Obamacare

Obamacare fail: Medicare payment reforms dont work

Late last year, the Obama administration was forced to abandon one of the gimmicks it used to make it appear that Obamacare would reduce the deficit, theCLASS Act. Scheduled to reduce the debt by $70 billion over ten years, the CLASS Act's failure alone erased more than half of Obamacare's claimed $120 billion in total deficit reduction.

Yesterday, the Congressional Budget Office (CBO) released another crushing blow to Obamacare's deficit reduction claims, posting a study showing that pilot programs designed to reduce Medicare spending either had no effect, or actually increased Medicare spending. Obamacare had counted on over $500 billion in Medicare savings. Here is how Obama's Office of Management and Budget Director Peter Orszag described their importance at the time:

[Obamacare's] pilot programs involving bundled payments will provide physicians and hospitals with incentives to coordinate care for patients with chronic illnesses: keeping these patients healthy and preventing hospitalizations will be financially advantageous…And the secretary of health and human services (HHS) is empowered to expand successful pilot programs without the need for additional legislation.

And here is what the CBO said about Medicare's bundled-payment pilot programs yesterday:

The disease management and care coordination demonstrations comprised 34 programs...

• On average, the 34 programs had little or no effect on hospital admissions. There was considerable variation in the estimated effects among programs, however...
• In nearly every program, spending was either unchanged or increasedrelative to the spending that would have occurred in the absence of the program, when the fees paid to the participating organizations were considered.

The history of containing health care costs through top down wage and price controls, without significantly harming health care quality, is abysmal. If these Medicare bundling payments don't reduce spending, the only way Obamacare can meet its Medicare cut targets is through either massively cutting doctor reimbursements, making it impossible for seniors to get care, or Draconian rationing.