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Medicare actuary weighs in with predictable caution

Here’s the takeaway: We now have a worst-case scenario from actuaries that supports health care reform. If the bottom line in a worst case scenario is basically break-even while giving millions of uninsured people insurance, it makes sense not only to do it, but also to use the data to help shift the focus to wellness and prevention, saving still more money–and more lives.

The report of the Center for Medicare/Medicaid Services Actuary was released this morning and is now being used by Republicans in the Senate to try and play a death knell for health care reform. Having read it, I don’t see death for health care reform, but I do definitely see a worst case scenario with some bad news for the CLASS provisions — the voluntary buy-in for long term care. Actuarial reports should be treated as a worst-case scenario, because actuaries are typically conservative and base estimates on known data. They do not EVER estimate unknowns. Even so, the impact is relatively mild: .1% (one/tenth of one percent) increase.

Overall, they estimate savings through fiscal year 2014 and moderate spending growth through 2019. They did not estimate past 2019. The one issue I have with all of these estimates is that it does not estimate on a per-capita basis. If it did, we would have a much more reasonable idea of what real costs and savings are, because by 2019, many baby boomers will be eligible for Medicare. It also includes spending for covering millions more Americans but doesn’t really break it down on a per-person basis.

Bullet points:

  • Rationing – No market disruptions are anticipated by these reforms. At worst, the actuary estimates that some providers may negotiate higher fees which could cause demand not to be met. There is some expectation that providers may accept patients with private insurance and fewer Medicare/Medicaid patients, but their overall conclusion was that it would not significantly impact service availability.
  • Key cost-saving provisions are not factored into the actuary’s conclusions because they do not have enough data to make reasonable estimates. Those provisions include the focus on preventative and wellness provisions, the impact of the uninsured having access to medical care before they are desperately ill and in need of urgent care.
  • Outcomes-based medical practices were underestimated in the report. In fact, savings could be substantial. “…while substantial savings could be generated by a comparative effectiveness board with authority over payment and coverage policies.” (page 12)
  • Dim future for CLASS provisions – The actuary concludes that the voluntary long-term care insurance program included in the bill will result in some small savings in the first five years (because no claims can be filed), but is unsustainable after that because of the likelihood of adverse selection.
  • Immediate Reforms – No significant impact, though they note that the high-risk pool will be exhausted by 2012 (which would be incentive to push effective dates of other reforms forward).
  • No adjustment for anti-fraud measures This surprised me, given the amount of fraud currently in the Medicare system. Changing the payment methods for devices and home health care (two of the most rampant fraud areas) should result in some significant cost savings.

Read more at The New Republic.

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