Rep. Chris Van Hollen, the ranking Democrat from Maryland, went on the attack against committee chairman Paul Ryan’s “Road Map” plan, which is a long-term proposal to make entitlement spending solvent.
Van Hollen pressed Foster on whether Ryan’s plan would work, prompting Foster to point out that one of the biggest problems in health care now is that most new technology that is developed increases costs rather than decreasing it.
“If there’s a way to turn around the mindset for the people who do the research and development … to get them to focus more on cost-reducing tech and less on cost increasing technology, if you can do that then one of biggest components of [increasing costs] turns to your side,” Foster said. “If you can put that pressure on the research and development community, you might have fighting chance of changing the nature of new medical technology in a way that makes lower cost levels possible.”
Foster said: “The Road Map has that potential. There is some potential for the Affordable Care Act price reductions, though I’m a little less confident about that.”
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Why is this first coming out now? Foster published his reports during the Obamacare debate process, but the Democrats were not very anxious to give his reports wide coverage as they shot down many of promises made about the progressive health care program.
Much of the discussion in the hearing, especially during the question-and-answer period with Ryan and Van Hollen, involved the impact of the payment rates from the government to physicians and health-care providers for Medicare recipients.
Congress has for years passed what is known as the “Doc Fix” to avoid cutting payment rates to providers. It would cost more than $200 billion to lower payments for the next 10 years to the rates recommended under the Medicare Sustainable Growth Rate.
Ryan and others have charged that the $575 billion in cuts to Medicare included in Obamacare cannot be double-counted as both going into the Medicare trust fund and helping to pay for the expansion of Medicaid. Foster’s answer was that the plan robs Peter to pay Paul.
“My answer is a definitive yes and no,” Foster said when asked if Obama’s health law double-counted.
The funds go from the Medicare trust fund to the Treasury general fund, and then can be used to pay for Medicaid. But at some point, the trust fund will need the money it lent out, perhaps when it comes time to pay recipients out of the fund.
“[A] hundred dollars can’t be spent as $100 toward health-care reform and as $100 toward health-care expenditures. That takes $200,” Foster said. “The key thing is when you go back to pay that $100, then Treasury has to find that $100 some other place.”
According to Foster, Obamacare will by necessity cause costs to rise, because people will be entering the system due to the mandate and they will be getting medical services they would have otherwise gone without.
Costs could also increase if Medicare cuts to hospitals, nursing homes and home health agencies turn out to be politically unsustainable over the years. The actuary’s office has projected those cuts would eventually force about 15 percent of providers into the red. The health care law funnels savings from the Medicare cuts to provide coverage to uninsured workers and their families.
As for people getting to keep their health insurance plan, Foster reiterated his projection that about half the people in private Medicare Advantage plans will have to find other coverage (about 7 Million people).
The health care law gradually cuts generous government payments to the plans, so insurers are expected to raise premiums or even drop out. And the main reason seniors have flocked to the private plans is that they offer lower out-of-pocket costs.
Medicare recipients who lose private coverage would still be guaranteed coverage in the traditional program, but they would likely have to take out a supplementary insurance plan for gaps in their coverage.
Below is a partial video of Foster’s testimony
Not mention in today’s testimony was the part of the Actuary’s office detailed report that predicted Obamacare drive doctors away from accepting medicare, and would expand insurance coverage to an estimated 34 million people who now lack it creating a demand for services that could be difficult to meet initially and could lead to price-increases, cost-shifting and/or changes in providers’ willingness to treat patients with low-reimbursement health coverage.
The Actuary estimated that within ten years 15% of all medicare providing doctors will become unprofitable as a result of Obamacare’s payment reductions. It also says the Independent Payment Advisory Board has been given the impossible task of keeping medical costs below medical inflation. Though the report doesn’t officially say this the only way to make up that difference is to limit what is covered through rationing. Many doctors to quit seeing Medicare patients entirely. Long term due to Obamacare the percent of medical practices that will become unprofitable will grow to 25% by 2030 and 40% by 2050 if the health reform law is implemented as written.