A similar version of this Health Alert appeared at Forbes.
One of the reasons people rebelled against Obamacare was that it financed the growth of government-run health care through drastic cuts to Medicare. According to the Congressional Budget Office (CBO), Medicare spending will see a $455 billion cut over the next decade, which would finance almost half of Obamacare spending.
Most of the Medicare cuts were simply reducing the fees Medicare pays doctors and hospitals. These payment mechanisms would make a Soviet bureaucrat blush. William Hsiao, the economist who designed the Medicare Prospective Payment System, determined Medicare’s fees as follows:
“He put together a large team that interviewed and surveyed thousands of physicians from almost two dozen specialties. They analyzed what was involved in everything from 45 minutes of psychotherapy for a patient with panic attacks to a hysterectomy for a woman with cervical cancer. They determined that the hysterectomy takes about twice as much time as the session of psychotherapy, 3.8 times as much mental effort, 4.47 times as much technical skill and physical effort, and 4.24 times as much risk. The total calculation: 4.99 times as much work. Eventually, Hsiao and his team arrived at a relative value for every single thing doctors do.” (Rick Mayes and Robert A. Berenson, Medicare Prospective Payment and the Shaping of U.S. Health Care, Baltimore: Johns Hopkins University Press, 2006, p. 86.)
Instead of Fee-For-Service (FFS), Medicare planners and their academic supporters endorse various bureaucratic methods of paying for “value” – as perceived by the government. Indeed, Sylvia Burwell, U.S. Secretary of Health & Human Services, recently expressed the – ahem – aspirational goal of tying 85 percent of Medicare’s payments to value by 2016, and 90 percent by 2018.
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