As Supercommittee Games End, Some Bets on Future of Health Care

BY Jason Kane  November 21, 2011 at 4:19 PM EST


Photo by Getty Images

At the start of this Thanksgiving week, Washington is gridlocked in all the expected places: the beltway, grocery aisles and — most of all — in Congress. Late Monday afternoon, the panel charged with cutting $1.2 trillion from the federal deficit officially announced defeat.

So we decided to keep the predictions flowing by asking Mary Agnes Carey of Kaiser Health News to give us her best guesses on how much the health care industry will change in the post-supercommittee world.

Executive summary: Buckle up for more of the same unless Republicans win big in 2012. Then all bets are off.

What’s the likelihood these automatic cuts will actually go forward in 2013?

MARY AGNES CAREY: (Chances are 2 out of 5) Not very likely. It’s 2011, we have another whole year, an election and a lame-duck session for Congress in 2012. That’s plenty of time to reverse an automatic cut if, in fact, that’s what we end up with. And there will be a lot of resistance around those automatic cuts. Of course for Medicare, the cuts would be limited to providers and limited to 2 percent, and Medicaid would be exempt. But a hospital, for example, would get a two percent cut on top of payment reductions in the health law. And they would say, “2 percent is way too much for us.”

What are the chances of a major overhaul of Medicare in the next few years?

CAREY: (Chances are 1 out of 5) I think we’ll see a lot of focus on cost containment for the program. Of course, in the health law there are several demonstration projects and projects designed to change the incentives in Medicare. But I think you’ll see more of a focus of linking payments to the quality of care provided, and trying to do things a little differently than they are now. For much of the fee-for-service program, that’s the traditional Medicare program, a lot of providers are paid by the service. And a lot of players in Medicare want to shift that away to have more a focus on the overall care delivered, how that can contain the cost, how you can change the incentives, especially with so many millions of baby boomers coming into the program. That discussion is ongoing now.

Any time you talk about changing Medicare, it’s a politically volatile topic. Let’s not forget that seniors are a very strong voting group. And the provider groups that serve the Medicare beneficiaries — the hospitals, the doctors, the pharmaceutical companies, the durable medical equipment providers and so on — these are really strong constituencies that work together to stop any major cuts in Medicare.

What are the chances Medicaid will be majorly overhauled in the next few years?

CAREY: (Chances are 2 out of 5) Any major changes would be strongly opposed by Democrats, by President Obama, by the groups that serve the Medicaid beneficiaries. Medicaid enrollment has gone up during the recession, and there had been additional federal funding that stopped this year to help governors meet those costs. But the biggest pushback to major cuts to Medicaid is that advocates would say, “Now we’re expanding the program in 2014 with the health law. Why would you want to reduce the roles now? Why would you want to kick people off the program now? They’ll just come back sicker in 2014.” So I think there will be a very strong pushback against that as well.

What are the prospects for major changes to other areas of the health care industry in the years ahead — programs that conduct research and prevent disease, for example?

CAREY: (Chances are 2 out of 5) The sequester protects Medicare providers, so hospitals and physicians are limited to 2 percent cuts. Medicaid is shielded from cuts in the sequester. But, if you limit certain groups to two percent, then to make your cut, you’ve got to go after other programs that could get hit more severely. For example, funding for public health — for the Centers for Disease Control and Prevention, funding for medical research, funding for HIV-AIDS. In particular, I’m talking about the Ryan White program that provides a lot of assistance to people to help them get life-saving medication. Funding for disease prevention. Those are areas that could really get hit in 2013, so I think you’ll see a lot of players across the spectrum in health care lobbying Congress really hard to stop those cuts. But there’s a lot of political power behind a lot of these groups. They’re very organized, they know how to push their issues. They understand that there’s pressure on lawmakers to control spending, but they also have strong constituents and they know how to make their message on Capitol Hill.

Some of the proponents of these programs could argue they’re cost effective to provide this care, and not providing it will simply drive up health spending in other areas. So they’ll make their cost-benefit analysis for sure.

How likely are we to start containing costs in the coming years?


CAREY: (Chances are 2 out 5 for the immediate future; Chances are 3 out of 5 for the next 10 years) That is a great question and it’s one of the hardest ones to answer. We’ve spoken to all sorts of health analysts who’ve said this is unavoidable, that we have to change the conversation, we have to change the incentives. And growing federal deficits are certainly making the case to control costs, as health care costs in the public and private sectors continue to grow. As those pressures increase, the counter pressure to control costs will still be there.

But it will call for major changes from every part of the health care system — from the people who provide the care to the people who receive the care. Those pressures aren’t going away, and will force people to look at the health care system in a different way and try different things with the hope that you can contain costs.