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Further cuts — more than $150 billion — will be made through what the legislation calls "productivity adjustment": shaving small amounts off the annual growth in reimbursements to hospitals and other facilities in the hope that they will squeeze the fat out of their operations. But disappointingly for some, there's no blueprint in the bill for how to make providers more efficient. "It's assuming if we pay less, they'll figure out how to do it," says Gail Wilensky, a top Medicare official under the George H.W. Bush and Clinton administrations. "People shouldn't assume there's some kind of reform here."
At the same time, the government will start spending more money, not less, on Medicare Part D, which provides prescription-drug coverage. Currently, millions of seniors every year find themselves in the Part D "doughnut hole": a gap in coverage that exists once beneficiaries' costs exceed $2,830. Coverage doesn't kick back in until these seniors pay $6,440 out of pocket. The law will begin closing this gap immediately. Seniors on Medicare will also get free preventive services under the reform.
The new law will set up an independent board to study clinical outcomes and evidence and come up with ways Medicare can reduce spending without sacrificing quality or access. (A similar board exists now; Congress usually ignores it.) Hospitals with the highest rates of avoidable infections and unnecessary readmissions will be penalized — though not as much as many health care experts would have liked. And the Medicare Advantage plans (those able to survive without subsidies) with the best clinical outcomes and highest patient ratings will receive bonus payments. The variety of approaches "is an example of how the bill attempts to try virtually everything that anyone has suggested for slowing the rate of growth in health care costs," says Paul Van de Water, an economist and health care expert at the Center on Budget and Policy Priorities.
But the kind of transformational change that could bring Medicare — and in turn the rest of the U.S. health care system — back from the financial brink won't happen overnight, if ever. "The reason Congress didn't do more is that right now we don't have all the answers for what we need and what will work and how it will work," admits Guterman of the Commonwealth Fund. Plus, lawmakers have learned the hard way that nothing is more dangerous to their survival than treading too heavily on a program that is cherished by seniors.