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July 02, 2007

Medicare For Some!

Joe Paduda considers what the libertarian vision on health care would look like in practice. Meanwhile, I'm all for incremental expansions of Medicare in theory, but folks should really be cognizant of the fact that such a strategy would do just about nothing to stop the system's explosive, destructive cost-growth. Five years down the line, when Medicare's even more in the red than it is now, and the whole system is all the more unaffordable, will calls for more government involvement go over well? How do you answer the "We gave you your Medicare change, and now we're six gazillion dollars in debt?" charge?

Maybe there's an easy reply. I don't know. But it seems a little dangerous -- and not much more politically achievable than some of the presidential plans that would actually fix the system. As a general rule, if you can see how your policy is step one on the road to Awesome Collectivist Utopia, the relevant industries and interest groups are going to notice too. And they're going to fight. Given that reality, I don't totally understand the case for incrementalism vs. full-scale reform. If you want Medicare-for-All, like, follow your bliss, man. But simply dropping Medicare eligibility to 55 seems all downsides without the relevant improvements.

July 2, 2007 | Permalink


Given that reality, I don't totally understand the case for incrementalism vs. full-scale reform.

Incrementalism might actually accomplish something. Other than that, though, you may have a point.

Posted by: SomeCallMeTim | Jul 2, 2007 3:38:56 PM

Depends if you think it can pass. Make the argument for me: Why will the insurers and pharma and everyone else fight less hard against creeping Medicare-for-All than Medicare-for-All? Why won't they take an NRA-style approach and go flat-out against any encroachment?

Posted by: Ezra | Jul 2, 2007 3:40:38 PM

I hate to be the one to point this out, but the answer to the valid point your raise might be that Medicare Part D winds up being, when viewed in retrospect 10 years from now, the beginning of the saving of Medicare. I believe, though I cannot prove (mama didn't raise no actuary), that putting many people on drug therapies that they couldn't get before will wind up saving gobs of cash for Part A and Part B, because drug therapies are generally cheaper than surgeries and ER visits (which were actually covered).

Medicaid has the reverse situation, and that's part of the reason no one is arguing the impending bankruptcy of Medicaid. You could always get drugs on Medicaid, but you could get turned down for surgeries. So in a recent study of the aged, blind, and disabled Medicaid population in Ohio, they found that 83 percent of chronically ill ABD Medicaid patients had substance abuse as a comorbidity -- not crack, heroin or Night Train, but painkillers, prescribed freely for painful conditions for which surgeries are never approved.

Posted by: Rick | Jul 2, 2007 3:42:11 PM

Focusing on wonkery rather than politics :

Medicare covers Americans 65 and up and its costs are growing at (IIRC) ~7% a year.

Assume that we created an independent program that was just like Medicare but it covered some age-defined subset of people who are too young to receive Medicare (say, 0-18 year olds, or 55-64 year olds). Would we expect this program's costs to grow at the same rate?

I think the answer has to be no, and here's why: Medicare's costs are rising because people live longer past 65 and are therefore spending more time in their "high medical cost years." Putting it another way, Medicare's costs are rising in part because the average age of the Medicare patient is rising. That problem won't arise for our hypothetical new program. For example, if we started insuring kids 0-18, the average age of the target population would be about 9 forever, subject to a little demographic fluctuation.

Posted by: alkali | Jul 2, 2007 3:47:41 PM

Sure -- health care for kids is cheap. But for middle-aged adults, not so much. Private insurance is seeing spending increases at about Medicare's rate.

Posted by: Ezra | Jul 2, 2007 3:50:57 PM

But adding kids makes the bottom line look better, while adding people over 55 just perpetuates the practice of having government ensure all the most expensive people. If you want a good idea of what Medicare-for-all will cost, you don't build a useful model by including only the highest-risk folks.

Posted by: Steve | Jul 2, 2007 4:09:55 PM

Why will the insurers and pharma and everyone else fight less hard against creeping Medicare-for-All than Medicare-for-All?

Pharma, insurers, etc. matter in large part to the extent that they can scare the hell out of various other parties. Not the least important of those groups are voters. Voters are less likely to be scared of incremental change than of one that reshapes a sixth of the economy. Genuine question: have we ever had such a large scale program/reformation rolled out? Has it happened absent a catastrophe like the Great Depression?

Posted by: SomeCallMeTim | Jul 2, 2007 4:09:59 PM

I don't think the problem is with incrementalism per se. Maybe the age-lowering for Medicare is not such a great form of incrementalism. Edwards' incrementalism, which allows people to buy into a Medicare-type plan, makes more sense to me. It's voluntary and less open to fear-mongering. I imagine that would also be more acceptable to the evil insurers and opponents of all good things.

I think the cost-growth problem is a somewhat separate issue. There's overlap, but in general the cost issue will have to be dealt with independently of whether we go with a universal mandate with private insurance, Medicare or some other single-payer plan, or something else.

Posted by: Sanpete | Jul 2, 2007 4:26:57 PM

Well, here's the thing -- improving your system through incrementalism is actually possible, whereas the US political system is so broken now that a mega-reform of your medical care system cannot be achieved. The Republicans will never let it happen.
How do you pay for it? Raise taxes, like all the rest of us. There is no way of stopping initial cost growth -- you have 46 million uninsured people, which represents a huge pent-up health care demand. As these people are covered, they will need treatment for all sorts of neglected conditions. You won't be caught up for a decade -- at least, that's about how long it took in Canada when we adopted medicare in the 60s.

Posted by: CathiefromCanada | Jul 2, 2007 5:02:15 PM

The State Children's Health Insurance Program provides a basis for something like "Medicare for Kids." Maybe you should focus on building on that.

I'm glad progressives are finally starting to get some common sense about health care policy and are looking to more modest, incremental, politically and economically feasible kinds of reform instead of these pie-in-the-sky, tear-it-down-and-rebuild-from-the-ground-up fantasies that have preoccupied them for so long.

Posted by: JasonR | Jul 2, 2007 5:22:37 PM

Yes lets talk about CHIP programs for kids.

NY Times ran an article on this recently and found that almost 20% of eligible kids were NOT enrolled becuase their dumb ass parents are so freaking lazy and worthless that they cant be bothered to do the requisite enrollment paperwork.

Posted by: joe blow | Jul 2, 2007 6:34:28 PM

There is a simple obvious answer to how we pay for this- stop being the ruler of the world.

There is a reason so many countries spend more on healthcare for their citizens than they do on their military, and it is that they have got their priorities straight.

Either we get our priorities straight and become as smart as the French or Germans, or we continue down the same path and become a has-been totalitarian state like Russia.

Take your choice.

Posted by: serial catowner | Jul 2, 2007 7:12:20 PM

I agree with Sanpete on this one -- the idea of "Medicare for All" should be to provide coverage to more people. That might indirectly help achieve cost savings, but that's not the main point of it.

There's so much wrong with our current "system" that progressives should have a rather long agenda for health care reform. It's important to match the proposals with the principles they address. Extending a government program to more people may not help the affordability problem, but Ezra's Institute for the study of Cost Effectiveness won't solve the problem of the uninsured, either.

Posted by: tinman | Jul 3, 2007 12:18:57 AM

I hate to mention this. OK, no I don't hate it. But we must also look at demographics. Currently the US is growing only because of immigration. The dependency ratio of any governmental medical care will *at best* stay flat on the provider side. In the meantime, the dependent side will grow for another generation, minimum. If the US goes into actual population decline, that ratio will continue to get worse. At that point, even if the price of medical treatment stays flat the burden will increase per taxpayer.

At the current rate of change, the US population should begin to decline within 10 years. If that occurs, no more Awesome Collectivist Utopia in the US - just like Europe, etc.

Posted by: Deep Thought | Jul 3, 2007 7:05:14 AM

"but folks should really be cognizant of the fact that such a strategy would do just about nothing to stop the system's explosive, destructive cost-growth"

You're saying we can't do anything about this cost-growth? My experience is that there is huge waste due to duplicated tests arising from lack of computerized records, so you could save from initiatives like this. And if you have a dominant payer limiting payment growth, then by definition costs will slow.

And maybe participants have to pay a bit more (now about $250 per month for Medicare plus a Medigap), and perhaps dedicated Medicare taxes have to go up a bit.

Posted by: bob h | Jul 3, 2007 8:17:49 AM

if you have a dominant payer limiting payment growth, then by definition costs will slow.

Medicare is already a dominant payer. Indeed, private insurers say that much of their coverage decisions and approach to reimbursement are keyed off of Medicare.

Unfortunately, CMS had done a poor job of limiting payment growth. Why? Well, at least until recently Congress has specifically prohibited CMS from taking cost into account in determining what to cover. If a new drug or device wins FDA approval, it gets covered even if it is little or no more effective than already existing therapies. Moreover, CMS has known for years that Medicare's spending per beneficiary is almost three times higher in Miami than it is in Minneapolis with no difference in outcomes. Yet, it has done precious little to bring about any convergence in practice patterns. This is starting to change with some help from the Medicare Modernization Act of 2003 (passed by a Republican Congress). CMS is only recently starting to get serious about cost-effectiveness and practice pattern variation.

Finally, as CMS squeezes provider payments by raising reimbursement rates more slowly than provider cost growth, providers shift more of the burden to private payers who now pay, on average, 120%-125% of Medicare rates for hospital and physician charges. Even with cost shifting, CMS' cost growth is still comparable to the private sector's cost increases. If hospitals had to accept Medicare rates from all comers, they claim they could not continue to provide the level and quality of care they do now even if there were no uncompensated care. About 85% of all hospital beds are in non-profit institutions, and many of those earn profit margins of well under 5%.

As a taxpayer, I don't think it is too much to ask for CMS to show considerable improvement in managing the resources that it already controls before we trust them with even more of out healthcare system. At least private payers can experiment with different plan designs in response to feedback from their employer customers and the consultants who advise them. Much more robust price and quality transparency should make it easier for both consumers and providers to identify the most cost-effective hospitals, doctors, imaging centers, labs and drugs. More use of electronic records can eliminate duplicate testing and adverse drug interactions, especially in hospitals where very sick patients are often treated by six or more doctors who generally don't know what each other is doing. We should be able to design payment approaches that reward best practices and evidence based medicine while penalizing the high utilizers. Just squeezing provider payments without trying to systematically attack utilization and rationally evaluate the cost-effectiveness of new drugs and devices is not the answer. CMS already has all the market power it needs. It's about time it started to use it.

Posted by: BC | Jul 3, 2007 9:22:07 AM

joe blow wrote: "NY Times ran an article on this recently and found that almost 20% of eligible kids were NOT enrolled becuase their dumb ass parents are so freaking lazy and worthless that they cant be bothered to do the requisite enrollment paperwork."

Whooa there pardner. Since you unhelpfully didn't provide a link to back up your claim it's hard to judge whether you're accurately portraying the article. But a quick search over at the NY Times turns this up:

"Face-to-face meetings were required for annual re-enrollment in Medicaid and CHIP, the children’s health insurance program; locations and hours for enrollment changed, and documentation requirements became more stringent.

"As a result, the number of non-elderly people, mainly children, covered by the Medicaid and CHIP programs declined by 54,000 in the 2005 and 2006 fiscal years. According to the Mississippi Health Advocacy Program in Jackson, some eligible pregnant women were deterred by the new procedures from enrolling."

In Turnabout, Infant Deaths Climb in South

That's not laziness. That's trying to make enrollment and re-enrollment more difficult specifically to discourage people from enrolling.

Or try this Times story:

"Jennifer Garden has a tumor inside her head - this much she understands. It will not kill her, she knows, but it has the power to make her miserable and steal her sight.

"Ms. Garden, 24, also has Medicaid - sometimes, anyway. And there is much about it that she has just never understood - the paperwork she gets in the mail, or why the system sometimes insures her and sometimes rejects her, or why she can see some doctors and not others.

"In many ways, the tale of Ms. Garden's struggle to keep her tumor in check tells an intimate, often maddening story of New York's vast, generous, but disturbingly imperfect Medicaid program. It shows how people's grip on this lifeline is weakened by private turmoil and personal failings, and by the idiosyncrasies of a system that seems to offer great largess with one hand, and chip away at it with the other.

"Over more than a year spent watching Ms. Garden tackle Medicaid's rules, documents, acronyms and programs within programs, it becomes clear how answers to even the most basic questions - such as when is she insured, and when not - elude her...

"Sometimes she is to blame, sometimes others. It is an endless battle - with the program, her troubled home life, and her own inclination, when circumstances get tough, to let things slide...

"Medication can usually keep such tumors in check, and it worked for Ms. Garden. But the day she turned 19, her mother's health insurance no longer covered her, and there her health troubles really began.

"She visited a New York City welfare office to apply for Medicaid. But what she thought was a straightforward process turned into something out of an absurdist play.

"She explained that she had no income, but the clerk insisted she needed proof. She could have satisfied the requirement with a written statement that she had no income, a fact she says that no one explained.

"For most of the next four years, Ms. Garden went without insurance, doctors or medication, and the tumor grew unabated. Exhaustion and severe headaches became regular ordeals, and it grew hard to hold a job, or even search for one.

"In that time, she says, she tried repeatedly to sign up for Medicaid. Once, for example, she was told that she was not poor enough to qualify because she lived with her boyfriend.

"She may have been eligible on all of her first three attempts - it is impossible to say with certainty - but each time she was turned away without even filling out an application.

"While working part-time at a Barnes & Noble bookstore, she recalls, she tried once more to apply, but her wages -less than $10,000 a year - were too high for her to qualify."

Trying to Get, and Keep, Care Under Medicaid

The paperwork is onerous and complex, and poor people frequently can't get a whole day or even hours off just to go try to get themselves or their kids enrolled in CHIP or Medicaid. And that's in NY, try AL or MS and see what they require. That's not a bug, for conservatives that's a feature.

Posted by: SteveH | Jul 3, 2007 12:17:14 PM

BC wrote a generally good post on Medicare, but gotta disagree with one thing: "As a taxpayer, I don't think it is too much to ask for CMS to show considerable improvement in managing the resources that it already controls before we trust them with even more of out healthcare system."

As one who knows, CMS is overburdened and underfunded. A while ago Health Affairs published a petition signed by a number of prominent health care analysts asking the Clinton administration and Congress to "provide
the agency the resources and administrative flexibility necessary to carry out its mammoth assignment... even accounting for Medicare’s growth, no private health insurer, after subtracting its marketing costs and profit, would ever attempt to manage such large and complex insurance programs with so small an administrative budget."

Crisis Facing HCFA & Millions Of Americans
Health Affairs, Jan-Feb. 1999

If Clinton didn't do it, what do you think the odds are that Bush did? It didn't happen. Congress and the Presidents are at fault here, not CMS. CMS does a miraculous job given the size of the program and their resouces, the numerous competing interests they have to balance, and the limitations it has in making changes in Medicare due to statute.

Posted by: SteveH | Jul 3, 2007 12:29:30 PM

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