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Another Obamacare Expert-Enthusiast

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Princeton Professor Uwe Reinhardt was my guest Tuesday (Transcript here). Professor Reinhardt is widely regarded as an expert on health care economics and is a backer of the Obamacare effort.

Professor Reinhardt dismissed the concerns of doctors that they will see their reimbursements cut next year:

HH: What about doctors and reimbursement rates, Professor Reinhardt? Will they be having their reimbursement rates cut?

UR: No. The answer is no. They never were cut, and they won’t get cut. What happened is in 1997, the Congress passed what they called a sustainable growth rate formula. It’s literally a mathematical equation, which is pegged on the growth of GDP, and a variety of other factors. And with that, they set for the physicians a budget for the coming year for Medicare, and said basically, we can sustain and afford as a nation a total budget for doctors of so many billion. Now when doctors bill more volume than had been budgeted, then next year, suppose the doctors bill 3% more volume than had been budgeted, then next year what would have been the fee update will get cut by 3%. That was the original idea. Now what actually happened, every year, for the most part every year, doctors exceeded the volume that was budgeted, because the fees were controlled so doctors can make more money by expanding volume-tests, imagining and so on. And each time, they exceeded the budget, and each time, they were supposed to take a hit for last year’s budget excess. But the Congress never imposed the hit on them, and banked it. So by now, you know, according to this equation, the doctors owe the rest of society a 20% fee cut. Now you and I, and every dog in Oregon knows this will never happen.

But if doctor’s reimbursement rates aren’t cut –and many doctors called and e-mailed the show to challenge the professor’s assertion– then the representations about the bill’s budget neutrality are completely bogus. The professor agreed with this obvious conclusion:

HH: Well, I know that, but President Obama said he wouldn’t sign a bill that was other than deficit neutral. And so if they’re scoring it based upon this massive cut to physician reimbursement, it’s not an honest scoring, is it, Professor?

UR: No, none of the scoring is really very honest.

HH: Oh, that’s interesting.

UR: No, you know, the American people are really weird and funny people. They like these games. What the way the Congressional Budget Office calculates the so-called savings, there is a projection of what health spending would be in the next ten years if no law were ever passed again. In other words, everything is frozen the way it is today, and then what would spending be, which is a total guesstimate, and even that is a kind word.

HH: So is there, is it a deficit neutral bill that’s before the Senate right now, Professor?

UR: According to the rules that the Congressional Budget Office works by, yes it is.

HH: But under those rules, they count those physicians cuts which aren’t going to happen. So what do you really think is the cost of Obamacare?

UR: Well, I think they claim that it’s actually cutting the deficit over the next ten years, and much more thereafter. I personally doubt that the deficit will in fact be cut. For one, I mean, this physician fee cut, even if they put it in the bill, which is convenient, you and I know this is not going to happen, and some other cuts won’t happen. So it will in fact, when the ten years are over, this bill will have been not added to the deficit? I doubt it very much. It probably will. However, and this is what citizens should keep in mind, President Bush gave the elderly highly subsidized drugs. In the coming decade, that drug bill will add $1.2 trillion dollars to the deficit. President Bush didn’t even worry about financing. He just said financing? That’s not for me.


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