CBO Gives Obamacare an Epic Fail
One of the key unanswered questions about the health law – highlighted in an interview then-Medicare Administrator Donald Berwick gave back in May – was whether and how Medicare could successfully contain costs, given that Medicare spending has skyrocketed virtually unabated since the program’s creation in 1965. An analysis from CBO released today examined this very issue, studying literally dozens of Medicare demonstration projects implemented over the years. In the brief, CBO makes crystal clear that Medicare, and specifically its fee-for-service system, isn’t the solution – it’s the problem:
The evaluations show that most programs have not reduced Medicare spending: In nearly every program involving disease management and care coordination, spending was either unchanged or increased relative to the spending that would have occurred in the absence of the program, when the fees paid to the participating organizations were considered. Programs in which care managers had substantial direct interaction with physicians and significant in-person interaction with patients were more likely to reduce Medicare spending than other programs, but on average even those programs did not achieve enough savings to offset their fees….
Demonstrations aimed at reducing spending and increasing quality of care face significant challenges in overcoming the incentives inherent in Medicare’s fee-for-service payment system, which rewards providers for delivering more care but does not pay them for coordinating with other providers, and in the nation’s decentralized health care delivery system, which does not facilitate communication or coordination among providers.
The reasons for these programs’ failure to contain spending were myriad: care was not fully integrated; the new care management fees did not offset the meager savings in Medicare spending; the demonstration programs had too few participants to accurately determine cost savings; some providers may have inflated risk scores to generate additional payments.
The Washington Post called the CBO study a “Medicare fail.” But in reality, the study is an OBAMACARE fail, because it undermines the two prime underpinnings of the entire 2700-page health care law:
- That Congress could afford to pass a massive new $2.6 trillion entitlement, because it would ultimately lead to a slowdown in the growth of Medicare spending; and
- That Medicare could be a model to drive changes to the broader health care system.
The CBO brief annihilates both theories, virtually obliterating the (already shaky) underpinnings behind this massive entitlement expansion.