September 2011

What to Expect: More Cuts
By Jim Knaub
Radiology Today
Vol. 12 No. 9 P. 4

So, if Congress’ special 12-person committee can’t agree on and pass $1.5 trillion in budget cuts (over 10 years) by December 23, Medicare provider reimbursement will be automatically reduced by 2%. Well, you can expect those cuts for Christmas because I can’t see Congress suddenly cooperating more than it has since, say, a Republican Congress and the Clinton administration strung together four balanced budgets.

So what does this mean for imaging? Well the three biggest chunks of the 2011 federal budget are defense spending ($895 billion), Medicare and Medicaid ($788 billion), and Social Security ($730 billion). The three of them combined total $2.4 trillion. You can’t significantly reduce government spending without touching those areas. Among these three, Medicare provider reimbursement has been the most inviting target going back to the Reagan administration. And politicians facing reelection are unlikely to tinker with Social Security. Some defense spending cuts seem to be on the horizon. Scaling down the war in Afghanistan and reducing our presence in Iraq would also reduce defense expenditures. But those budget savings simply won’t change the deficit math, so federal healthcare spending will undoubtedly remain a target in the short term.

Looking beyond the short term, the big question for everyone in the healthcare industry is: What is the extent to which reform becomes about reducing healthcare costs vs. reducing federal healthcare spending? Cutting federal healthcare spending and reducing healthcare costs are not necessarily the same thing. Wisconsin Congressman Paul Ryan’s budget plan would control federal healthcare spending by converting Medicare and Medicaid to voucher programs.  Congress would determine the federal contribution people could then use as so-called vouchers to help purchase health insurance on the market. While it would control federal expenditures, no one really knows what it would do for healthcare costs. Opponents believe it would just shift the burden of spiraling healthcare costs to individuals. Supporters believe competition would reduce costs. Of course it’s also true that President Obama’s healthcare reform offers little in the way of healthcare cost reductions.

In one sense, little has changed for imaging: expect short-term cuts and long-term uncertainty.