medicare has changed, projections not so much
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Medicare Has Changed,Projections Not so Much
Chapin White, Ph.D.Presentation at the American Enterprise InstituteJune 3, 2013
Center for Studying Health System Change – www.hschange.org
Pop Quiz Current Medicare spending slowdown is …
cyclical structural
ACA Medicare cuts are … reasonable not reasonable
Long-run Medicare fiscal imbalance is … #1 threat to our nation’s economic wellbeing based on questionable assumptions
Center for Studying Health System Change – www.hschange.org
Cyclical vs. Structural
Cyclical factors– recession
Structural changes– provider payment policy– cost reimbursement tight prospective rates– usual, customary, reasonable SGR
Center for Studying Health System Change – www.hschange.org
Excess Cost Growth Slowdown
-2%
-1%
0%
1%
2%
3%
4%
5%
6%
7%
1975 1980 1985 1990 1995 2000 2005 2010 2015 2020
Source: Author’s calculations based on CBO projections (2012).
Center for Studying Health System Change – www.hschange.org
Are ACA cuts reasonable?
ACA reduces annual price growth by 1.1 percentage points
Trustees report says– current-law projections “not reasonable”– cuts “will not be viable” in the long run
Center for Studying Health System Change – www.hschange.org
What’s a Reasonable Hospital Price?
$0
$5,000
$10,000
$15,000
$20,000
Private, 2013
Medicare, 2013
Medicare, 2036
Medicare, 2086
Denmark, 2013 (est)
France, 2013 (est)
Germany, 2013 (est)
Inpa
tient
Hos
pita
l Pric
e pe
r Dis
char
ge
Source: Author’s analysis based on Stargardt Health Economics (2008).
Center for Studying Health System Change – www.hschange.org
Are the SGR cuts reasonable?
SGR calls for 25% cut in Medicare physician fees
Center for Studying Health System Change – www.hschange.org
What’s a Reasonable Orthopedist Income?
Source: Author’s analysis based on Laugesen and Glied Health Affairs (2011) and Lasser JGIM (2008).
$0
$50
$100
$150
$200
$250
$300
$350
$400
$450
U.S., no SGR cut U.S., with SGR cut UK Canada France
Center for Studying Health System Change – www.hschange.org
What’s a Reasonable Primary Care Income?
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
$200
U.S., no SGR cut U.S., with SGR cut UK Canada France
Source: Author’s analysis based on Laugesen and Glied Health Affairs (2011) and Lasser JGIM (2008).
Center for Studying Health System Change – www.hschange.org
Short-run vs. Long-run Growth Short run
(2013-2022)– extrapolates recent
trends– heavy demographic
headwind– HI hanging on
Long run (2023-)
– growth spikes back up– assumes volume surges
reasonable?– HI trust fund takes a
nosedive
Fig. III.B5. Cumulative HI Taxes minus Expenditures(present value, trillions)
Center for Studying Health System Change – www.hschange.org
Long-Run Growth Assumption
Technology
Center for Studying Health System Change – www.hschange.org
What About Prices?
CMS sets “take it or leave it” prices Providers choose how much to supply ACA lowers price growth permanently
lower quantity lower spending
Center for Studying Health System Change – www.hschange.org
What the ACA Does to Prices
Quantity
PriceSupply
Center for Studying Health System Change – www.hschange.org
Cognitive Dissonance
Unfunded Medicare liabilities could sink the U.S. economy
But ACA cuts “will not be viable”?
Something that now seems unreasonable will happen– Medicare will consume huge resources, or– providers will make do with less
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