Cause and Effect: Why People Don’t See the Impact of Provider Cuts

A survey conducted this November by the PricewaterhouseCooper consulting firm found that nearly 70 percent of the American public wants President Obama to make curbing healthcare costs his top health policy priority in his second term.

OK, that’s reasonable.  Everyone agrees we need to keep finding ways to contain cost growth.

It’s in the details of the survey, though, that logic starts to get a little fuzzy.  Half of all respondents said their priority area in which to make spending cuts would be in payments to physicians and hospitals.  Next, at 42 percent, came cuts in health information technology investments.

As cost-cutting mechanisms go, these, well, don’t work.  Cutting Medicare and Medicaid provider payments, which are already below private insurance reimbursement levels, would have disastrous effects at a time in which the health reform law is increasing the Medicaid population and 10,000 people per day are turning 65 and becoming eligible for Medicare.

As PwC wrote in reporting the survey results, “This would leave a growing patient population with fewer providers – and it could translate to smaller access networks for managed care providers.”

And reducing support for health information technology would be counterproductive, particularly when providers that are utilizing HIT have shown great strides in cost-efficiency and improved outcomes.

We can’t really blame the public at large for these views on potential healthcare spending cuts when they see exchanges like the one on yesterday’s installment of the ABC Sunday talk show “This Week.”  Republican strategist Mary Matalin had the following dialogue with New York Times columnist Paul Krugman regarding the White House’s proposed budget cuts.

KRUGMAN:    One thing that got me mad was when (Congressman Jeb) Hensarling was talking.  He said, well, the President hasn’t proposed any specific spending cuts.  Look at that proposal.  It’s got very specific cuts…There are major Medicare cuts.  There are cuts mostly falling on providers, not on beneficiaries….

MATALIN:       Professor, if you cut a provider, that doesn’t cut a beneficiary?  Is that an economic reality?

KRUGMAN:    No, it doesn’t, actually.

MATALIN:       If you cut providers, you’re going to cut beneficiaries.

KRUGMAN:    Not true.  Not true in this case.

If a Nobel Prize-winning New York Times economic columnist claims there is no linkage between reimbursement and access, is it any wonder that a sizeable share of the public believes there will be plenty of physicians willing to see rapidly increasing Medicare and Medicaid populations, even when payments don’t cover the cost of care.