The government determines how much it pays doctors for seeing Medicare patients, so you know that’s going to create problems.
For several years now, doctors have faced a cut in how much Medicare pays them, with the current scheduled cut at 10.6 percent. But the Congress always manages to come up with a temporary bipartisan fix to postpone the pay cuts.
This time, however, Democrats are claiming that Senate Republicans are blocking legislation that would postpone the scheduled pay cut—and they are, by one vote in the Senate. But there’s a reason.
Democrats want to “pay” for the pay-cut postponement by cutting the Medicare Advantage program, and a handful of Republican senators have said no.
The American Medical Association (AMA) is outraged, and has been running ads targeting 10 Republican senators who refused to shut off debate in the Senate, which would have allowed the Senate to vote on the legislation.
So in the midst of this political infighting, let us bring a little background to the debate.
First, both parties want to fix the reimbursement cut. But for some Republicans there is a bigger issue: whether or not there will be a private sector option in Medicare.
Medicare is a defined benefit program, which makes it very hard to reform. Medicare+Choice (which was created in 1997) was a defined contribution plan that allowed Medicare to give a private sector health insurer a flat amount of money to cover a senior’s health care needs for an entire year.
If Medicare is giving a health plan $10,000 a year (to pick a figure) for a Medicare enrollee, that raises a public policy question: Why can’t people just put their 2.9 percent Medicare payroll tax on all earnings directly in their own medical retirement account and hand out that money themselves at retirement?
In other words, Medicare+Choice was considered the first step to moving away from a government-controlled, defined-benefit medical retirement system and putting money and power back into the hands of consumers and patients.
Medicare Advantage has replaced Medicare+Choice, but the goal is still the same: to get the private sector into Medicare.
The Democrats know that, and most of them don’t like it. They would like to neuter Medicare Advantage so that there is nothing left but traditional, government-controlled Medicare.
The Democrats hope that by including Medicare Advantage cuts with the payment fix, they will drive doctors against the health insurers and the Republicans who are trying to retain some semblance of the private sector in Medicare—which is exactly what’s happening. If the various key sectors of the health care system keep fighting over the crumbs, everyone is divided.
What we are seeing is the kind of thing that’s always going to happen when politicians are running health care, which is why it is government that should have its role reduced in health care, not markets.