Wednesday, September 19, 2012

More Silliness from Peter Orszag

Former Obama Administration budget official Peter Orszag uses his weekly column in Bloomberg to make claims that premium support proposals will result in fewer doctors accepting patients in traditional, government-run Medicare.  But the article includes several faulty premises, starting with the fact that “Medicare represents such a large share of the health care market.”  The word “market” appears frequently in the Orszag article – but the term has very little to do with government-run Medicare.  A program like Medicare – which relies upon government-dictated, top-down, “take it or leave it” pricing structures – is NOT a market, under any true sense of the term – it’s tantamount to economic dragooning of medical providers.

If Orszag and others on the Left want to argue that Medicare IS a market, ask them how they would respond if half of all doctors, hospitals, or both suddenly decided to drop out of the Medicare program.  Does anyone really believe that liberals would allow such a scenario to happen?  Of course they wouldn’t.  And given the trillion-dollar budget deficits under President Obama – making new money to finance reimbursement rate increases virtually impossible to find – Democrats would instead propose new forms of coercion to keep doctors from leaving the Medicare program.  Orszag may talk about markets all he wants, but it’s patently obvious that no Democrat would ever allow a true marketplace for provider participation to develop within Medicare.

Second, if premium support really does result in some percentage of physicians leaving traditional Medicare, seniors could choose a Medicare Advantage plan to maintain access to their favorite doctors and hospitals as part of that plan’s provider network.  Orszag claims that “the existing Medicare program already offers Medicare Advantage plans, so perhaps anyone who wants private insurance already has it.  But then, what is the point of Ryan’s Medicare reform?”  Well, one point is that premium support would mitigate the effects of Obamacare’s $300 billion in cuts to Medicare Advantage, which will reduce the program’s enrollment by half and plan choices by two-thirds.  So seniors would actually have a true choice in health plans under premium support, which would fix the damage Obamacare is about to inflict on the Medicare Advantage program.

That’s not the only part of Obamacare Orszag conveniently left out.  His piece ignores entirely the fact that both the Congressional Budget Office (which Orszag himself used to head) and the non-partisan Medicare actuary believe that Obamacare will result in providers becoming unprofitable and leaving the program.  Here’s what the actuary had to say:

In the Office of the Actuary’s April 22, 2010 memorandum on the estimated financial effects of the Affordable Care Act, we noted that by 2019 the update reductions would result in negative total facility margins for about 15 percent of hospitals, skilled nursing facilities, and home health agencies.  This estimated percentage would continue to increase, reaching roughly 25 percent in 2030 and 40 percent by 2050.  In practice, providers could not sustain continuing negative margins and, absent legislative changes, would have to withdraw from providing services to Medicare beneficiaries, merge with other provider groups, or shift substantial portions of Medicare costs to their non-Medicare, non-Medicaid payers.

Unless and until Orszag wants to acknowledge what his former colleagues at CBO and elsewhere have said – that Obamacare itself will reduce access to Medicare providers by as much as 40 percent over the long term – he has little right to cast stones elsewhere.  We should take no lessons from someone who, given his VERY selective memory, appears more interested in scoring cheap political points for his former boss than in having a substantive policy discussion.