roadmap fully funds Medical Savings Accounts (MSA) for low-income beneficiaries while continuing to allow all individuals, regardless of income, to set up tax-free MSAs. Based on consultation with the Office of the Actuary of the Centers for Medicare and Medicaid Services and the Congressional Budget Office, these reforms will make Medicare permanently solvent.
To be clear, it is not too late to take control of our fiscal and economic future but the longer we wait, the bigger the problem becomes—and the more limited and difficult our options for solving it. The Roadmap for America’s Future offers the American people a clear contrast and a clear vision for our country’s future. It secures the distinctly American legacy of leaving the next generation better off. I would encourage you to visit
www.americanroadmap.org to learn more about the specific aspects of this plan.
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U.S. Congressman Paul Ryan Washington, DC Office 1233 Longworth House Office Bldg Washington, DC 20515 Phone: (202) 225-3031 Fax: (202) 225-3393
