The House Ways and Means Committee recently adopted a significant physician payment reform package as part of an effort to contain the costs of the Medicare program and reduce the federal deficit.
The committee's proposal received bipartisan support and was endorsed by President Bush. It deserves the support of Congress.Medicare is the fastest-growing program in the federal government. By 1994, the Medicare program will consume 12.2 percent of the entire federal budget. We simply can't afford this unchecked growth.
If we do not take reasonable steps now to control Medicare spending, we will be faced with intolerable tax increases and/or benefit reductions in the near future, just to preserve the program. We can avoid such a crisis by adopting the committee's proposal.
The most important part of the reform package is the establishment of expenditure targets for overall Medicare payments to physicians.
It would work very simply: Each year a goal for total spending by Medicare for doctors' bills would be established. This spending goal would allow for normal growth in the program due to inflation and the increase in the number of beneficiaries. If Medicare spending exceeded the target, physician payments in subsequent years would be reduced to make up the difference.
The American Medical Association has vigorously opposed expenditure targets, claiming that they will result in the rationing of health care to elderly Medicare beneficiaries.
In a word, the AMA's claim is "bunk."
At most, the spending targets could only result in limited reductions in the increase in physician fees.
For example, under this policy, physician fees in 1992 would increase by 4.5 percent rather than 5 percent if there is no change in physician behavior. In past years, Congress adopted actual reductions in physician payments as part of deficit reduction efforts, but there was no cry about rationing. How could a 0.5 percent difference in the increase in fees be rationing?
This latest reform effort complements other important steps to curb Medicare costs. In recent years, Congress has moved to control the hospital portion of Medicare, through reductions in payments to hospitals and the establishment of a prospective payment system, which is designed to give hospitals an incentive to control costs. A similar incentive must be provided to doctors.
Medicare expenditures for physician services (doctor bills) are growing at an alarming rate.
Unchecked, these payments will increase by 14.9 percent per year between 1988 and 1994. This compares with a growth rate of 6.4 percent for Social Security and 3.5 percent for defense.
Expenditure targets are a performance standard. They establish an incentive for doctors to control overall costs. Congress controls the incentive and can ensure that rationing doesn't occur.
If doctors don't limit expenditures, then Congress can take annual and measured steps to reduce spending. The proposal provides for the active participation of physicians in setting both targets and subsequent payment increases.
This approach to curbing health-care costs is supported by the major private payers of health-care bills, organized labor, large corporations and the American College of Surgeons.
I am confident that, notwithstanding the AMA's position, it will also be supported by the vast majority of individual physicians, who recognize their responsibility to share in the cost containment effort.