Medicare cuts to physician fees

As Avik Roy correctly points out on his Forbes blog, while there are no direct cuts to physician fees contained within Obamacare, that does not mean cuts beyond the 30% reductions already called for by the Sustainable Growth Rate law will not be caused by the Affordable Care Act.

I explained the $716 million in Medicare cuts in a previous post, but there is more to the story.

The fifteen member Independent Payment Advisory Board must make recommendations to cut Medicare costs if they exceed certain targets, but is severely limited in how to do that. The Board cannot increase premiums, cut benefits or ration care. What it can do is cut payments to Medicare health care providers. This is a classic you can have it all strategy, don’t worry only somebody else will be affected.

As Roy points out, Obamacare cuts payments to hospitals, Medicare Advantage Plans and other health care facilities. These cuts already put some hospitals in financial jeopardy according to the Medicare Actuary. So, to make further cuts in Medicare costs, the only remaining target is physician payments. This means additional cuts beyond the already scheduled 30%.

Obviously this cannot work. There is only so much that can be cut. Obamacare has created a giant shell game adding new benefits here, making cuts there and using unrealistic assumptions trying to find the missing pea. As we all know, the customer never wins the shell game and this will be the case with Medicare. Adverse consequences cannot be avoided for beneficiaries.