Bigger Cuts for Medicare

See my previous post on what has to happen for the Affordable Care Act to reduce the deficit. An American Action Forum analysis reports that it’s worse than I thought:

[T]he CBO estimates that the ACA will cut Medicare spending by $741 billion over the next 10 years, up from the roughly $500 billion advertised at passage (see page 5, table 2 — Medicare and Other Medicaid and CHIP Provisions). This change reflects both the fact that the budget window is different, and that in the absence of cuts, Medicare is growing quite rapidly. Accordingly, the size of the cuts [is] growing rapidly as well.

Comments (7)

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  1. Alex says:

    This will come primarily from fees to doctors, thus reducing the availability of doctors to Medicare patients.

  2. Ambrose Lee says:

    Cutting payments to doctors to give the appearance of financial balance? That’s change we can believe in.

  3. Otis says:

    Medicaid is the real variable in the deficit picture.

  4. Devon Herrick says:

    The CBO estimated about $523 billion in Medicare cuts over the first 10 years of the Affordable Care Act. The Medicare chief actuary pegged the total at $575 billion. Now, the American Action Forum (headed by a former CBO director), put the total even higher. The Medicare chief actuary is correct that doctors will not continue to treat Medicare enrollees for fees that are lower than Medicaid. Many of these doctors will abandon traditional medical practice for retainer-based models. When physicians convert to retainer-based (i.e. concierge) practices, about 90% of the Medicare caseload is given the option of either 1) paying an annual retainer equal to $100 per month; or 2) finding a new doctor that will see them for the pittance Medicare pays.

  5. Dr. Steve says:


    The government will not allow concierge medicine to continue. They can and will stop doctors from independent practice.

    Even today non-participating doctors cant charge medicare patients fees above government approved rates. But there will be other measures taken to force participation.

  6. Eric says:

    Interesting how conservatives are trying to have it both ways. They argue that the Medicare cuts that make the bill deficit-reducing won’t happen for political reasons (and as such, we have to assume that the bill increases the deficit), while simultaneously demagoguing about how the scary Medicare cuts will be bigger than expected.

  7. Bob Hertz says:

    As far as I know, the ACA proposes only cuts in fees. It does not propose any cuts in utilization.

    George Halvorson nailed this in his 1996 book Strong Medicine. Moderate fee cuts mean nothing if no one controls utilization.

    Also, fee cuts are almost never across the board. If one procedure has its fee reduced, then doctors and hospitals simply migrate to the procedures which are still profitable. Many researchers have documented this process.

    The whole fiction of paying for ACA with Medicare fee cuts was depressing. It gave the Republicans a big tool to get elderly votes in 2010, and it won’t even happen anyways.

    A real fee cut, crude as it is, would be to set a hard budget for Medicare. If the budget is maxed out after 11 months, then no more care is paid for outside of emergencies.

    In Canada there are doctors who routinely take off the month of December, because the single payer system has no more money for the year.

    Is this good medicine? No, but that is not the question. It is a clear form of cost control.

    America will probably have to accept a hard budget, but I do not know how the political system will allow it to happen. Comments welcome!