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Republican Medicare Mess: Hospitals reveal an ugly truth, will Paul Ryan listen?

What are Paul Ryan and Tom Price going to do when they wake up one morning and their simple plan to repeal Obama care turns into a nightmare? Republicans have a major problem, and it all starts with their tendency to simplify and demonize programs that are much more nuanced than these politicians dare admit. Both men want to privatize parts of Medicare, somehow convincing themselves and their adherents that if a private insurance company offers the same coverage with the same misguided payment structure then the cost of Medicare will somehow be reduced. And both men want to immediately repeal Obamacare, similarly convincing themselves and many Americans that its elimination will herald a better and cheaper health care system, a feat of pure magic since medical care was expensive and restrictive with poor quality outcomes even without Obamacare. Representative Price even suggested that Obamacare has shoved a wedge between doctor and patients, and as a practicing physician myself (he is a doctor, but an orthopedist who is years out of practice) I have no idea what he is even talking about. Obamacare expands coverage, but has little to no impact on the everyday lives of doctors or their patients. It is also run by private insurances, not any public program. And what both men fail to grasp is that it has saved Medicare large amounts of money, something that will be reversed once the law is repealed.

It is a great irony that now the American Hospital Association (AHA) is crying foul and declaring that Obamacare’s repeal will lead to the demise of many hospitals and the loss of tens of thousands of jobs in every congressional district in America. How can this be? Paul Ryan and Tom Price insist that Obamacare is bad for health care, and the hospital lobby should be on their side. But the AHA does not see it that way, and its solution to Obamacare’s repeal will completely undercut Ryan’s plan to save Medicare. Thus, these Republicans have a dilemma on their hands, one that they seem not to genuinely grasp.

This is why. Despite what Republicans claim, Obamacare was crafted by and designed to help many of the largest lobbyists in Washington, including the AHA and the health insurance industry. Insurance companies sought broader coverage, which is what Obamacare delivered, and in return they promised to provide “gifts” to patients like not considering pre-existing conditions and extending care to young adults under their parents plans. Now the Republicans want to force them to continue providing the gifts, while eliminating the broader coverage that pays for those gifts. And Hospitals made a similar deal, one which is causing them to lobby all the Republicans in congress and the administration, and one that unearths the hypocrisy and foible of what Ryan and Price are purporting to accomplish.

As mentioned, Obamacare has saved Medicare a ton of money and extended the Medicare trust fund. One way this has occurred is that Medicare has cut dramatically the amount of money it pays hospitals while it fines hospitals if Medicare patients are re-admitted too quickly. In compensation, hospitals received a gift from Obamacare: more insured patients. By expanding Medicaid and decreasing the number of uninsured people (many of whom suffer from multiple medical conditions and over-utilize the hospital), hospitals would no longer have to provide as much free care, since more of the sickest people will have insurance. Free care is a huge financial burden for hospitals, and they were happy to trade Medicare cuts for less free care. Hence their embrace of Obamacare.

So, like with insurance companies, the Republicans are threatening to take away the gifts that Obamacare has given to hospitals (fewer uninsured patients) while continuing to make them pay a high price (lower Medicare reimbursement). That is why the AHA is now crying foul. And what they are demanding is that Obamacare’s repeal needs to be coupled with a rise in Medicare payment to hospitals. Such a demand puts Paul Ryan in a tough spot.

Speaker Ryan has stated unequivocally that Medicare costs too much and it needs to be trimmed back. Now, by repealing Obamacare, he either alienates the AHA and potentially many voters when hospitals close across the country, or he increases Medicare payment to hospitals which will reverse the cuts to Medicare orchestrated by the Obama administration and set it on a road to financial peril. If Republicans re-institute their payments to hospitals, Ryan and Price will have to find cuts elsewhere to keep Medicare solvent, and it is unlikely that the rank and file Republicans will buy into their privatization plan because it only works by cutting people’s coverage, not the best political move.

Maybe this is an opportunity for Speaker Ryan and Secretary Price to actually confront the problems dragging down our health care delivery system that prompted the passage of Obamacare in the first place. You can’t fix Medicare by simply moving its problems to the private sector; reformers need to acknowledge that there is $750 billion annually in wasted health care generated by hospitals, pharmaceutical companies, and specialist doctors, and that real changes must curb some of that squander. They must accept that for hospitals to thrive in a sensible health care delivery system they need to be reimbursed for home care and other innovative strategies that save money and increase outcome, and that they also need to have a maximum number of people who have health insurance. And insurance companies, including Medicare, need help so that they do not have to pay high price tags for wasteful tests and procedures, that primary care again becomes the focus of health care delivery, and that they can negotiate with drug companies for the best prices.

The Republicans indeed are facing a dilemma and a crisis: either confront reality, or bow again to special interests. The former will enable both political parties to join forces to craft a health care law that may accomplish so much of what Obamacare did not. While the latter will return us to business as usual, with Medicare dragging down our nation’s financial security, and special interests being paid large sums of money to deliver substandard health care. Let’s hope Paul Ryan is as smart as everyone seems to think he is and that he actually wants to cut Medicare costs while improving the quality of care.

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