CMS actuary doubts Medicare insolvency estimate

Medicare trustees may have overestimated the chances of true productivity gains in healthcare, according to Rich Foster, CMS's chief actuary, during a panel discussion at the American Enterprise Institute earlier this week.

Trustees projected that value-based purchasing, or physicians being paid according to the quality rather than quantity of their care, would save the program up to 25 percent, and extend its solvency from 2016 to 2024, according to AEI coverage at MedPageToday.

Foster, however, doubts the program will ever see the level of efficiency that Trustees are counting on. He did acknowledge that new care delivery models, such as accountable care organizations (ACOs), could reduce duplicative care, and save the program anywhere from 15 percent to 30 percent. But he still noted that making drastic efficiency improvements in the complicated, multi-layered healthcare environment is unlikely.

"Healthcare treatment is pretty labor intensive," Foster explained. "A lot of the treatments are customized for individuals, and if you think about it, in that setting, it's difficult to achieve some of the productivity adjustments achievable in area like manufacturing."

He also was skeptical that productivity gains could be continually garnered over time. "I've suggested--no I've threatened to your faces--the likelihood that these productivity adjustments may not work," Foster told the panel. "[Productivity improvements] can happen for some period of time. I'm less clear that that can happen forever."

In his comments in the actual Medicare trustee's report, released late last week, Foster also indicated that the Affordable Care Act's longer-term cuts will actually bring Medicare pricing below provider's costs, and drive clinicians to refuse Medicare business.

To learn more:
- read the MedPageToday report
- listen to Foster's comments at AEI
- read a National Center for Policy Analysis article

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