Understanding Obama's Medicare Cuts

A blog about business and economics.
Aug. 24 2012 5:02 PM

Cutting Medicare Provider Payments Will Probably Hurt Some Patients

Kevin Drum's Q&A on Obama's cuts in Medicare reimbursement rates is a pretty solid explainer, but I don't think his bottom line that "Medicare beneficiaries have nothing to worry about" here is really supportable.

Reducing Medicare's generosity to health care providers is an idea I'm happy to get behind, but there's a reason Medicaid is not considered a particularly high-quality health insurance program and its low reimbursement rates are a key part of it—lots of doctors refuse to accept Medicaid patients. Already Medicare is stingier than private plans, and in large high-income metro areas the most-in-demand doctors often decline to see Medicare patients. Any change at the margin to make it less lucrative for doctors will increase the number of providers who try to shun Medicare patients.

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All things considered, I'm fine with that. American health care providers are very generously compensated by international standards. And there are lots of extra measures we could take to ensure that an adequate level of service is provided even while cutting Medicare payment rates. But if your top priority in life is to make senior citizens' health care as excellent as possible at any price, then Obama's savings are in fact contrary to that goal.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.