Lowering Medicare reimbursements

When there is talk of Medicare for all, the projected costs (savings ha, ha) are based on paying health care providers at Medicare rates which are significantly lower than private insurance.

As you can see below Congress is considering even lower payments to manage Medicare spending. On the other hand, there is an effort to block the cuts thereby NOT managing Medicare costs which eventually must lead to higher taxes and premiums.

The point is there are consequences for any efforts to manage health care costs. There is no magic wand to force lower costs, to cap cost sharing on this or that without consequences. Medicare can pay low fees because lost income for the health care sector can be recovered from the private sector. What are the consequences if Medicare was the insurance for all Americans?

Medicare Payments to Health Care Providers to see Congressional Action

Medicare payment rules and pending reimbursement cuts next year have doctors and other providers worried because they say the scheduled reductions do not account for increased labor costs and inflation.

They are looking to Congress for relief, and lawmakers from both parties appear supportive.

One day after the Centers for Medicare & Medicaid Services (CMS) finalized a rule imposing a nearly 4.5% across the-board cut for providers next year, 46 senators called on the chamber’s party leaders “to work with members on a bipartisan basis to address these imminent payment cuts,” or risk “reduced staffing levels and office closures, jeopardizing patient access to care.”

There’s also bi-partisan legislation in the House to deal with the problem.

It is believed that there is enough support on both sides of the aisle to block the 4.5% cut. That is good news for seniors because some doctors have already decided not to take Medicare patients anymore because the payments they receive are too small.

Congress is likely to stop a separate 4%, or $36 billion, “pay-as-you-go” cut in Medicare spending required under the American Rescue Plan Act.

That cut would affect all parts of the health care system dealing with Medicare and Medicaid patients. If both of those cuts were to go into effect, they would combine for an 8.5% cut in Medicare payments, which would devastate providers, according to one estimate.

Senior Citizens League


  1. Baloney. As they have for decades, providers will try to shift any reduction in reimbursement under government coverage to coverage via the private sector – including raising charges for insured plans offered in the public exchange (which will, in turn, increase the cost to taxpayers because almost everyone in the public exchange gets a taxpayer subsidy).

    This has been going on at least since the feds introduced Diagnostic Related Groups, the Resource Based Relative Value Schedule, and Balance Billing Limits. All of those are vote-buying tactics that appeal to those covered under Medicare.

    In 2014, Health Reform introduced taxpayer subsidized exchange coverage and a Medicaid expansion. Today, failure to enroll or a gap of coverage is a voluntary decision, where those who are uninsured have prioritized other household needs, wants. First introduced in 2014, enrollment in taxpayer subsidized public exchange coverage is approaching 15 million Americans. Since passage of Health Reform in 2010, the number of Americans covered under Medicaid has grown from 56.5MM to 89.4MM, or an increase of 56%. As the Baby Boomers retire and age into Medicare, during the same period, the number covered under Medicare has increased from 44 Million to 59+MM, or over 33%.

    Democrats in Congress and the Biden Administration will continue to game the process – if only to continue the myth of the potential value in “Medicare For All”.


  2. I have read for years that obstetricians have high insurance rates and with Medicaid providing the low reimbursement for a huge percentage of babies, that leads to the train wreck evident now in NJ. I had not thought of the high number on Medicaid.
    Medicaid reimbursements need to go up in such cases if people want a doctor in the same state. Just one more problem to add to the list.


  3. Rationing of care and cost shifting is real. Yesterday an article online talked about the shortage of OB-GYN in NJ. It is so bad that Cape May County’s only hospital had to shutdown its maternity ward due to a doctor shortage. There are several reasons like the high cost of living and 6 figure malpractice insurance in NJ and low pay. There are other reasons too but 50% of babies born in NJ are Medicaid babies and the reimbursement is only 41.7%, with only Rhode Island lower.

    If you are a doctor paying back your student loans, paying high insurance premiums in a high cost of living area, and only getting 41% of what you charge, what would you do? Move out of state for more money and lower cost of living or insurance?

    When will that bleed over to other high risk specialities?


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