Watch this informative/funny/tragic video by Mary Harron from the We The Economy channel on YouTube. It packs a lot of information into an entertaining video. Please share with your friends, neighbors, family, co-workers, and anyone else you can think of!
From H&HN Daily
Cost is the big factor. Cost is why we can't have nice things. The overwhelmingly vast pile of money we siphon into health care in the United States every year is the underlying driver of almost every other problem with health care in the United States from lack of access to waste to fragmentation to poor quality. We can't afford to fix the problems, cover everyone, do real outreach, build IT systems that are interoperable and transparent and doc-friendly — or so it seems, because at least on weak examination, every fix seems to add even more cost. And in the old ways of doing things in health care, the way we have been used to doing business, the conclusion of the weak examination has been correct: Despite the tsunami of money, there is never enough to do it right.
Health care that costs more than it needs to is not just an annoyance; it's a big factor in income inequality in the United States. The financial, physical and emotional burden of disease are major drivers of poverty. At the same time, the high cost of health care even after the Affordable Care Act means that many people don't access it when they need it, and this in turn deprives large swathes of the population of their true economic potential as entrepreneurs, workers and consumers. People who are burdened by disease and mental illness don't start businesses; don't show up for work; and don't spend as much money on cars, smartphones and cool apartments. Unnecessary sickness is a burden to the whole economy.
How did we get this way? What was the mechanism that differentiated U.S. health care from all other advanced countries? The usual suspects (such as "We have the most sophisticated research and teaching hospitals," or "It's the for-profit health insurers" or "Doctors make too much") all fail when we compare our system with other sophisticated national systems such as those in Germany and France. Other countries have all of these factors in varying amounts — private health insurers, world-class research, well-paid physicians — and cost a lot, but still spend a far smaller chunk of their economy on health care. Blame has been leveled in every direction but, in reality, no single part of health care has been the driver. The whole system has become drastically more expensive over the last three decades.
What's the Mechanism?
Since the difference between the United States and other countries is so large and obvious, there should be some way we can look at health care spending that would make that mechanism jump out at us. And there is a way.
The Organization for Economic Cooperation and Development gathers and publishes huge amounts of information about the top 40 or so national economies in the world. Go online and search for its database on national health expenditures as a percentage of each country's economy. Don't just look for recent data. We already know what that says: The United States throws twice as large a chunk of its economy into health care as most other countries; 50 percent more than the most expensive other countries. No, take the search back to the middle of the last century. Pull the data into a spreadsheet. Make the spreadsheet into a graph. Here's what you get:
Wow. Suddenly a rather startling pattern emerges. Right side: Yes, the United States costs twice as much. Left side: Didn't use to.
As economies grow in absolute size, they tend to dedicate a greater percentage to health care. After a certain point, somewhere around 9 percent, the cost continues to increase, but the rate of increase tends to flatten somewhat. Through the '60s and '70s we can see that happening. The United States, as the largest economy, is one of the most expensive, but it's just there at the top of the pack. In the mid-1960s Medicare is implemented — the first big infusion of federal money into the health care economy — and does the U.S. line jump up? Not really. It flatlines for a year, then continues its moderate climb.
Something Wicked This Way Comes
Then something happens that is stark, sudden and large. Health care economies tend to lag national economies by a year or two; in bad economic times, governments and private purchasers can't cut health care expenditures immediately, but they do tighten their belts for the future. At a moment when the other most expensive health care economies (Germany, Sweden, Denmark) are flatlining or drifting lower in response to the global economic malaise of the early 1980s, the U.S. line goes nearly vertical, flatlines for a year or so, then leaps ever higher in a series of startling S-curves.
That first big leap is between 1982 and 1983. What was different in 1983 that was not there in 1982? DRGs, diagnosis-related groups — the first attempt by the government to control health care costs by attaching a code to each item, each type of case, each test or procedure, and assigning a price it would pay in each of the hundreds of markets across the country. The rises continue across subsequent years as versions of this code-based reimbursement system expand it from Medicare and Medicaid to private payers, from inpatient to ambulatory care, from hospitals to physician groups and clinics, to devices and supplies, eventually becoming the default system for paying for nearly all of U.S. health care: code-driven, fee-for-service reimbursements.
Cost Control Drives Costs Up?
How can a cost control scheme drive costs up? In a number of ways: In an attempt to control the costs of the system, the DRG rubric controlled the costs of units, from individual items like an aspirin or an arm sling to the most comprehensive items such as an operation or procedure. The system did not pay for an entire clinical case across the continuum of care from diagnosis through rehab; or for an entire patient per year on a capitated basis, which would capture the economic advantages of prevention; or for an entire population. While it is more cost-effective (as well as better medicine) to provide a diabetes patient with medical management, in-home nursing visits and nutritional counseling rather than, say, waiting until the patient needs an amputation, the coding system actually punished that efficiency and effectiveness. Under this system, we got paid for our inefficiencies, and even for our mistakes: Do-overs often would drop far more to the bottom line than the original procedure did.
The system punished, rather than rewarded, spending more time with patients, trying to help patients before their problems became acute, or maintaining a long-term, trusted relationship with patients. Under a code-driven, fee-for-service system, getting serious about prevention and population health management would be a broad road to bankruptcy.
If extra items were deemed necessary (an extra test or scan, say), there were codes for that, and reimbursements awaiting. In so doing, the system rewarded doing more (volume) rather than whatever would be the best, most appropriate, most efficient treatment path (value). It provided a written, detailed catalog of reimbursements which rewarded diagnoses of greater complexity, rewarded new techniques and technologies with new and usually higher reimbursements, and especially rewarded systems that invested in a greater capability to navigate the coding system. At the same time, the reimbursements were constantly open to pressure from the industry. Each part of the industry, each region, each specialty, each part of the device industry, became fiercely focused on keeping those reimbursements up, and getting new codes for more costly procedures.
The business and strategic side of health care became a matter of making money by farming the coding system. Do more of what gets better reimbursement, less of what does not. Make sure every item gets a code and gets charged for. The codes became a manual for success, a handbook for empire.
The Smoking Gun
The smoking gun is right there in the chart, at the big split between the trajectories of the United States and other countries. And today, at this moment, the code-based, fee-for-service payment system is still by far the basis of most revenue streams across health care.
The unifying factor between multiple new strategies unfolding in health care right now, including patient-centered medical homes, pay for performance, bundled prices, reference prices, accountable care organizations, direct pay primary care and others, is to find some way around the strict code-based, fee-for-service system, either by avoiding it entirely or by adding epicycles and feedback loops to it to counter its most deleterious effects.
There is no perfect way to pay for health care. All payment methods have their drawbacks and unintended consequences. But the code-based, fee-for-service system got us here, and any path out of the cost mess we are in has to get us off that escalator one way or another.
Joe Flower, CEO of the Change Project Inc., serves on Speakers Express, the speaking faculty of the AHA's Health Forum, and on the board of the Center for Health Design. He is also a regular contributor to H&HN Daily.
You can help MVHCA as we work for single payer health care by donating, hosting a house party, signing up for the newsletter, and attending our monthly meetings. You can also Like us on Facebook, and Follow us on Twitter. Thank you.
The New York Times
April 10, 2015
Where Government Excels
By Paul Krugman
Like all advanced nations, America mainly relies on private markets and
private initiatives to provide its citizens with the things they want and
need, and hardly anyone in our political discourse would propose changing
that. The days when it sounded like a good idea to have the government
directly run large parts of the economy are long past.
Yet we also know that some things more or less must be done by government.
Every economics textbooks talks about “public goods” like national defense
and air traffic control that can’t be made available to anyone without
being made available to everyone, and which profit-seeking firms,
therefore, have no incentive to provide. But are public goods the only area
where the government outperforms the private sector? By no means.
One classic example of government doing it better is health insurance. Yes,
conservatives constantly agitate for more privatization — in particular,
they want to convert Medicare into nothing more than vouchers for the
purchase of private insurance — but all the evidence says this would move
us in precisely the wrong direction. Medicare and Medicaid are
substantially cheaper and more efficient than private insurance; they even
involve less bureaucracy. Internationally, the American health system is
unique in the extent to which it relies on the private sector, and it’s
also unique in its incredible inefficiency and high costs.
And there’s another major example of government superiority: providing retirement security... (more here).
Comment by Don McCanne of PNHP
Next week, when the Senate returns from its break, they will likely approve
House-passed H.R.2 - the “SGR fix” - a bill that is being used as a vehicle
to move Medicare closer to privatization by taking small incremental steps
in increasing Medicare premiums and deductibles - features that are more
characteristic of private individual plans than public social insurance
Paul Krugman reminds us that governments are better at providing health
insurance. So we should reject the current bipartisan efforts that are
moving us further in the direction of converting Medicare from a public
insurance program into a premium support model (defined contribution
vouchers) of a market of private health plans.
This week’s taxpayer boost given by the Obama administration to the private
Medicare Advantage plans - the fourth such devious boost in the past four
years - enhances the private plans to set them up as a model for privatized
Medicare. Is there no stopping this?
Help MVHCA as we work for Improved Medicare for All by donating, hosting a house party, signing up for the newsletter, and attending our monthly meetings. You can also Like us on Facebook, and Follow us on Twitter. Thank you.
Debate on H.R. 2, “Medicare Access and CHIP Reauthorization Act of 2015”
United States House of Representatives
C-SPAN, March 26, 2015
Speaker of the House John Boehner:
"We expect to end the so-called doc fix once and for all. Many of you know we’ve patched this problem seventeen times over the last eleven years, and I decided about a year ago that I had had enough of it. In its place we’ll deliver for the American people the first real entitlement reform…
"Today it’s about a problem much bigger than any doc fix or any deadline. It’s about beginning the process of solving our spending problem, and it’s about strengthening and saving Medicare which is at the heart of that problem. Normally we’d be here to admit that we’re just going to kick the can down the road one more time. But today, because of what we’re doing here, we’re going to save money 20, 30, 40 years down the road. ...
"We can’t become complacent. We’ve got more serious entitlement reform that’s needed. It shouldn’t take another two decades to do it, and frankly I don’t think we’ve got that much time. But I’m here today to urge all of our members to begin that process, and the process begins by voting yes on H.R. 2 today."
H.R. 2 passed in the House today by a vote of 392 to 37. It goes to the Senate where it will be voted on tomorrow. But is this really about the “doc fix” - eliminating SGR? Speaker of the House John Boehner clarifies that for us. It’s about entitlement reform and H.R. 2 begins that process.
See more detailed commentary on H.R. 2 at PNHP.
Guest Opinion by Dr. Samuel Metz on the Lund Report:
Its collapse was a legislative failure, according to this author, which Oregon legislators deserve support so the same problem doesn't befall us.
Drawing unwanted national attention to his tiny state, Governor Peter Shumlin pronounced Vermont’s quest for universal health care Dead On Arrival. This statement broke the hearts of activists who previously cheered passage by the 2011 Vermont legislature of Act 48, the first step toward America’s first statewide universal care plan.
But this collapse was no ordinary failure. It was not a failure of universal care, or of single payer, or even of Gov. Shumlin himself. This was a spectacular failure of a very different nature, and one with valuable lessons for Oregon. But we must learn the right lessons, not the wrong ones.
The Wall Street Journal called this a failure of universal care to reduce costs. Not true. Not only was the universal plan never implemented, all predictions in Vermont’s universal care study, prepared at the request of the legislature by Dr. William Hsiao, remain valid. Regardless of costs, universal care in Vermont would still provide better care to more people for less money. Dr. Hsiao’s conclusions are corroborated by more than two dozen other studies in 14 states that come to the same conclusion.
Megan McArdle of Bloomberg View called this a single payer failure. But this was not a single payer failure because Vermont did not enact single payer. Vermont made a valiant effort to provide universal health despite many federal laws, including Medicare, ERISA, and the Affordable Care Act, that make single payer impossible in any state. Instead, Vermont created a work-around in which Green Mountain Care, the proposed state health care program, would have included less than 60% of its population; Vermont’s proposal included multiple payers, not just the state single payer.
James Haslam, executive director of the Vermont Workers' Center and a respected leader in Vermont’s campaign for universal care, labeled this as Gov. Shumlin’s failure. But as tempting as it is to blame the messenger, this failure was not Gov. Shumlin’s. Governors do not enact legislation; legislatures enact legislation. Vermont’s 2011 legislature dared to establish a universal care plan, but it left enactment of the taxes to fund that care to the 2012 legislature. The 2012 legislature left the task to the 2013 legislature. The 2013 legislature left the task to the 2014 legislature. When the 2014 legislature left the task for the 2015 legislature, Gov. Shumlin did not need a Hebrew prophet to read the writing on that wall. He simply stated the obvious: No Vermont legislature in the foreseeable future would take that responsibility. He pronounced the death; he did not kill the patient.
The collapse of the Vermont plan was a legislative failure, clear and simple.
For the record, Gov. Shumlin and the majority of legislators were Democrats.
No matter how expensive health care becomes, private insurance costs more than single payer. In every population – the poor, the sick, the elderly, employees of large businesses who self-fund, our veterans – single payer costs less.
But Vermont legislators did not believe they could vote for replacing insurance premiums with single payer taxes and still get re-elected. Neither did Gov. Shumlin.
Gov. Shumlin attributed the death of Vermont’s universal care plan to runaway healthcare costs and the increased taxes needed to pay those costs. Both are true: Vermont’s healthcare costs are rising (like every other state) and higher taxes would be necessary to match them. But universal care does not generate higher healthcare costs. It converts what we currently pay privately (i.e., employer premiums, family premiums, deductibles, co-pays, out of network payments, and excluded medication costs) into taxes. Premiums, out of pocket payments, taxes – it’s all our money, just different labels.
And while the efficiency of single payer reduces total healthcare costs (not dramatically – most studies, including Dr. Hsiao’s, suggest a modest 5-10% reduction), the primary advantage of single payer is guaranteed access to healthcare that costs less, that removes fear of bankruptcy, and that does not depend upon employers.
What is Vermont’s lesson for Oregon?
Our legislators need our unequivocal support before they will make bold decisions: not just to enact universal healthcare (like Vermont), but to create the tax plan to fund it (unlike Vermont).
Legislators will not respond to our need for universal healthcare unless we tell them. Legislators will not vote for new taxes to fund universal healthcare unless they know they have our vote if they do. Enabling our legislators to avoid the debacle of Vermont requires us to take our message directly to their offices: We want universal care. We want them to make it happen. And we will vote for them if they do.
We must give our legislators courage (and our votes) to do the right thing. That’s Vermont’s lesson for Oregon.
Samuel Metz, MD, is a private practice anesthesiologist in Portland. He has collaborated with Oregon State Sen. Michael Dembrow on passing the HB 3260 study of financing options for universal health care in Oregon. Dr. Metz can be reached at S@SamuelMetz.com. More information about the HB 3260 can be found at www.OregonStudy.org.
Jan 8 2015
Medicare Rights Center Identifies Pitfalls and Problems with Enrolling in Medicare Part B
This week, the Medicare Rights Center released a report detailing common enrollment challenges facing people new to the Medicare program. As the Baby Boom generation ages into Medicare, an estimated 10,000 people become Medicare eligible each day, while an increasing share of older adults are delaying retirement beyond age 65.
- Enhancing notification and education for people new-to-Medicare.
- Reforming the Medicare enrollment periods to eliminate needless gaps in the start of health coverage.
- Strengthening avenues for relief, giving greater opportunity for retroactive enrollment and the elimination of premium penalties.
- Conducting more research on how many people are affected by Medicare enrollment challenges and how many will be potentially affected in the future.
Full article and link to report here.
Explained in 7:35 minutes.
This great video explains how both Canada and the USA have Medicare. The difference is that in Canada, Medicare is for everyone, regardless of age. It explains how Canadian Medicare works, and answers questions like:
Why do Canadians flock to the US for care?
Why are pysicians fleeing Canada?
Answers: the aren't!
This video found at the Incidental Economist.
Vermont Tests Single Payer and the Country is Watching
By Darshak Sanghavi, M.D., and Sarah Bleiberg
KevinMD blog, Jan. 28, 2014
While the Affordable Care Act, or Obamacare, has been criticized by its opposition as “socialized medicine,” it relies heavily on private health insurance. On the other end of the political spectrum is the idea that a government-run single payer system, similar to Canada’s, is the best way to deliver health care. (This is sometimes shorthanded in the U.S. as “Medicare for All.”) However, this system has been believed politically impossible here—until now. In May 2011, Governor Pete Shumlin of Vermont signed into law “An Act Relating To A Universal And Unified Health System,” House Bill 202 (HB 202), establishing a single payer health care system beginning in 2017. In passing this legislation, Vermont has become a closely watched laboratory for health reform.
What are the pros and cons of a “single payer” system?
In general, single payer health care means that all medical bills are paid out of a single government-run pool of money. Under this system, all providers are paid at the same rate, and citizens receive the same health benefits, regardless of their ability to pay.
There are a number of proposed benefits to a single payer system. Currently, providers must follow different procedures with each of many insurance companies to get paid, creating an enormous amount of administrative work. Under a single payer system, providers might reap significant savings from reduced administrative expenses, and be able to focus more on delivering care. As with Medicare, a single payer system may also give the state stronger leverage to negotiate lower rates for drugs, medical devices, payments to providers and other expenses, resulting in lower overall costs. Additionally, a single payer system provides universal access to health insurance, which eliminates the problem of the uninsured.
On Monday, August 19th at 11:30 am, Bobbi Hall's KBOO program is on the Medicare Birthday Party. KBOO's new fm number in the mid-valley region is 104.3 (much better reception with this new translater). This 28 minute program will have music, edited talks, and some interviews. After it airs (Monday afternoon or so) you can listen to the program online anytime at https://archive.org/details/063.MedicareBirthdayParty2013
Also, see Maegan Prentice's lively video on our Medicare Birthday party, which highlights the writers' board. Find out what the visitors thought!
By Ida Hellander, M.D.
PNHP, August 14, 2012
“Premium support” or voucher proposals for Medicare are a mainstay of conservative health policy. They have been defeated for over three decades, starting with President Reagan’s FY 1981 budget proposal. They are a key feature of “managed competition”-type reform proposals. Although President Clinton embraced managed competition in his ill-fated health reform bill, he vetoed the 1995 Balanced Budget Act which would have turned Medicare into a voucher program. Premium support proposals were defeated again in 1997 and 2003.
Rep. Paul Ryan (R-Wis.), chairman of the House Budget Committee and candidate for vice president on the presumptive GOP ticket with Mitt Romney, resurrected the idea of a premium support proposal for Medicare in April 2011 with his “Path to Prosperity” budget proposal. Seniors would receive a fixed federal contribution or “defined contribution” to apply towards the cost of a private plan, and traditional Medicare, with its guaranteed coverage, or “defined benefits,” would be eliminated. The plan also called for increasing the age of Medicare eligibility from 65 to 67.
A so-called bipartisan variant of this scheme was proposed by Ryan in November 2011, with Sen. Ron Wyden (D-Ore.); in this version traditional Medicare would continue to be an option alongside private plans, and subsidy levels would be set at the cost of the next-to-cheapest plan, as determined by competitive bidding rather than be set by CMS. Medicare growth would be capped at GDP + 1 percent.
The latest version of “premium support” promoted by Rep. Ryan is the virtually the same as this more recent proposal with one major change; it sets the cap on Medicare growth lower, at GDP + ½ percent.
With the exception of the choice of traditional Medicare, the scheme is similar to the Affordable Care Act’s exchanges.
At the heart of all premium support proposals – and indeed the Affordable Care Act itself - are a number of myths:
1. Myth: Private health insurance is more efficient than Medicare. Fact: Medicare has controlled costs better than private insurance and has much lower administrative overhead. According to CMS, Medicare spending rose by an average of 4.3 percent each year between 1997 and 2009, while private insurance premiums grew at a rate of 6.5 percent each year. The CBO has estimated that the private insurance equivalent of Medicare would cost almost 40 percent more in 2022 for a typical 65-year-old. Administrative costs in Medicare are less than 2 percent of expenditures, compared to 17 percent of revenues for private insurers.
2. Myth: Expanding private plans in Medicare will reduce Medicare’s costs. Fact: Private Medicare Advantage plans have raised Medicare costs. Private insurers profit by selectively enrolling the healthy and shunning the sick, as documented in a New England Journal of Medicine article subtitled “The healthy go in and the sick go out.” Hence, they collect premiums paid by the Medicare program, and provide little care. As a result, the Congressional Budget Office estimates that Medicare Advantage plans cost Medicare 12 percent more per enrollee than the traditional program. New research from the National Bureau of Economic Research indicates that the true cost of private plans to Medicare may be much higher than the CBO estimate. Since Medicare launched a new risk adjustment scheme based on 70 diagnostic codes in 2004, overpayments to private plans have increased dramatically and accounted for $30 billion in excess spending, or 8 percent of total Medicare spending, in 2006 alone. Since then the overpayments have likely risen as the proportion of Medicare recipients in private plans has jumped from 16 percent to 24 percent.
3. Myth: Premium support will reduce Medicare’s costs. Fact: Premium support plans don’t reduce costs, they shift them onto the patient. The rising cost of premiums will quickly outstrip the value of the fixed federal contribution, and seniors will have to pay more in either premiums or out-of-pocket payments for care. The Congressional Budget Office estimates that Ryan’s original Medicare proposal would raise out-of-pocket costs for the typical 65-year-old Medicare beneficiary in 2022 by $6,240. They haven’t estimated the cost of the latest plan yet.
4. Myth: Competition among private plans will control costs. Fact: Private plans profit by competing to enroll the healthy and shun the sick. The industry is so consolidated that there is no effective competition in most regions of the country.
5. Myth: Paying private plans in Medicare via “competitive bidding” will lower costs. Fact: There’s no evidence for this. Private plans compete by selectively enrolling healthier beneficiaries. Private insurers have been competing on price in the under 65 market for decades, yet costs and premiums have skyrocketed even as benefits and choices have been reduced.
6. Myth: Premium support will increase choice for seniors: Fact: Premium support will decrease choice for seniors. Private plans with limited networks dictate which physicians seniors may see and which hospitals they may use. Medicare gives beneficiaries completely free choice of physician and hospital.
7. Myth: Competition among private insurers will reduce administrative costs. Fact: Premium support will likely boost administrative costs since patients will move from the low-overhead traditional Medicare program to private plans with far higher overhead.
8. Myth: There are no alternatives to reduce Medicare spending besides premium support. False: There are many better options for reducing Medicare spending, including the 9 listed below. Ultimately, the only way to preserve Medicare is to replace it with a single payer program with comprehensive benefits and effective cost controls. Currently Medicare is only one payer among thousands of different plans. Only a true single payer covering the entire population can slash administrative costs and control costs with budgets, negotiated fee schedules and drug prices, and health planning. Separate budgets for hospital operating costs and capital investment will permit the real health planning needed to reduce the costly and dangerous proliferation of expensive high-tech facilities.
Nine ways to reduce Medicare costs now -
- Eliminate Medicare Advantage plans.
- Give Medicare the power to negotiate drug prices.
- Eliminate private Part D plans, which have high overhead, and replace them with a public drug benefit along traditional Medicare principles
- Proscribe participation by for-profit providers, and mandate that participating providers (like hospitals) not pay any individual more than the president of the U.S.
- Extend the self-referral ban to include doctors who refer patients to their own MRI, CT, PET, and other complex imaging equipment (about half of total cardiologists income currently comes from imaging studies that they order and perform).
- Ban participating physicians from prescribing medications or medical devices (including orthopedic and cardiac implants) produced by drug or device makers from whom they receive payments.
- Reduce fees paid to the highest paid specialists, generally those who prescribe or use expensive drugs and devices. Doctors should be paid for the time they actually put in.
- Revamp Medicare's payment policies for subacute hospital care and so called "long-term acute care" (LTAC). Hospitals currently collect a set fee based on diagnosis for the acute hospital stay, and quickly transfer Medicare patients to a second inpatient facility that collects an additional fee. The result of this financial incentive has been a huge upswing in subacute and LTAC utilization, without any evidence that patients benefit. A colleague who is knowledgeable on this issue informs us that the proportion of Medicare patients with a subacute or LTAC admission after discharge from an acute care hospital has gone from 10 percent to 28 percent since these financial incentives came into effect, with about 600 LTACs appearing de novo.
- Abolish the Medicare pay-for-performance and ACO schemes, which are causing increases in administrative costs without any evidence of benefit.
9. Myth: Medicare is already a single payer system. Fact: Currently Medicare is only one payer among thousands of different plans. Only a true single payer covering the entire population can slash administrative costs, implement effective cost-control methods like globally budgeting hospitals, negotiating fees, and doing real health planning with teeth to reduce the costly and dangerous proliferation of expensive high-tech facilities.
10. Myth: Premium support will provide all seniors with the security that quality, affordable coverage will always be there. False: Premium support eliminates traditional Medicare with its defined benefits and substitutes a fixed contribution that, over time, will cover less care. Only a single payer plan can control costs while eliminating financial barriers to care for all. Ultimately, the only way to preserve Medicare is to replace it with a single payer program with comprehensive benefits and effective cost controls.
Outline of Rep. Ryan’s proposal for Medicare and Medicaid reform
- Starting in 2023, transforms Medicare from a program that entitles seniors to “defined benefits” to one in which beneficiaries receive a “defined contribution” or “premium support” towards the purchase of private coverage or traditional fee-for-service Medicare.
- Although Ryan has claimed that people 55 and older would not be affected by his changes to Medicare, today’s seniors would be hard hit by Ryan’s $800 billion in proposed cuts to Medicaid because that program funds nursing home care. Few seniors have the resources to pay for nursing home care, and the cost of even a short stay in a nursing home can lead to impoverishment. Today’s Medicaid program allows the surviving spouse to protect a home and some assets so they may live out the rest of their lives with dignity. When Medicaid’s funding is slashed and benefits are determined by the states, that may no longer be the case.
- The plan gradually raises the eligibility age of Medicare from 65 to 67 by 2034. Private coverage is prohibitively expensive for many at this age. Research shows that the uninsured have worse health before they gain access to Medicare, and have more medical expenses for the first few years they are in the program, than their insured counterparts. Lengthening their wait by two years would lead to even greater health disparities before gaining coverage and higher unmet medical needs and higher costs among this cohort once they are on Medicare.
- Private Medicare plans would compete with traditional Medicare on a Medicare exchange. Seniors would be responsible for the additional premiums of any plan (including traditional Medicare) costing more than the next-to-cheapest plan. Private plans have been shown to selectively enroll healthier seniors while shunning the sick. Thus, the cheapest plans would be those private plans most effectively able to cherry pick the healthy (e.g. by offering gym memberships as a covered benefit), while other plans and traditional Medicare’s costs would rise. The cost of the additional premiums on top of cost-sharing could quickly add up to many thousands of dollars per year. The result would be a massive shift of the burden of health care costs to beneficiaries, particularly anyone with serious health needs.
- There is no evidence that private plans will reduce Medicare’s costs, and a lot of evidence they will raise them. Private plans have already been shown to cherry-pick healthier patients, raising costs by 12 percent compared to the cost of caring for the same patients in traditional Medicare. Administrative costs are much higher in private plans (about 17 percent) than in Medicare (under two percent), shifting funds from clinical care to bureaucracy.
- The plan calls for “risk adjusting” plan premium payments so that plans with healthier patients receive less funding. However, there is no evidence that risk-adjustment can work in the dynamic reality of profit seeking health care insurers/providers. Private plans quickly learned to game Medicare’s new risk-adjustment system to garner an extra $15 billion annually, about 4 percent of total Medicare spending. Interestingly, private plans were able to obtain more lucrative overpayments after the newly enhanced risk adjustment was put into place.
- The plan calls for capping overall Medicare growth at GDP plus 1/2 percent. This limits the financial exposure of the federal government, but exposes beneficiaries to increasing risk and larger out-of-pocket costs over time.
- In sum, this is a plan to eliminate Medicare as we know it, including traditional Medicare (since the voucher only has to cover the cost of the second-cheapest plan, not today’s Medicare) and replace it with a private system beholden to Wall Street. Seniors would bear the burden of rising health care costs themselves. In contrast, a single payer system could provide comprehensive coverage to everyone.
- Ryan’s plan would turn the joint federal-state program covering 62 million low-income Americans into a federal block grant program starting in 2013 and slash the federal contribution by $800 billion (35 percent) in 2022 and by 49 percent in 2030. States would have flexibility in determining who they cover and what benefits are provided with the remaining funds.
- According to the CBO, “states would need to increase their spending on these programs, make considerable cutbacks in them, or both.”
- Between 14 million and 27 million fewer people would be covered in 2021 than under Medicaid as it currently exists, according to the Urban Institute. Beneficiaries might also see reductions in benefits and increases in cost sharing.
- An additional 11 million people would not gain new Medicaid coverage if the federal health reform law were repealed, as Ryan has proposed, according to the Congressional Budget Office.