Did you ever ask yourself as the government aims to provide “affordable” health care for all Americans, why it can’t control the cost of Medicare? A new report says the Medicare fund for hospital care will be depleted in 2017, two years ahead of previous predictions. The new deficit is after Medicare cut payments to physicians by 21%, cuts that Congress has not previously allowed. Medicare Part B premiums are expected to increase by 8% in 2010 and 15% in 2011 to cope with a portion of the Medicare cost problem. That’s not good news for Americans with Medicare because at the same time low inflation indicates there will be no increase in Social Security benefits in 2010 or 2011. The AARP must be delighted.
On top of this news additional Medicare savings assumed by the current administration, like cutting payments to Medicare HMOs and cutting the cost of drugs under Part D of Medicare are designated not to help with the growing Medicare problem, but to offset the cost of expanded government coverage for the uninsured. Call me crazy, but isn’t this a bit like being behind on one credit card payment while charging to the limit on a second card? Other ideas to fund expanded coverage include taxing all or a portion of the health benefits paid by employers, cutting back on flexible spending accounts and health savings accounts and new taxes on things like soda and other food that have been determined to contribute to poor health status. Perhaps we need a surtax on people with a BMI over 30.
While there has long been talk of the efficiencies of a government run program, the simple truth is that Medicare saves money by shifting the cost burden and by raising the costs borne by beneficiaries. To save money Medicare simply declares that a certain service is no longer covered. For example, recently the virtual colonoscopy was dropped as a covered procedure. Do you see where this is going?
Today, expenses not paid by Medicare are paid by the private sector. Common sense will tell anyone that if you cut physician fees by 21% under Medicare providers will eventually, either not participate in Medicare or more likely raise their fees to non Medicare patients, a process that has been going on for years while Medicare claims cost savings and efficiency. A few years back the law was changed so that a person age 65 who continued to be employed with health benefits could not use Medicare but instead must continue to use the employer coverage, more cost shifting and yet another reason for employers to drop coverage. One must ask the question, if there is a single payer system and thus no place to shift costs cut by the government, where do the cuts come from? Some would answer that it simply means lower income for hospitals and physicians and drug companies. Unfortunately it is not that simple. Each aspect of the health care system is connected to accessibility, innovation, new technology, research, and the quality and quantity of health.
The administration also hopes to lower health care costs in part through health and wellness activities. Considering large employers have been investing tens if not hundreds of millions of dollars in that effort for years with little success in stemming the growth of health care costs, should we assume government will be more successful? Also, savings that may be achieved are many years into the future, say when a person who is 30 today is 65.
While Medicare and Social Security face looming financial problems, the Obama administration talks about expanding government based health care. The lessons of the Massachusetts experiment with universal health care are simply ignored. Massachusetts sees the problem as lack of coverage rather than costs; it expanded coverage while costs continue going through the roof. Merely bringing the uninsured under a broad government umbrella will substantially increase health care utilization and cost thereby exacerbating the problem just as the 80 million baby boomers enrolling in Medicare add stress to that program. We can’t have it all, especially at once.
There is no need for a crystal ball to see where this is headed. There is no way to avoid higher and higher taxes of various types, more out of pocket costs to those who use health care services and eventually pure rationing of health care. America had the answer in large part within its grasp twenty years ago. It was called an HMO, especially a group or staff model HMO. Coordinated care, efficiency, centralized medical records, one stop shopping, physicians on salary rather than with incentives to provide more (and frequently unnecessary) care, continuous peer review, it was all there and yet Americans perceived the system as withholding care, providing low quality care, limiting choice of providers and were seduced by a barrage of negative publicity and late night jokes about HMOs. We should remember this experience as we debate how we will provide quality and “affordable” health care to all Americans. I bristle at the word “affordable” because I have yet to hear it defined. Forty-five years of running health benefit plans tells me that Americans view a $5.00 increase for an office visit co-pay as unaffordable. At the same time the expectation of many Americans is that they will be provided with “free” health care. I can define free; “at no cost,” gratis”, without charge, as in Medicare and Social Security are “free.”
Note: A new study : Why Americans pay more for health care The United States spends more on health care than comparable countries do and more than its wealth would suggest. Here’s how—and why. DECEMBER 2008 • Diana M. Farrell, Eric S. Jensen, and Bob Kocher Source: McKinsey Global Institute, tends to support the value of the HMO concept by noting that the largest growth in health care costs and the portion higher than expected for the US is in outpatient care driven by use of specialists and incentives to use expensive tests and equipment, both of which were intended to be managed by the managed care concept.
The fundamental problem is that we are not addressing the fundamental problem.
We need an open and honest debate about why health care costs so much and why it escalates faster than almost any other service (college education may be a rival but nobody wants to talk about that either). And no, the problem is not insurance company profits; rather it is the flaws in the health care delivery system (like hundreds of thousands of physicians in private practice operating in their own entrepreneurial silos, a fee for service structure and misplaced incentives) coupled with the demands and expectations of health care consumers. If you buy all that and you should, peer into my crystal ball and see what will happen if the government is managing health care and determining what is and is not covered while at the same time Congress is being lobbied by the makers of MRIs, or the trial lawyers or the hospital association or anyone with a financial interest in health care.
While we receive vague pledges from interested parties to cut costs over the next ten years, we are barraged with advertising from drug companies, hospitals, those who have invested in scanning equipment and even individual physicians on billboards. Why in the world should any health care provider need to advertise and what it its purpose, OMG could it be to generate revenue? I want to learn about quality and alternative care from a reliable source not via a TV or radio commercial following the one for toilet bowl cleaner.
Until we address the cost problem and until Americans understand what it will take to solve that problem (like not always having what you want when you want it from the health care system), we are only digging a deeper hole. The flim flam bait and switch tactics of our politicians are not helpful.
The greatest danger in the health care debate is embracing a government program to expand coverage without concrete methods to manage costs. That will result in costs buried forever in additional taxes, thus making the future solution not controlling costs, but raising taxes, but hey, health care would be “free.”
And beware employers if you think you will get out from under the health benefits burden. You may well be worse off with higher payroll taxes and the loss of control over how the money is spent coupled with a myriad of additional hidden taxes. Just for good measure throw in more pressure on wages and demand for supplemental coverage.
The problem is cost and all its components, including quality. Solve that and for the most part the uninsured problem is minimal because health care will truly be “affordable.”