Interesting article this week in The Economist, where they point out that increased Medicare funding, in the form of President Bush\’s Medicare Part D program, might actually be harming seniors in the program.

While they concede that the program has been able to get seniors lower costs on prescription drugs, it has also faced damaging cost overruns that threaten to cut into other areas of Medicare spending.  Specifically, if the prescription drug plan continues to grow, reimbursement to doctors for treating elderly Medicare recipients may be cut.  As a result, many doctors would simply refuse to treat Medicare patients.  Others would treat them, but pass the costs on to non-Medicare patients to make up for the reduced payments.

The article concludes:

Doctors and hospitals already had a disincentive to take on Medicare patients, as cost-cutting laws enacted by Congress years ago were anyway hurting their margins. But in late December, Congress went further, and very nearly enacted a mandatory 10% cut in doctors\’ reimbursements for Medicare patients. In the end, doctors got a six-month reprieve; efforts are now under way in the Senate to extend that reprieve for a further two years. If such cuts go through, most doctors will think again about treating Medicare patients.

Mr Bush\’s Medicare reforms are popular today, but a backlash may be coming. Some private firms have been caught manipulating the elderly into signing up for inappropriate plans. Questions are being asked about why the public is subsidising the marketing expenses of pharmaceutical companies\’ expenses that the public sector does not incur. Those doubts will turn into howls if Part D puts the rest of Medicare under the scalpel.