California Democrat confirms: payment cuts are benefit cuts

Democrats seem to suffer under the delusion that there is some difference between cuts to Medicare beneficiaries and cuts to Medicare reimbursement payments to health care providers. For example, yesterday TPM reported that while Speaker Nancy Pelosi, D-Calif., and Minority Whip Steny Hoyer, D-Md., were dead set against cuts to Medicare benefits, they did support “the Democratic position on Medicare and Medicaid — to look for savings from health care providers and manufacturers first, not directly from beneficiaries.”

But as House Budget Committee Chair Paul Ryan, R-Wis., has been carefully laying out in a series of hearings, there is no difference between cuts to health care providers and cuts to beneficiaries. That reality is beginning to hit home for some Democrats as Medicaid reimbursements are hitting lows that force hundreds of health care providers in their districts out of business.

Last month, California Gov. Jerry Brown wrote a letter to President Obama asking for flexibility to cut Medicaid spending by 10 percent. The letter puts the White House in a bind since granting California leeway would open the floodgates for other states to ask for the freedom to spend less on Medicaid. Brown also faces opposition from House Democrats who worry that cuts to health care providers would mean cuts to benefits for Medicaid patients. Rep. Dennis Cardoza, D-Calif., wrote to Centers for Medicare and Medicaid Services (CMS) Administrator Donald Berwick last week asking him to deny Brown’s request:

If the proposed cuts in the Medi-Cal rate go through. I am deeply concerned that [some] providers [of services for the disabled] will have no option other than to close their facilities.

This is exactly what CMS Actuary Richard Foster predicted would happen in one of Ryan’s hearings last week:

If we have a job, if we are paid a certain amount for the services or the goods we provide, and what we’re paid ends up not being adequate to keep us in business, then we’re going to go out of business, or turn our business elsewhere. So, the potential access problems could be very serious. We see with the Medicaid program, of course, in some states the payment rates – particularly for physicians – are quite low and the access to care is quite low.

Obamacare already cut Medicare reimbursement rates by over $200 billion: it cut “market basket” payment to hospitals, skilled nursing facilities, and hospice care center by $156.6 billion, it cut home health services by $39.7 billion, and it cut Disproportionate Share payments to hospitals by an additional $22.1 billion.

Now Democrats want to go to the Medicare-provider piggy bank again to fund a debt hike. Keith Hennessey reports that the McConnell-Reid Debt Hike will include another $200 billion in Medicare payments cuts to health care providers.

Foster has predicted that if all of the scheduled Obamacare Medicare cuts go through, 15% of all health care providers will be bankrupt by 2019.

Already rural hospitals that are disproportionately dependent on Medicare and Medicaid patients, like San Joaquin General Hospital, are constantly teetering on the edge of bankruptcy. The higher percentage of government-insurance patients a health provider has, the less likely it is they can stay in business by relying on higher private-insurance payment rates.

The bottom line is that price controls never work. Yes, the government might save money by paying doctors and hospitals less for care, but patients will then suffer from waiting lists and reduced access to care.

Beltway ConfidentialCaliforniaCalifornia NewsJerry BrownMedicaid

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