Systems thinkers frequently refer to an archetype we call a fix-that-fails-or-backfires. In essence, this is a solution to a problem that does not address the root cause but only treats the obvious symptoms of dysfunction. Using a fix-that-fails-or-backfires, the problem invariably recurs or gets worse.
Fix-that-fails-or-backfires aptly describes what Congress has just done to the Medicare Program and has in fact been doing to healthcare for over half a century.
Poisons Administered by Congress
Medicare has been sick and getting sicker for four decades. Claiming to "fix" the failing system, Washington has been poisoning it.
Congress has administered various toxic concoctions to Medicare with wonky-sounding names like Medicare Economic Index (1973), then Volume Performance Standard (1990), followed by the Sustained Growth Ratio (1997) all intended to bring Medicare’s fiscal imbalance into sustainability. Reports from the Congressional Budget Office have repeatedly shown insolvency looming in the future. The only difference between the reports of 1997 and 2014 was the date of impending bankruptcy.
Unsinkable USS Medicare. Courtesy of author.
Washington’s attempts to stop Medicare’s slide into bankruptcy have involved cuts to the doctors based on different formulas. I have to ask why cuts are invariably directed to medical services and not to the bureaucracy, specifically the regulatory apparatus. The latest series of cuts, enacted through the Sustained Growth Ratio or SGR had such devastating effects on patient care services that Congress itself had to put the SGR on hold by repeatedly passing the so-called DocFix, 17 times since 2003.
Obamacare Gives Coup de Grâce
Obamacare legislates $716 billion in cuts from the Medicare reimbursement schedule. In effect, Obamacare applies the SGR to all twelve years that it was on hold. The result would be waiting lines for senior care 10 times as long as the ones that our veterans wait and die in. The effect would be so damaging to patient care that everyone agreed – public, Democrats, Republicans, and talking heads – something had to be done, immediately.
Medicare Access and Children's Health Insurance Program Act
Congress “fixed” Medicare this month by passing the Medicare Access and Children’s Health Insurance Program Act, or MACRA. This bill passed by huge majorities: 392-37 in the House of Representatives and 92-8 in the Senate. When something passes by those wide margins, it doesn’t necessarily make it right, just politically acceptable. MACRA stops the poisoning of Medicare. It does nothing to cure the patient.
MACRA repeals the SGR, presumably repeals the huge Obamacare cuts, and provides for 0.5 percent annual increases in the reimbursement schedule for Medicare doctors. It also claims that it will tie reimbursements for doctors to patient quality metrics, something neither Congress nor doctors themselves for that matter have ever been able to do.
It is certainly impolite to interrupt the love fest of both parties and the White House over what the president called a “milestone for physicians, and for seniors.” I am a doctor not a politician. Doctors are required to tell the patient the truth, which is sometimes not what the patient wants to hear.
Through MACRA, Congress stops the poisons that it has been administering for over 40 years. It does nothing to fix Medicare’s fiscal dilemma. Medicare is spending more than it can afford. Entitlement programs are overspending, which was why President Barack Obama said he started healthcare reform in the first place.
MACRA adds over $140 billion to the deficit and hopefully allows Medicare to avoid bankruptcy, for the moment. All MACRA really does is kick the can down the road so our children will have an even bigger bill to pay.
MACRA Payment Schemes
Under MACRA, physicians must choose one of two payment systems: a Merit-Based Incentive Payment System, or an Alternative Payment Model. Both are complex, meaning they will require an even bigger bureaucracy to administer and oversee, which of course means more money diverted from care providers to bureaucrats. Both payment plans continue the perverse incentives that have plagued healthcare for decades.
Every doctor knows that curing a patient starts with knowing the cause of illness.
Why is Medicare always in fiscal imbalance? Why does it keep spending more than it takes in? A student in Economics 101 can answer that question. No system can be in balance, can be stable, when there is unlimited demand and limited supply.
Any attempt to fix, as in cure rather than palliate, Medicare must also know precisely where all that money goes, over $500 billion a year? How dollar-efficient is the system? How many dollars go to value-adding activities and how much is spent on non-value-adding steps? Washington has neatly sidestepped this question ever since Title XIX Social Security Act created both Medicare and Medicaid.
When we have hard facts and solid evidence, only then can we begin to cure sick patient Medicare and his equally critical big brother, patient Healthcare.
Dr. Deane Waldman MD MBA is author of award-winning “The Cancer In Healthcare;” Professor Emeritus of Pediatrics, Pathology and Decision Science; and Adjunct Scholar (Healthcare) for the Rio Grande Foundation, a public policy think tank. Dr. Deane also sits on the Board of Directors of the New Mexico Health Insurance Exchange, as Consumer Advocate. Opinions expressed here are solely his and do not necessarily reflect the opinions of the Board.
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