Medicare cuts and other D.C. fairy tales: Obama's so-called 'savings' are pure political fantasy
By Dr. David Gratzer
Thursday, December 3rd 2009, 4:00 AM
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It's that time of year again: Washington is talking about cuts to Medicare. President Obama's health-care reforms depend on them - up to $400 billion worth over 10 years.
As a psychiatrist, I'll break the bad news gently: Medicare cuts are like Santa Claus and his flying reindeers - often talked about, never actually seen.
The federal government has long fought to control Medicare spending. Today's Medicare program costs taxpayers twice what it did 10 years ago. But whenever lawmakers from either party agree to savings, Congress reverses course, fearing cuts will anger voters on Election Day.
Congress reversed planned cuts in 1999. And 2005. And 2004. And 2006. In fact, since 1997, when members of both parties agreed to automatic cuts if spending rose faster than population and economic growth, the program has been cut just once, in 2002.
At one point, Congress voted to postpone a 10% cut in Medicare doctors' fees from December 2007 until mid-summer 2008. Just weeks later, House Speaker Nancy Pelosi attacked the rescheduled savings as "exactly the wrong medicine."
So come July 2008, despite massive deficit projections, Congress voted to abandon the planned savings altogether. President George Bush vetoed that decision - only to have Congress, both parties, override him.
Turns out, there are only two ways to credibly cut Medicare costs. Option one: reengineer the program with a focus on cutting demand by improving the overall wellness of beneficiaries. This is a vital, longer-term project that so far nobody is touching with a 10-foot pole.
Option two: cut supply by rationing care, which makes patients - namely, politically active elderly voters - angry. So it's no surprise that the cycle of cuts and reversals has continued with almost comic certainty. In fact, just days ago, the House of Representatives passed a bill reversing Medicare cuts slated for 2010, with White House support.
Yet as you read this, President Obama and Democrats in Congress insist they can pay for half of Obamacare's new spending on health care with . . . you guessed it: future, unspecified, scheduled cuts to Medicare doctors' fees, drug payments and hospital reimbursements. Pelosi has put aside last year's worries; now she believes Washington can find $400 billion over 10 years - without the likes of herself interfering.
How? Obamacare is built on a gimmick. The White House apparently believes America's grandmothers won't mind hundreds of billions of dollars worth of Medicare cuts if a committee of health-care bureaucrats is in charge, deflecting responsibility for ruthless decisions that politicians and doctors can't be trusted to make. In the Senate bill, the committee is called the Independent Medicare Advisory Board.
This strategy has already failed in Britain, where politicians desperate to tame rising health costs created a National Institute for Health and Clinical Effectiveness. Several NICE rulings to cut coverage for expensive treatments have since been challenged or reversed. And as a result, health inflation lives on in Britain, because their officials, just like ours, don't have the guts to tell millions of grandmothers to suffer just to balance a budget.
And so, supporters of Obama-care who think their plan is paid for with Medicare savings, beware. Don't worry about leaving the milk and cookies out: He's not coming, and neither are the cuts.
Gratzer, a physician, is a senior fellow at the Manhattan Institute and author of "Why Obama's Government Takeover of Health Care Will Be a Disaster."
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You have all been warned.
