AAFP Statement: U.S. House Budget Fails to Control Health Care Costs

Monday, April 18, 2011

Statement Attributable to:
Roland Goertz, MD, MBA
American Academy of Family Physicians

"The U.S. House of Representatives’ proposed 2012 budget is part of the needed discussion about controlling federal spending for Medicare and Medicaid. However, this proposal neither controls systemwide costs nor improves care for elderly, disabled and low-income, working families, who are our patients.

"It does threaten to undermine access to care for our most vulnerable citizens and exacerbate the already serious problems --such as fragmentation and duplication of services or skyrocketing health care insurance premiums --in our health care system. It also fails to address the systemwide flaws such as the growth in uninsured Americans or over-reliance on medical subspecialties.

"Arbitrarily limiting financial support for Medicare and Medicaid will not reduce costs, but rather merely shift them to patients and providers. Instead, Congress should continue to demand fundamental changes in the way we deliver health care services --which must include rebalancing our system on primary care medical care, building the primary care physician workforce, implementing the patient-centered medical home, improving quality and paying for outcomes rather than the number of procedures. Without these, changing from the current federal Medicare program to subsidized private coverage or from consistent national standards of care in the current Medicaid program to capped annual block grants without coverage or eligibility minimums will only shift the costs from the federal budget to states, providers and patients. And such a shift could reduce access to care, the quality of care and patients’ use of needed preventive services. It is a formula to protect the federal government from excessive cost increases by making patients and physicians pay them.

"This budget proposes a Medicare premium support plan that eliminates guaranteed benefits and substitutes vouchers to subsidize private insurance for Medicare beneficiaries. This was the goal of Medicare Advantage, a program that actually increased costs by 12 percent because private insurance companies declined to offer coverage without additional government support.

"Moreover, the private insurance industry doesn’t have a track record of controlling costs, enhancing patient or provider satisfaction, or improving quality for public programs channeled through private insurance vendors. Moving millions of elderly and disabled Americans to the private insurance market requires yet-to-be-implemented insurance reforms --patient protection provisions, such as prohibiting annual or lifetime benefit limits, or requiring insurers to cover pre-existing conditions --that are currently opposed by many in Congress. Without such changes, Medicare premium support will push elderly and disabled patients into a market that locks patients out by price, denials for pre-existing conditions, and caps on the value of benefits or rescissions of coverage. This premium support plan also creates an adverse selection, in which healthy Medicare patients will flee to the low-cost high-deductible private plans, leaving the sick and disabled in Medicare, driving up premiums and reducing services.

"A premium support system also requires a private insurance market without the large company consolidation and regional monopolies that exist today. In addition, transparency becomes more important as Medicare beneficiaries develop multiple chronic conditions and cope with increasingly frail cognitive health that affects the ability to make informed choices.

"Medicaid block grants give more flexibility to states but a fixed federal contribution to state Medicaid programs puts the financial onus on states to keep pace with inflation, pay unanticipated demand resulting from economic downturns, and cover unexpected costs due to events such as epidemics or large natural disasters. The main purpose of a federal role in Medicaid was to provide the financial flexibility to states to weather economic stress that necessarily produces greater demand for services at exactly the time that financial resources in the state are most strained. Required to balance their budgets, states likely will cite decreased federal support and use their new Medicaid flexibility to impose higher out-of-pocket costs on the poor, limit covered services, restrict eligibility and impose waiting lists, and slash payment to already underpaid health care providers. In short, the number of uninsured, low-income working families and elderly will increase.

"Without a built-in increase for inflation and for costs beyond the control of the states, block grants could replicate the funding deficit we now see in the Temporary Assistance for Needy Family block grants, which have not increased since their 1996 creation and are now valued at 28 percent less than when they were created.

"Certainly, we must address the spiraling cost of health care and its impact on the federal budget. But we can more effectively do so by ensuring access to care for all Americans, reforming our health care system, and rebalancing services on family medicine and primary care. Congress must address the fundamental flaws in our health care system. Pushing costs onto patients or the states is not the answer."

Editor's Note: To arrange an interview with Dr. Goertz, contact Leslie Champlin, 800-274-2237, Ext. 5224, or lchampli@aafp.org.

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Founded in 1947, the AAFP represents 136,700 physicians and medical students nationwide. It is the largest medical society devoted solely to primary care. Family physicians conduct approximately one in five office visits -- that’s 192 million visits annually or 48 percent more than the next most visited medical specialty. Today, family physicians provide more care for America’s underserved and rural populations than any other medical specialty. Family medicine’s cornerstone is an ongoing, personal patient-physician relationship focused on integrated care.  To learn more about the specialty of family medicine, the AAFP's positions on issues and clinical care, and for downloadable multi-media highlighting family medicine, visit www.aafp.org/media. For information about health care, health conditions and wellness, please visit the AAFP’s award-winning consumer website, www.familydoctor.org(familydoctor.org).