Map of life expectancy at birth from Global Education Project.

Thursday, August 16, 2012

So you want to talk about Medicare?

Okay, fine. Let's go for it. First of all, if you are interested in a concise primer on the history of health care policy in the U.S., Jonathan Oberlander is kind enough to provide it in today's NEJM. This is a well-worn story here, but I'll just say that we ended up with the dysfunctional, unjust and wasteful non-system we now have through a combination of pathologies in our political culture and historical accident.

Read Oberlander for the details, but essentially, the United States failed to follow the lead of every other affluent country on the earth and create a functional system that provides universal access and reasonable efficiency by the mid-20th Century. That was the historical moment when health care took off on a path of rapid technological advance that made it both highly valuable, and increasingly expensive. Since we weren't covering everybody under a uniform, rational system, a complex of powerful, entrenched interests grew up which blocked any comprehensive reform which threatened them. Instead of a system that reconciles competing interests and serves generally accepted values -- justice, universality, efficiency -- we have people feeding off of various incomes streams who can afford to buy political influence to maintain their privileges at the expense of the common good.

So, thanks to empty suit Mitt Romney appointing the extremist Paul Ryan to define the Republican presidential campaign, we're suddenly talking about nothing else but Medicare. Since I am serious and responsible, I recognize that the cost of Medicare is increasing and that the current revenue stream that funds the Part A trust fund for hospital care won't cover projected costs some time in the 2020s. (I don't buy the false precision of the forecasts, but yeah, around 2024 or so.) The amount of general tax revenues that subsidize outpatient care and pharmaceutical costs under Medicare will also have to increase, and right now, people seem not to be inclined to raise the tax revenues needed to pay for them.

Do Barack Obama and the Democrats have a plan to solve this problem? Sorta kinda, but it's likely not enough. Does Paul Ryan have a plan? No, absolutely not.

Ryan actually doesn't propose to mess with Medicare at all for ten years, as you know. He's hoping people 55 and older will be selfish enough to be reassured that they will still get Medicare and not care what happens to their younger siblings and their children. That seems dubious, but he's claiming that what he proposes is the way to save Medicare. The way I saw this described on CBS News was that when you turn 65, you get a coupon worth $15,000, which is the current annual cost of Medicare per beneficiary, which you can then use to buy insurance on the open market. If you find a plan that only costs $14,000, you get a check in the mail for $1,000 and you still have insurance.

What the "reporter" failed to tell you is that Medicare is cheaper than private insurance that provides the same benefits, ergo, you will not get the $1,000, unless the insurance companies can get away with cherry picking -- enrolling only relatively health people -- and you happen to be one of those healthy people. Which gets us into all the problems people under 65 have already. If you need insurance, you won't be able to afford it. On the other hand, if the insurance companies can't get away with that, then everybody will have to pay out of pocket to cover the difference between $15,000 and the cost of private insurance.

And it gets worse. The amount by which the voucher increases every year is less than the projected increase in health care costs. That means the out of pocket cost for beneficiaries will go up and up, and more and more people won't be able to afford it. Ryan claims the insurance companies will compete to keep costs down, but they haven't been able to do that up until now and there's no reason to think they'll do it in the future, especially because . . .

Medicare, as a single payer, has much more power to contain costs, and doesn't have to pay anything for 8 digit executive salaries, profits, marketing and underwriting. If we want to really contain costs, rather than just shifting them to old folks who can't afford them, what we need to do is stick with Medicare, but make it better. First, expand it to cover younger people, so we don't have people hitting 65 with untreated conditions that are more expensive than they have to be. (Yes, this is a significant problem now.) Second, give Medicare the power to negotiate with drug companies over price. Third, reorganize the health care system and reimbursement policies to pay for results, not for doing stuff. Fourth, establish practice guidelines based on cost-effectiveness.

The Affordable Care Act makes half-way stabs at three of these four requirements. More people under 65 will have some form of insurance, though not everyone; it finances experiments in reorganization and pay-for-results, but doesn't make any of this universal so it remains to be seen how far it goes; and it finances research into outcomes, but does not allow Medicare to take cost into account in authorizing procedures. At least it gives us something to build on, that's going approximately in the right direction.

But . . .

We need universal, comprehensive, single payer national health care. 


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Ok, Medicare is a national social insurance program, administered by the U.S. federal government since 1965, that guarantees access to health insurance for Americans ages 65 and older and younger people with disabilities as well as people with end stage renal disease. As a social insurance program, Medicare spreads the financial risk associated with illness across society to protect everyone, and thus has a somewhat different social role from for-profit private insurers, which manage their risk portfolio to maximize profitability by denying claims.

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