Monday, September 21, 2009

Medicare for All: Moran's logic, not the idea, is flawed

I recently received an email from one of our Kansas Congressmen, Jerry Moran, Republican from the First District that covers essentially the western 2/3 of the state. (He is not my congressman, who is Blue Dog Democrat Dennis Moore, but we are a small state in terms of population with only 4 congressmen, and I get emails from many of them. Plus Rep. Moran is one of two Republican congressmen from Kansas running to succeed Sen. Sam Brownback who is resigning to become – the result is foreordained – our next Governor.) The email contained the text of an editorial that Rep. Moran posted on his website to explain why he did not think that expanding Medicare to cover everyone, as has been advocated by many, including myself, was a good plan for health reform. Unsurprisingly, the title was “A Medicare-Type Public Option Does Not Make Sense”.

Rep. Moran acknowledges that “This idea is supported by some in Washington and, at first glance, may appear appealing to many. Certainly, this idea seems easier to understand than other proposals that are being pushed in our nation’s capital and in the media.” He is a thoughtful man, not a reflex yahoo. He then goes on to give four reasons why it is a bad idea, and that he does “…not see how this plan will protect and enhance care for Kansans.” His four points are:

Medicare is going bankrupt – The Medicare trust fund that pays for inpatient hospital stays is currently paying out more in benefits than it is collecting through payroll taxes. As a result, this fund is expected to go bankrupt in 2017, just eight years from now. Additionally, Medicare faces overall shortfalls of nearly $38 trillion, nearly three times current GDP levels…

Providers suffer major losses treating Medicare patients – Kansas health care providers and hospitals operate on razor-thin margins because they are drastically underpaid by Medicare. When Medicare underpays doctors and hospitals, the cost is shifted to private insurers. The average family in a private PPO health plan pays an additional $1,788 a year to compensate for Medicare underpayments. If these rates were expanded to those who currently have private insurance, many Kansas hospitals would be forced to close their doors and access to doctors and nurses in the state would be further limited.

Current Medicare fraud is staggering – According to the FBI, Medicare and Medicaid lose an estimated $60 billion or more annually to fraud. This amount equals 10% of all health spending in the U.S. Congress needs to address this problem in Medicare and Medicaid before creating a massive new program that would be susceptible to the same fraud.

Medicare regulations are a mess – The morass of regulations governing Medicare prevents progress and impedes doctors, nurses, and other providers from efficiently caring for patients...Bureaucrats in Washington set Medicare payment rates for providers and hospitals and these rates are so low that many doctors refuse to see Medicare patients. An expansion of this regulatory mess will lead to fewer providers and diminished health care access for Kansans

I had to write back and comment that these arguments, too, have pretty major flaws. They fall into three major categories:

First, misunderstanding (or misrepresenting) the source of the high cost of health care.
It is sick people who cost money. This is why, as I have pointed out, the key issues of health reform is so difficult to "sell" to most people, who are not (currently) really sick. The cost of what is perceived as “health problems” by the young, healthy journalists and Congressional aides -- colds, checkups, rotator cuffs, meniscuses, blood pressure checks – is essentially rounding error in the cost of health care. What costs money are the sick people -- the elderly who have multiple diseases and require mutliple hospitalizations, people with cancer, babies in neonatal intensive care, multiple trauma victims from car accidents. 5% of the people account for 55% of health costs; 10% for 70%. More than 50% of the people all together are about 3%. That is why insurance companies make money by underwriting -- insuring the healthy, disenrolling (or excluding, or sending to Medicare) the sick. Most of the people who cost the most are already in Medicare. The rest of us would cost much less per capita.

If everyone was in Medicare, we'd have one system to pay our health bills, and Moran’s first issue could be addressed because all health care $ now spent by employers would go into the pool, while the sickest people are already in the pool, so the marginal cost of putting everyone else in would be must less than the income.

The second flaw is that his argument, in both his second and fourth point, is that providers are unhappy with how much (or little) Medicare pays and how complex their regulations are. On the other hand, his third point attacks providers (presumably the same group) because of the massive amount of “fraud” they are perpetrating on the Medicare system. You can’t have it both ways unless you can be sure that the “fraud-meisters” (presuming there really is extensive fraud) are not the same ones, doctors and hospitals, who are making the complaints you validate in points two and four. And there is no way to do that. The answer for these two points is the same as for #1 – with everyone in the same system we could increase our payments for certain services in Medicare. And, of course, not pay more, or even pay less, for certain other services. By having the one payer, we could make policy that says we are going to pay for what we value (e.g., primary care) and not for excessive technological interventions that are not needed.

The third issue, fraud, mentioned above, is arguable. Much of what the government calls fraud is unintentional incorrect billing. To the extent that there are providers -- the same providers the Congressman worries about underpaying in the second point – who are committing fraud, this needs to be addressed, and would be able to be more thoroughly address with a single source of payment. Does Rep. Moran think no one commits fraud against private insurers? Certainly those private insurers would not agree!

The third flaw is in Rep. Moran’s fourth point regarding complex Medicare regulations. Boy, are they ever! But so are – even more so – those of private insurers. And the problem is made many times worse because of the plethora of different insurers, all with their own rules and regulations, and indeed with the same insurer having different rules for different people in different plans or employed by different companies. Cleaning up the Medicare regulatory complexity is important, but could be done by the government. If we had everyone in Medicare, it would be all cleaned up. If we continue to have multiple private insurers, it will stay a mess anyway. And blaming “bureaucrats” for low Medicare payments is at best disingenuous; Medicare pays what Congress will support. If Congress wants to pay more, they can appropriate more, at least for Part B and D. And this argument runs absolutely counter to the first, which is that Medicare is going broke. It sure isn’t from lack of parsimonious administration.

Rep. Moran concludes by saying “Medicare guarantees health care for seniors. But, what good does it do to have an insurance card if there is no doctor, nurse, or hospital to provide care? Instead of expanding Medicare, Congress should address Medicare’s current challenges and consider common-sense reforms to make quality coverage more affordable and more accessible for Americans. Medicare cannot pay all of its bills now and the problems will be exponentially magnified if it is expanded to include an additional 114 million Americans.”

Congress should address Medicare’s current challenges, and the most effective way to do so would be to put the other (?114 million) Americans into it. This would dilute the number of sick people already in the program with the younger and healthier, support the program financially with the current employer contributions now going to private insurers, and, most importantly, put all of us in the same plan together, all of us concerned about how well it works and how it spends its money.

Because, Congressman, we really are all in it together.

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