Elderly and Military Families to Face More Bad Debt in Medicare Cuts Tug-of-War

There’s a radio and TV ad war going on between doctors and health care insurers who serve the elderly and military population. And no matter which side wins, consumers could lose big – suffering limited access to health care or more medical debt, according to health care analysts.

According to an article in Monday’s New York Times (“Doctors Press Senate to Undo Medicare Cuts”), the American Medical Association, which represents doctors, is blaming Senate Republicans in ads for blocking a bill Congress overwhelming passed that would have reversed a 10.6 percent cut in payments to doctors, instead increasing payments by 1.1 percent to doctors who treat the elderly.

The American Health Insurance Plans, a trade group representing insurers, countered last week with ads of their own, urging Congress to stop cuts to Medicare Advantage – something likely to happen if the Senate approved the bill.

The Bush Administration and Republicans opposed the bill Congress sent them before the July 4 holiday because they say it finances an increase to doctors by reducing federal payments to insurance companies that offer private Medicare Advantage plans to the elderly.  Those plans cover about a quarter of Medicare beneficiaries.

With no action on the bill, the Medicare cuts to doctors took effect July 1, as required by the Medicare funding formula. Consequently, any changes to Medicare payments affects fees to Tricare, a federal program fee schedule used to pay doctors who treat military personnel and retirees and their families, according the NY Times article. But the Bush Administration has delayed processing the claims to allow Congress time to reach a compromise.

In the meantime, doctors are cutting back services to Medicare patients. And although studies have repeatedly found that the private Medicare plans cost the government more per person than traditional Medicare, cuts to the private Medicare plans may cause some insurers to limit or cancel plan coverage in some markets.

Either way, hospitals, the elderly and service men and women face more medical debt, says Michael Klozotsky, health care analyst for credit and collection industry advisory firm Kaulkin Ginsberg.  First, because absence of care often leads to more serious ailments down the road, which cost more, he said. Second, because less convenient options for getting care is more expensive.

“Even a compromise plan still puts doctors in a position to face cuts,” Klozotsky said. “That will mean some doctors will still opt out of the program. As a result, to get access to care, military families and the elderly will be forced to seek care farther away from home, which puts financial pressures on them that will eventually lead to bad debt.”