Medicare: A lifeline, not a Ponzi scheme

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In an earlier post (Medicare: We need to expand it, not cut it!, July 1, 2011), I commented on the proposals from politicians such as Wisconsin representative Paul Ryan and Connecticut Senator Joseph Lieberman to limit Medicare.  I quoted economists Austin Frakt and Aaron Carroll (as cited by Paul Krugman (“Medicare saves money”, NY Times June 12, 2011), from their post on the Incidental Economist, that  “…right now Americans in their early 60s without health insurance routinely delay needed care, only to become very expensive Medicare recipients once they reach 65. This pattern would be even stronger and more destructive if Medicare eligibility were delayed.” It is a stupid idea, more designed to engender the political support of people who do not think the issue through than to practically save money.

There are other similar proposals to “fix” Medicare that fit the same pattern: they superficially seem to make sense, but are actually nonsense. One of the most popular is the idea that we exclude “wealthy” seniors from Medicare, or, at least, require them to make a significant financial contribution. This contribution could consist of premiums paid to Medicare that were tied to income (or wealth, more relevant for retired people but much harder to assess accurately) or co-payments for services, again tiered to income. This seems to make sense – why not? There are many well-to-do elderly; why should currently-working people, who are struggling to make ends meet, have to pay for their care?

One reason is that the reason that Medicare is an “entitlement” because these people have paid for it in advance by their taxes during their working lives. Some of this is from the specific Medicare deduction that comes from each of our paychecks, which supports only “Part A” (coverage for hospital care), as well as from the general income tax revenue that pays for “Part B” (doctors) and “Part D” (drugs). People pay into these plans during their working lives, and draw the benefits when they need it when they are older. This is, in principle, what “saving” is about, but it goes beyond an individual retirement plan to cover everyone. This is the nature of social insurance.

Governor Perry of Texas, a Republican candidate for the presidential nomination (perhaps, if we are lucky, soon to be former candidate), called Medicare (and Social Security, vide infra) “Ponzi schemes”. : “Perry: I think every program needs to stand the sunshine of righteous scrutiny. Whether it’s Social Security, whether it’s Medicaid, whether it’s Medicare. You’ve got $115 trillion worth of unfunded liability in those three. They’re bankrupt. They’re a Ponzi scheme.” They are not. A “Ponzi” scheme involves taking one person’s property (money), and using it to pay off previous investors, who are seeking to make money on their investments. Medicare (and Social Security) are social insurance programs where the benefit is understood to be care (in the case of Medicare) or [minimal] income (in the case of Social Security). The entire beauty of both of these programs is that they involve everyone. Thus the well-to-do as well as the poor and the people in the middle have a stake in keeping the program running and effective.

If we were to exclude certain sectors of the population from receiving benefits from either of these programs, it would undermine the collective investment that we as a society have in each other. The better off, better educated, more empowered now fight for these programs because they are beneficiaries, and results in their being in place for those who are not so privileged. It is probably this very sense of mutual interdependence that makes ideological conservatives oppose them, but such opposition is short-sighted. The reason for having social insurance programs that make us interdependent is that – we are interdependent. The society, in the US (and, arguably worldwide) requires not only healthy, educated, productive workers but also consumers who are able to purchase goods and services. Billionaires like Warren Buffett call for higher taxes on the wealthy (an idea picked up on by President Obama) because they understand that a prosperous society requires contributions from everyone. We ARE in it together.

If we were to exclude only the very wealthy from benefits under these programs (say the top 1%), it would not hurt them financially, but it would hurt the rest of us because these very powerful people would no longer have a personal stake in supporting such programs. And, of course, it would save essentially no money; the corollary of the enormous concentration of wealth in a small number of people is that there are not very many of them. Thus, if they never drew a single dollar of benefit from Medicare (or Social Security) the programs would not be any better off. In order to save money, we would have to exclude a lot of people beyond the very wealthy (10%? 20%? 30%? of the population), and this would be then excluding a large section of the population, and truly reduce support.

More recently, Jane Gross writes in the NY Times about “How Medicare fails the elderly” (October 16, 2011). Her emphasis is not on excluding people from coverage, but rather on not covering services that do not enhance, and often decrease, recipients’ quality of life. Medicare pays for many services that fall into this area, and the reason has rarely to do with the desires of the patients themselves. “Of course, some may actually want everything medical science has to offer. But overwhelmingly, I’ve concluded in a decade of studying America’s elderly, it is fee-for-service doctors and Big Pharma who stand to gain the most, and adult children, with too much emotion and too little information, driving those decisions.” Among the treatments that she notes that Medicare pays for but are usually not medically indicated (especially in the old, debilitated, and demented) are feeding tubes, many forms of surgery (particularly abdominal and joint replacement) and “tight” control of Type II diabetes. All of these treatments have high risks and rarely prolong life while significantly decreasing its quality.

Gross notes that when these complications arise patients often need long-term, very expensive (she cites costs for her mother 8 years ago of $14,000 a month!) care in nursing homes, which Medicare does NOT pay for. Medicaid will, but only after the senior has exhausted all their resources (including savings house, etc., and then only in some nursing homes which are willing to take Medicaid reimbursement, and these are often not those of highest quality). Thus, by paying for the performance of procedures that do not help, Medicare leads patients into worse quality of life at high cost.

Clearly, the motivations of the drug and device makers, hospitals and physicians and nursing homes are often (in some cases usually or always) financial, but this is not the case for the family members, who mostly want to “do the best” for their parent or relative. However, given unclear guidance by their physicians, or incorrect information from any source, they may associate “doing something” with “doing the best thing”; often “doing the best thing” is not doing “something”. If Medicare did not pay for unnecessary and potentially harmful procedures, there would be little motivation among providers to do them, and it would not only save money but more important improve the health care and preserve the dignity and quality of life of people in their last years.

There is a solution to the potential bankrupting of Medicare. One: Pay for only medically necessary and indicated services. Two: revise the Medicare fee schedule to maintain the payment for primary care services but decrease excessive payment for high cost specialty services. Three: Expand Medicare to include everyone. Then we all have a stake, right now.

Steps toward a solution: Time to put Single Payer back "on the table"

During the health reform debate, one option we were assured was never seriously “on the table” was “single payer”, or Medicare for All. President Obama, who as a senator had indicated his support for this solution, backed away from it as fast as he could. In this he was undoubtedly encouraged by his many advisors, who have also encouraged bank bailouts, “compromise” on the debt ceiling, etc. (see June 18, 2009,“No Single Payer”: Sebelius – making policy for the powerful).  This is not to say that there were not supporters of single payer within government; there were and are. HR 676, “The Improved and Expanded Medicare for All” act, principally sponsored by Rep. John Conyers of Michigan, had nearly 100 co-sponsors in the House. Sen. Bernard Sanders of Vermont introduced a single-payer bill  in the Senate. Vermont, in fact, has become the first state to move toward a form of single payer on a statewide basis.

As anyone who has been reading this blog for any amount of time knows, I am a strong advocate of single payer. (A few of the many MSJ references: April 28, 2011 Perception and reality of economic inequality; July 22, 2010, Improving quality and access still requires coverage for all;  April 10, 2009, Does the nation need a clear policy on a right to basic health care?).

My reasons for support of single payer are several:

1. It covers everyone. No one is left out. There is no complex system of “these people get coverage this way, those people get coverage that way, and those people (too bad) are left out altogether.”


2. It provides a uniform benefit package. Everyone can get the care that they need, without concern about whether they are covered. In our current system, even many people who are insured have inadequate coverage. In addition, to the extent that the society decides to limit access to unproven or detrimental (see #5 below) or even “too expensive” care, no one gets it.


3. It saves money. Off the top, it saves the profit being taken out of the system by insurance companies and other for-profit businesses. It saves even more money by eliminating all that being spent by those companies to deny care claims and by providers of care to try to get paid (see A Modest Proposal: Bribe the Insurance Companies, August 23, 2009).


4. It puts us all in it together. This is a core method of ensuring social justice. The more educated and empowered among us will work to make sure that they get good care, and this benefits everyone.


5. It provides the basis for ensuring quality, by having a degree of control over what gets reimbursed, and therefore what gets done. It may not ensure quality by itself, but it is almost a necessary component.

In 1964, President Johnson signed the Medicare Bill in Independence, MO, giving cards #1 and #2 to former President Harry Truman, who had fought for national health insurance in the late 1940s and lost, and his wife Bess.Forty-seven years later, Medicare has proven its importance in providing a single-payer program for seniors. It is the largest payer in the country, and the rates that it pays for services determine those paid by other insurers. While expanding Medicare to everyone should be the centerpiece of health policy, it has instead become the target of proposals to cut coverage to those who already receive it, particularly from the right. This has led to a lot of bad ideas from politicians such as Rep. Paul Ryan and Sen. Joseph Lieberman (see Medicare: We need to expand it, not cut it!, July 1, 2011).

The “poster child” for a single payer system is Canada, which has had it since the early 1970s. Based on the principle of social solidarity, not often apparent in the US, the Canadian federal government set the criteria for the program (which is also called “Medicare”) and the individual provinces set the specific terms and fund it. There is local (provincial) autonomy within the boundaries established by the federal government (see December 14, 2009, Tommy Douglas and the Canadian Health System;  May 27, 2010, Universal Coverage and Primary Care: The US needs both). Several recent articles have addressed the degree to which changes in the primary care system to create “medical homes” in Ontario, Canada’s largest province, have enhanced the quality of patient care, access of patients, lowered cost, and increased the income of primary care physicians (see Rosser et al, “Progress of Ontario's Family Health Team model: a patient-centered medical home” [1]). It is critical to note that this Family Health Team program was really only possible on such a scale because Ontario, like the rest of the country, has a single-payer system.

The importance of increasing, or at least not decreasing, the income of primary care physicians relative to other specialist, has been addressed in several other posts. What about all physicians, as a group? The AMA and other physician groups were, after all, largely responsible for the defeat of Truman’s national health insurance program and were major opponents of the US Medicare and Medicaid programs. Surveys by Physicians for a National Health Program (PNHP, see especially “Single Payer National Health Insurance”) have shown increasing support for single payer among the physician community, with universal health coverage being supported by a majority of US doctors in 20 (Support for national health insurance among US physicians: 5 years later[2]).

A new study may help to persuade physicians that single-payer systems are actually in their financial interest. Writing in August 2011 in Health Affairs, Morra and colleagues report that “US Physician Practices Versus Canadians: Spending Nearly Four Times As Much Money Interacting With Payers”[3] (hyperlink to abstract). The title basically says it all. While both Canadian and US physicians spent time (translated into money!) interacting with insurers, the single payer in Canada and hundreds of payers in the US, about patient benefits and payment, the staff of US physicians spent 10 times the amount of time in such activities as did their Canadian counterparts. The authors estimate the cost to US physicians at $82,975 per physician per year, nearly 4 times the $22,205 cost to Ontario physicians. In addition, these costs fall disproportionately highly on small physician practices, which are more likely to be primary care. They conclude that “If US physicians had administrative costs similar to those of Ontario physicians, the total savings would be approximately $27.6 billion per year.”

From a financial point of view, we have an apparent dilemma in the US. The cost of Medicare is very high and creates financial threats to the economy. The reimbursement from Medicare to providers is often too low to make them a desirable payer. But there is a solution. It involves getting control over costs. First, do not pay for harmful or questionable interventions, do not pay major markups to generate excessive profit for private companies, and use the large scale of government purchasing to get good prices for drugs, unlike the boondoggle of Medicare Part D, the prescription drug program in which Medicare pays retail prices to pharmaceutical companies.

The solution is also to emphasize more primary care and prevention (October 18, 2010 Lower Costs in Grand Junction: More Primary Care, Less High Tech). The next steps will be harder, for they will involve making difficult decisions about the cost/benefit ratios of different types of care, particularly as the availability of new, expensive, high-tech interventions provide allure, if not always results.

The way not to do this is for policies restricting access for a part of the population (working and poor people) to be made by another part of the population (big businesses, politicians, and lobbyists) who will not be affected by those decisions. A single-payer system in which we are all covered by the same benefits does not automatically save money, but at least makes it possible.

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[1]; Rosser WW et al, “Progress of Ontario's Family Health Team model: a patient-centered medical home”, Ann Fam Med. 2011 Mar-Apr;9(2):165-71.

[2]Carroll A, Ackerman R “Support for national health insurance among US physicians: 5 years later” Ann Int Med 1Apr2008;148(7):566-7.

[3] Morra D, et al, “US Physician Practices Versus Canadians: Spending Nearly Four Times As Much Money Interacting With Payers”, Health Affairs August 2011 vol. 30 no. 8 1443-1450.

Medicare: We need to expand it, not cut it!

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Medicare is big news lately. Saving Medicare, cutting Medicare, reforming Medicare. Medicare has become a part of the political right’s effort to roll back all programs that were implemented in the 20^th century to help provide any safety net for Americans. I was going to say “most vulnerable Americans”, but actually many of these are programs for all Americans. The prime examples, of course, are Medicare and Social Security, often seen as the “third rail” of American politics which cannot be touched because they are so wildly popular. They are particularly popular with those who most benefit, primarily seniors who vote in very high proportions. These “entitlements” (a word that is often used by those who oppose them as a negative, but it is not) are considered so core by their recipients that they “forget” they are government programs (as in “keep the government’s hands off my Medicare!”).

So the proposal of Paul Ryan, the chair of the House Budget Committee, to essentially privatize Medicare by giving out vouchers for recipients to purchase private insurance, was heralded as “bold” by many commentators. Perhaps it was, although Ryan himself is backing away from this “bold” stand, as are most other Republicans.  Sure, sometimes “bold” is stupid, leading a charge into impossible odds (“into the valley of death rode the 600[1], but it has the implication of “heroic”, doing the right thing even in the face of certain defeat. Ryan’s plan wasn’t heroic. It was mean and callous and another part of the effort to make sure that our national policies benefit only the wealthiest among us.

The Ryan plan is terrible because it does not ensure health care but (and only in its most positive formulation) insurance coverage – it would provide vouchers to purchase private insurance. But the vouchers won’t cover any reasonable health insurance plan (remember, all health insurance is not good health insurance), certainly nothing compared to the current benefits covered by Medicare. And as any health insurance purchaser (employer or individual) knows, the cost of health insurance keeps going up. When Medicare was passed in 1965, it was because our society finally recoiled in horror at the reality of older Americans, who had worked all their lives, finishing out those lives in sickness and indignity and bankruptcy without health coverage. That need has not changed.

But Rep. Ryan’s plan, designed to gut Medicare, isn’t the only bad one. Senator Joseph Lieberman of Connecticut has proposed raising the age of eligibility for Medicare from 65 to 67, again to save money. This plan was debunked by Paul Krugman (“Medicare saves money”, NY Times June 12, 2011), who cites the work of “… the health economists Austin Frakt and Aaron Carroll [who] document, right now Americans in their early 60s without health insurance routinely delay needed care, only to become very expensive Medicare recipients once they reach 65. This pattern would be even stronger and more destructive if Medicare eligibility were delayed. As a result, Mr. Frakt and Mr. Carroll suggest, Medicare spending might actually go up, not down, under Mr. Lieberman’s proposal.” This is exactly the point I made in the recent blog “The real face of lack of access to health care”, June 19, 2011; not covering people for a period of time doesn’t save money because those people “save up” their health problems for when they are covered, and often need more expensive care.

Needless to say, Senator Lieberman took umbrage and responded with a letter to the Times which did not effectively address any of Krugman’s criticisms. His position was supported by a letter from the Executive Vice President of America’s Health Insurance Plans, the health insurance company trade group. Krugman’s criticism was supported by all the other letter-writers, including Harvard Medical School Professor and former New England Journal of Medicine editor-in-chief Marcia Angell, MD. More recently, in the Times’ “Opinionator” blog, Notre Dame philosopher Gary Gutting (“Medicare facts and convictions”, June 22, 2011) analyzes the method of argument (rhetoric) being used by the “two” sides of the debate, Ryan’s and President Obama’s (accepting Ryan’s concept that these are the only two sides). He decides that the key difference between them is one of beliefs, not data; that is, what you believe is the right thing or the way to do things determine how the problem should be addressed, not the facts, which seem to Gutting not to be really where the disagreement lies. “We can and should argue about convictions,” he says, “but this can seldom be done fruitfully in the context of specific policy disputes.  Once we’ve pushed the debate on Medicare or any other policy matter to the point where convictions become the sole basis of disagreement, it is time to vote.”

I agree that the issue is one of convictions, or belief systems. It is about whether we want to live in a society where there is come collective social responsibility or a society in which everyone is on their own.  Republicans tend to state their convictions in the language of “big government is bad”. As an abstract concept, this can resonate with working people who are struggling to support their families and feel that their taxes are too high. But this misses the fact that only through the action of government can the collective interests of the vast majority of us begin to have any weight against the vast wealth of those who fund Ryan and his colleagues (well, for some of us there are unions, but there is a nationwide campaign, well-funded by a few billionaires such as the Koch brothers, to gut any strength they have; “exhibit one” being in Rep. Ryan’s home state of Wisconsin). The Supreme Court has been a huge enabler of this movement through its decisions in Citizens United, making corporations “people” with unlimited ability to use their money to influence the political process, and the recent Walmart sex-discrimination suit in which they have severely restricted the ability of regular people to join cause to oppose those big corporations through class-action lawsuits.

The critical flaw in all of these discussions is that the core issue for Medicare is financial: that it costs too much and those costs need to be controlled by some means – whether privatization (Ryan), increasing the age eligibility (Lieberman), finding fraud (whether real, as the organized crime groups stealing billions of dollars for completely fake claims, or inadvertent minor mistakes made by doctors and hospitals “uncovered” by bounty hunters), or some other plan. Yes, it is true that the costs of Medicare are rising, maybe too high (depends on your “convictions”), and it is likely, under its current funding mechanism, to go bankrupt. This, however, is not a problem with Medicare but rather with health-care costs overall. They are rising, in this country and all over the world, as the availability of new technologies allow us to do many more things – very expensively.

 As Krugman points out, relative to other forms of health coverage Medicare is cost-effective, with much less overhead than the private sector. Cuts to Medicare alone only limit the access of those non-high-income seniors who are dependent upon it and skirt the need to address rising medical care costs. Indeed, the ways to do that (having boards that can evaluate the evidence to permit Medicare to pay only for effective procedures; limiting insurance company and drug and device maker profit; reducing the enormous payments to the highest-income medical specialists and to many specialty hospitals) have been opposed by those same colleagues-of-Ryan who propose cutting benefits to the elderly.

Rather than raising the eligible age for Medicare, or providing vouchers to buy private insurance, the right answer, fiscally as well as morally, is to expand Medicare to include everyone. It would decrease costs as people no longer put off early diagnosis, prevention and treatment. It would allow, through a single insurer, regulation of the excessive costs addressed in the paragraph above. Sure, it would cost the government more, but most of that would be covered by the money currently going to buy private insurance, and the waste engendered by the administrative structures of providers seeking to get paid and insurers seeking to avoid paying (see A Modest Proposal: Bribe the Insurance Companies, August 23, 2009). And a rise in taxes, not for most people but for those wealthiest who saw their taxes cut in the Bush years by trillions of dollars so that now the top tier and biggest corporations pay less than 15% in taxes, way lower than the middle class.

If someone complains that they do not have enough money to feed and house their children, most of us would at least feel sorry for them. But if we then find out that the reason is because they are spending almost all of a good income on alcohol, drugs, and gambling, that sympathy pretty much disappears. As a society we have done the same thing. We have dropped tax rates, especially on profits from stocks (capital gains) and bailed out the financial industry so their titans would not lose much on their gambling debts. This has led to millions of job losses and home foreclosure – people not having enough money to feed their food and children. We need to fix it, and use that money to provide health care for our people rather than profits for the gamblers.

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[1] Tennyson, “The charge of the light brigade”, 1854.

Would free medical schools increase primary care?

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An op-ed by Peter B. Bach and Robert Kocher in the NY Times March 28, 2011, “Why medical school should be free”, makes a strong argument for just that. They acknowledge that this might seem unreasonable given the fact that physicians, regardless of specialty, make so much more that the average American; indeed are “all but 2 of the 15 highest paid professions”. This data is from the Bureau of Labor Statistics, published just a week earlier. An article by Harry Bradford in the Huffington Post, “America’s 10 best paying professions: Bureau of Labor Statistics”, that indicates that 9 of those top 10 are physicians, surgeons and dentists, with CEOs the only non-medical profession cracking the group, and that at #9, ahead of psychiatrists (#10) but just behind family and general practitioners (#8). The actual numbers from BLS may be suspect; while $174K for FPs may be close to correct, there is no where I know of, one could hire an anesthesiologist for anything close to as little as $220K (or radiologist or orthopedist or surgeon).

So why shouldn’t students pay to get into such lucrative professions? After all, other schools, professional and non-professional, cost money; this is true whether the degree is in law, business, engineering and accounting, which all pay relatively well, or  music, art, teaching and social work, which pay much more poorly. What is special about physicians that should make them be able to go to school for free, as do, say, firefighters and police? Bach and Kocher argue that the high cost of medical education, with students currently averaging over $150,000 in debt and rising, contributes significantly to both the shortage of primary care physicians that this country desperately needs and will continue to need in increasing numbers, and the cost of health care, with physicians entering the specialties that make lots of money by doing lots of highly-reimbursed procedures, many of which may not be medically necessary. As discussed in the recent blog piece Primary Care, Medical School Debt, and US Health Needs: Analysis from the Graham Center (May 30, 2011), the shortage of primary care doctors is projected to significantly increase as a result of the aging of the population, the influx of formerly uninsured people through ACA, and the fact that students are entering primary care at a rate too low (just over 20%) to even replace the already-too-low percent of the physician workforce that is now primary care (just over 30%), not to mention raise it to the necessary 40%-50%. By making medical school free, and thus eliminating this debt burden, students who were interested in primary care would have far less disincentive to entering the field – and earn very good livings, as what is currently the 8^th most highly paid profession.

Going beyond this, Bach and Kocher suggest a creative method of financing the estimated $2.5 billion that this would cost (based on average current medical school tuition): charging for post-graduate (residency) training in non-primary care specialties. Medical school graduation (unlike most other schools, including graduate schools) does not prepare one to be a doctor; rather it prepares the student to be trained in a medical specialty (residency). Residents are not charged tuition, but are instead paid as workers (although it is often considered an educational “stipend”; labor law decisions have varied from state to state). Under this proposal, students entering primary care residencies would continue to receive the stipend, while those entering other specialties (in which they could expect to make a great deal more money) would actually pay (they suggest $50,000 a year, in current $) that would be put into a pool to cover the cost of medical school tuition. The actual process of collecting this money and transferring it to the medical schools, as well as controls on methods of gaming the system (for one, they note, medical schools raising the tuition as students no longer have to pay it themselves) would have to be fairly complex. Nonetheless, this is a great idea; if medical school and residency together are the educational requirement for practicing medicine, then the basic education would be free to the student while entry into higher-income specialties would require additional years of, essentially, tuition. There would be no restrictions imposed upon student choice, but the financial incentives would significantly switch from the “voodoo” workforce policy Dr. Phillips identifies (see May 30, 2011 blog) to one that is aligned with desired outcomes.

A particularly attractive aspect of this proposal is that it would not further add to the debt burden of lower-income students seeking to become primary care physicians; in the May 30, 2011 blog I quote E. Grey Dimond, founding dean of the University of Missouri-Kansas City Medical School (now the highest-tuition school in the US) saying “Farm kids in Missouri from little towns that need doctors can’t pay what we have to have.” Under the system proposed by Bach and Kocher, those farm kids – and kids from underserved urban areas – would have a chance to gain a medical education and return to serve their communities.

The other ostensible benefit, decreasing medical costs, is not likely to come from this policy alone, however. Indeed, those students entering those more highly paid specialties would wish to maintain their incomes at high levels to justify the additional cost of their education. If there indeed are many procedures being done which are not medically indicated, and there is evidence that there are (see, for example, Rita F. Redberg’s Op-Ed piece in the NY Times “Squandering Medicare’s money”, May 25, 2011), the way to reduce them is to place further restrictions on them and decrease the amount that they are reimbursed by Medicare and other payers. This would further decrease the financial incentive to choose these specialties instead of primary care.

An alternative, however, is to continue to pursue – and exacerbate – “voodoo” workforce policy. The AMA’s “RUC”, described in Outing the RUC: Medicare reimbursement and Primary Care, February 2, 2011, which is only willing to consider increased payments for primary care if the entire pie is increased thus permitting other specialists to not make any less, is a great example of how to do this. Another is the policy of “balanced benefits” contained in two bills, the Medicare Patient Empowerment Acts, introduced in the House by Rep. Tom Price and Senate by Sen. Lisa Murkowski, and strongly endorsed by the AMA, and described in detail by Dr. Don McCanne’s “Quote of the Day” on May 27, 2011.Hidden by the high-sounding names, this bill would destroy Medicare as it currently exists, and replace it with a de jure, as well as de facto, two-class system of health care. Under the current Medicare law, physicians who accept Medicare have to accept the amount Medicare pays for a given service, plus the amount that Medicare determines to be patient responsibility, as payment in full.  Under these new bills, Medicare patients could see physicians who do not now accept Medicare, use their Medicare benefits to pay the what it pays, and then pay out of pocket the difference between that and the doctor’s charge. Essentially, this would turn all but high-income Medicare beneficiaries into the equivalent of Medicaid recipients.

It is a vile proposal, which would harm most Medicare patients and pad the incomes of physicians. It is more than embarrassing that it has been so strongly endorsed by the AMA and many other physician groups, who are clearly in the business of increasing the income of their members rather than benefiting patients. Dr. McCanne notes that the American Academy of Family Physicians and the American College of Physicians (internists) are conspicuously absent from the group of endorsers. For that he, and I, and the members of these organizations, are grateful. The AMA and the other endorsers of the Price and Murkowski bills deserve the strongest condemnation from Medicare beneficiaries, their families, and the American people.

Perception and reality of economic inequality

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We see a lot written about how political views in the US are very polarized. As an example, the April 17, 2011 “Doonesbury”, portrays Donald Trump bragging that he is polling 41% against President Obama and is not even running yet; the interviewer, Mark, replies “It’s a divided country. Virtually anyone who’s not Obama gets 40%. My mailman could get 40%.” The idea is that we cannot reach accommodation because we have such different basic understandings, “belief systems”, “worldviews”.

Certainly this has been the case in Congress, although recently, in passing a budget for the remainder of FY 2011, there were actually some Democrats and Republicans voting on the same side. It is important, however, to note that the Republicans who voted against the budget condemned those who did precisely because they did not hold rigidly and intransigently to their positions, even if, as in the case of Congressman Paul Ryan’s budget proposal, those positions are based in mythological faith rather than in data. Paul Krugman, (“Who’s Serious Now?”  April 16, 2011, writes that Ryan’s proposal was “In fact, it was a sick joke. The only real things in it were savage cuts in aid to the needy and the uninsured, huge tax cuts for corporations and the rich, and Medicare privatization. All the alleged cost savings were pure fantasy.” The threat to Medicare is critical, given both the role that health reform, ACA, “Obamacare”, has played as a touchstone of evil in the fantasy world of Ryan and his party, and the real loss of healthcare, along with their jobs, faced by so many Americans.

A lot of people wonder how it is that such a large portion of the US population, can support Republican proposals that are so obviously about increasing the financial benefit to the richest Americans while hurting most everyone else, including, obviously, most of those supporting the Republicans. Are they selfless advocates of big money, such that they are willing to sacrifice their own interests to aid the least needy? Do they truly believe that each of them, despite the mathematical odds, has a good chance of becoming part of that select group? Are they stupid? It may be that either or both of the last two are true, but the first, unsurprisingly, is not. This is demonstrated in a very interesting study by Michael I. Norton, of the Harvard Business School, and Dan Ariely, a psychologist from Duke, recently published in Perspectives on Psychological Science.

In “Building a better America: one wealth quintile at a time”[1], Norton and Ariely present a large (5522) random sample of Americans three pie charts showing possible distributions of wealth among income quintiles as possible ideal models. One is equal: 20% in each. One is less equal and is in fact the distribution of income (not wealth) in Sweden The third is the distribution in the US. (That the second one is not in fact the wealth distribution in Sweden is not really important here; it could be called “Mars”; it is just an intermediate distribution).  About equal percents chose the “equal” and “Swedish” distributions, 77% preferred “equal” to the US, and 92% preferred the Swedish to the US. Given that people were told to assume that they had a random chance of themselves being in any quintile in any of the distributions, the preference for a more equal distribution may be unsurprising; indeed it suggests that more than half of those in the top quintile are less selfish and would support a more equal distribution of wealth. This, by the way, is consistent with a report by CBS news report from April 17, 2011 “The US Tax code: a ‘huge convoluted mess’”, in which several multi-millionaires argue against the idea that “…the rich can't afford higher taxes.“ One says “Every time I get a tax cut, I get richer…‘I don't buy one thing that I don't already have. I don't put money back into the economy. I just get richer.”

An even more interesting part of Norton and Ariely’s study involved asking their subjects what they though an ideal distribution of wealth among Americans should be and what they thought it actually was.  While their ideal was not “equal” – it assigned over 30% to the highest quintile and just over 10% to the lowest –it was much more equal than their perception of the actual distribution, which had the top quintile having nearly 60% of the wealth, and the lowest quintile only about 2%.

But, as the figure shows, their estimates were way off; in actuality the top quintile has 84% of the wealth, the third (middle) quintile well less than 5% (not much more than their estimates gave to the lowest quintile), and the two lowest quintiles are not even visible on the graph, with a total of 0.3% of the wealth. More important, there was little difference between various groups such as men and women, income levels (<$50K, $50-100K, >$100K), or whether they had voted for Bush or Kerry in 2004 (the data was collected in 2005). All groups felt that the ideal wealth distribution should be significantly more equal than they believed it to be, and all groups believed it to be far more equal than it actually is.  

Norton and Ariely express the hope that this study will inform public policy creation; that by showing that the American people are much closer together in their vision of a just distribution of wealth in society than are the politicians and pundits we hear so much from, there is a chance of reaching some greater consensus in terms of economic policy. This hope is endorsed, from several different perspectives, by the 4 commentaries that accompany it in the same issue of the journal, by Dunn et al (“Consensus at the heart of division”), Tyler (“Procedural justice shapes evaluations of income inequality”), Kagan (“Unclear implications”), and Schwartz (“A new veil of ignorance?”).

So why do we have such divisions? Schwartz notes that “T. Frank (2004) argued, somewhat insultingly, that average Americans are being duped to vote against their real economic interests. But the Norton and Ariely data suggest that people vote against their preferences. How can people be duped to vote against their preferences?” That he can ask this question means perhaps Frank was correct. Kagan beings to get to the answer when she writes “To start with the obvious, precisely because such a huge portion of American wealth is held by such a tiny percentage of individuals, these individuals have an extraordinary interest in maintaining the currently inegalitarian distribution. And unlike the vast majority of Americans, who have so little and thus have so much to gain, this tiny minority has the immense resources to see to it that their interests are carefully attended to by lawmakers.”

Moreover, people do not vote on one issue, even if the issue is their economic self-interest. Indeed, this is what Thomas Frank writes about in “What’s the Matter with Kansas?” Frank says people may vote for candidates because of their stands on social issues (e.g., abortion, gay marriage) rather because of their positions on economic issues. On the other hand, in the recent (2010) elections, we observed a justified anger at the economic situation that led to a massive shift to those who were not in power (the Republicans), who have responded not with plans to increase jobs or equalize wealth but to dismantle all the progressive reforms of the last 100 years; not to get government out of people’s lives, but even more into their bedrooms.

And the economic arguments, as Krugman notes, have tremendous implications for health and health care, given the size of health spending as a portion of our economy. Rep. Ryan’s “solution” for the deficit relies in great part on the restructuring of Medicare to reduce its support for the health needs of American seniors, when indeed what is needed is the expansion of Medicare, as a single-payer, more-controllable, health financing model, to all Americans. Ryan’s attack on Medicare is part of his attack on any semblance of a social contract or social justice, and is part of the continued redistribution of wealth from the less-well-off to the rich.

In the CBS report discussed above, David Cay Johnston, who teaches tax regulation at Syracuse University Law School, notes that  "All the data are overwhelmingly showing that for the last 30 years, we've been redistributing wealth upwards….It's not trickle-down economics; it's Niagara-up!" The Norton and Ariely data suggest that the American people do not support such a flow, and this is consistent with the fact that every poll for the last 20 years notes that we would support a universal health insurance plan. Maybe Paul Ryan’s attack on Medicare will finally be the impetus for us to go beyond the limitations of ACA and get real health-care-for-all.

[1] Norton MI and Ariely D, “Building a better America: one wealth quintile at a time”, Perspectives on Psychological Science, 3Feb2011;6(2):9-12 doi: 10.1177/1745691610393524

Outing the RUC: Medicare reimbursement and Primary Care

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Along with many others, I have written extensively about the need for more primary care physicians in the US. I have also addressed the various disincentives that exist for medical students to enter primary care specialties, such as family medicine, rather than narrower subspecialties or procedural specialties. One of these is the lower income earned by doctors in primary care; this is felt by many to be one of the major issues in specialty selection, and is increasing in importance as students graduate from medical school with larger and larger debt burdens, often exceeding $200,000. A study by the Robert Graham Center of the American Academy of Family Physicians (AAFP), “Income disparities shape medical student choice”, finds that the difference in income between primary care on subspecialists has been increasing since 1981, and that by now there is a difference of $3.5 million in the lifetime income of the average subspecialist (not even the most highly paid) and the average primary care physician.


So why is there such great variation in the reimbursement of different specialists? It is not on hours worked; many studies have taken this into account and found that on an hourly basis there is a great variation. The Wall St. Journal’s Anna Wilde Matthews and Tom McGinty, in “Physician panel prescribes the fees paid by Medicare”, describe a study done for the Medicare Payment Advisory Commission, MedPAC, that found a wide-range in per-hour reimbursement, from $101 for primary care physicians to $161 for surgeons to $193 for radiologists and $214 for dermatologists. It is not on the basis of length of training; all physicians go to medical school and the training, for example, for surgeons is considerably longer than that for dermatologists. Is it how hard the work is? After all, not everything is brain surgery. Well, to an extent, but there is considerable latitude in how “hard” is valued. What about “necessary to the health of a person” or “necessary to the health of the population”? Hardly. Let’s discuss this some more.


First, it is important to understand that the reimbursement paid to physicians by Medicare is essentially the basis for payment from all payers; contracts and reimbursements are almost always based upon multiples of what Medicare pays. Depending upon the size of the physician group negotiating with an insurance company, the particular multiplier may be greater or smaller, but Medicare reimbursement is the yardstick. Medicare payment itself is based on a formula that is primarily based upon the work that a certain activity involves, with several smaller modifications (regional variation, malpractice cost, etc.). This formula is described by health economist Uwe Reinhardt in his December 10, 2010 Economix blog for the NY Times, “The little-known decision makers for Medicare physicians fees”. Based on complex (or not) scenarios constructed for this purpose, the amount of “work” involved in over 7,000 “procedures” (for this purpose, “procedure” includes things like office visits of varying length and complexity) are assigned relative value; indeed they are assigned “relative value units” (RVUs).


But over time things change. A surgical procedure that might have taken a long time and required a hospital stay may now be done quickly in an outpatient setting. Counseling and managing several complex diseases in a primary care setting may take a lot more work and time. So the relative values may change, and reimbursement could go up or down for any of these “procedures”.


Except that, in order to keep Medicare spending from spiraling even more out of control than it has, the total number of RVUs has to stay constant. So when the number of RVUs (specifically, work-RVUs, or wRVUs) for one procedure goes up, those for others have to go down. Enter the RUC.


Several recent articles, included the Matthews and McGinty and the Reinhardt pieces cited above, have addressed the role played American Medical Association’s (AMA) Relative Value Scale Update Committee, or RUC, an organization most physicians, not to mention most other Americans, have never heard of. This group of appointed doctors makes recommendations to the Center for Medicare and Medicaid Services (CMS) about the relative amount that Medicare should pay for different physician activities. While not required to do so, CMS takes the recommendations of the RUC more than 95% of the time. While about half the services provided by physicians are in primary care, primary care doctors, according to an article in the New England Journal of Medicine by Washington state Congressman and physician Jim McDermott, “Harnessing our opportunity to make primary care sustainable”, only 6% to 13% of the 29 physicians on the RUC are in primary care. While they are supposed to be unbiased toward their own specialties, this does not seem to be what happens. Psychologically, even when they are trying to be fair, they know more about what they do and how “hard” it is than they do about what others do. Concretely, it may be easier to measure the work involved in “1 colonoscopy” or “1 gall bladder surgery” or “reading one chest x-ray” than the complex variation in primary care visits. In any case, the record demonstrates that RVU assignment, and thus reimbursement, has continued to go up for specialist procedures and thus down for primary care.


So we have a bunch of physicians, appointed essentially by their specialty societies, making recommendations on how much physicians should get paid, and a bunch of specialists deciding how to value what they do compared to what others do (certainly a conflict of interest, as defined by Howard Brody and discussed by me in The AAFP, Coca-Cola, and Ethics: Serving the public interest?, August 20, 2010), and a tremendous dominance of non-primary care over primary care physicians among this group. Why should we be surprised that we get the results that we get?


More important, for the health of the American people, the decisions made about reimbursement drive what procedures are done and what activities physicians pursue. Since reimbursement is based on “work”, not “benefit” – to the individual or certainly to the population – we get the bizarre mix of health care services that we have. Writing in Kaiser Health News, Brian Klepper and David C. Kibbe, in an article titled “Quit the RUC”, note this:


“But there is a more insidious and destructive issue at hand. The perverse incentives that are embedded in fee-for-service physician payments influence care decisions and are a principal driver of the health system's immense excesses. Encouraged by the RUC, sometimes unnecessary specialty procedures may appear more valuable and appropriate than primary care services. The system pays more for invasive approaches, so conservative treatment choices that are lower cost and lower risk to the patient may be passed over, especially near the end of life. The resulting waste, half or more of all health care dollars, has fueled a cost explosion that has led the industry and the larger economy to the brink of instability.”



Different solutions have been proposed. Klepper and Kibbe suggest that the primary care professional groups drop out of participation in the RUC altogether (“Quit the RUC”). Reinhardt feels that there is value in getting advice from this independent group, but that CMS should be much more cautious about taking its recommendations. McDermott agrees, or suggests that at least the number of RUC members be adjusted or increased to include a much larger percentage of primary care physicians.

One or more of these solutions needs to occur. Most importantly, the solution needs to look at overall benefit when assigning reimbursement value. I considered titling this piece “Wreck the RUC” (alliterative and less offensive than the other obvious, rhyming, option). If we are interested in improving the health of the American people, we need more primary care doctors, and we need to address all the open and hidden factors that are in place to work against such change. The RUC is a good place to start.
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Solving Medicare costs and the budget deficit: primary care, cost-effectiveness, and universal health coverage

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According to the New York Times, “Here is a basic truth about the deficit: In the long run, it cannot be fixed, without reining in spending on Medicare and Medicaid.” In a December 11, 2010 editorial titled “Health Care and the Deficit”, the Times lets us know that Medicare, Medicaid, and S-CHIP (the Children’s Health Insurance Program that covers low-income children whose families are too “rich” for Medicaid) account for more than 20% of federal expenditures, more than Social Security or national defense; and that, if unchecked, will rise to 40% by 2035. To the editorialist this is obviously unacceptable, and s/he reviews the proposals of the two recent “bipartisan” commissions that have made recommendations to reduce spending on these programs.

Overall, the editorial is good in that it is very critical of the recommendations of both commissions. “The most disturbing element of both reports is that, in their efforts to show quick savings, they shift much of the burden from the federal budget to individuals or, in some cases, to states. That may make the federal deficit look better, but it is a shell game that produces no real reduction in the cost of health care.” Bowles-Simpson (the conceived-of-as-a-deficit-reduction-but-changed-into-a-tax-cut panel, previously addressed in my blog of December 12, 2010 Tax Breaks for the "Masters of the Universe" or for the rest of us? ) wants mostly to save money by having greater “cost sharing” by Medicare beneficiaries.

While, as the editorialist points out, there is something to be said for people with any type of insurance not being completely insulated from the cost when they opt for probably-unnecessary expensive tests, the fact is that the fault is much less often on the part of the patient than on the part of the doctors who recommend these tests. This is particularly true when those doctors have a financial interest in doing the tests because they are highly-reimbursed for them. If this is the problem, then regulation should address it directly, by having Medicare, Medicaid, and other insurers use cost-effectiveness criteria rather than taking the real risk that “people on modest incomes might forgo needed care.”

The other panel, Domenici-Rivlin (another “bipartisan” group headed by a conservative Republican and a conservative Democrat), also recommends cost sharing, and goes even further by taxing the cost of health benefits that workers receive. It relies on the idea that, with cost sharing, beneficiaries will restrain their own spending. They are likely to – even at the cost of their own health. It also resurrects the idea of vouchers for people on Medicaid.

Yes: Medicare, Medicaid, and the entire US health system spend too much money; and yes: the cost of what is called “health care” is squeezing out spending on other critical social programs, such as education. But the recommendations of these two commissions, essentially capping spending while continuing to reward private health insurers through their “market-based” solutions, will only exacerbate the problem.

Meanwhile, following on the heels of Massachusetts’ experience in not having enough primary care doctors – or other providers – to meet the health needs of its increased number of insured citizens, California is experiencing the same problem, without even having a state-wide health reform. Documented in the PBS News Hour report aired November 18, 2010, “In California, facing down a family physician shortage”, residents of that state cannot find the primary care doctors they need to provide cost-effective care, and it is anticipated to get “worse” with health reform. Paul Leight, a health economist at the University of California Davis, states “So, we have more than 20 million Americans who now don't have health insurance who will have health insurance. And once they get health insurance, naturally, they're going to want to see a primary care physician.“ Naturally. And we don’t have nearly enough of them.

But, of course, as has been it seems endlessly documented on this blog and by study after study, including for example the Commonwealth Foundation’s 2010 report “Mirror, Mirror on the Wall: How the Performance of the U.S. Health Care System Compares Internationally, 2010 Update”[1], the US spends far more (2-3 times more!) and gets worse health outcomes than all other developed countries. Commonwealth’s 2008 report shows that the US, in terms of health outcomes, did worse than in its original report of 2006, and spending has continued to increase. The biggest reason for the excessive cost in the US is that it is based in a system geared to profit, by insurers, drug and device makers, and health care providers (including hospitals, doctors, nursing homes, etc.) As I have pointed out (for example, in A Modest Proposal: Bribe the Insurance Companies, August 23, 2009), it is not simply the profit itself that causes the grossly bloated cost of US health care, but the inefficient system built to ensure the continuation of that profit. To suggest solutions based on increasing the role of private, profit-incented, players as a method of controlling costs is illogical. Increasing profits will come either from increasing costs or from decreasing access to care. This is not the way to go.

The goal must not be simply reducing costs, but increasing quality. The wonderful thing about health care is that our system is so bloated and inverted in its incentives and outputs – and in having far more tertiary than primary care -- that this seeming contradiction, reduce costs and increase quality, can be achieved. Different groups push for more primary care, limitations on high cost technical procedures, and a more rational health system based upon universal access and elimination of profit. Unfortunately, taken alone, each is inadequate. Here is what the evidence shows will work:

More Primary Care. We need a system based upon primary care, so that Massachusetts, California, and the rest of the country, can have the primary care providers they need. This is the focus of the Patient Centered Primary Care Collaborative (PCPCC). This means completely changing the financial incentives at every level that lead to production of more subspecialists. The “encouragements” for increasing primary care contained in ACA are inadequate. The key issue is the inverted reimbursement system in which procedure-based subspecialists make many times the income-per-hour of primary care doctors. The reimbursement system used by Medicare (upon which all other insurers base their reimbursement), currently controlled by a specialist-dominated advisory group, needs to change entirely so that potential income is eliminated from the specialty-choice decisions of medical students, and so that procedure-based profit is eliminated from the decision of hospitals about what kind of care and specialists they wish to support.

Cost-effectiveness payment. Tied to changing the mix of primary and sub-specialty providers and their reimbursement is for Medicare and other payers to not pay for, or not pay as much for, unproven high-cost therapies, whether those are new drugs or devices or unproven procedures. This does not mean denying access to some procedures or drugs across the board to all patients; it means appropriately selecting those who are most likely to benefit. This is a complex science, but an easy concept: what is likely to be cost-effective for me may well not be for you, because we are different, in disease, disease stage, intercurrent conditions, underlying reserve, etc.

Universal not-for-profit health insurance system. This is the sine qua non, the single necessary element for improving the health of all our people. It is not sufficient in itself, but without it there is no chance to control costs, or to implement reimbursement reform, or to effectively limit the use of high-cost, low-effectiveness and/or unproven technologies.

These will work, but need to all be done. Expanding primary care and limiting expenditures on high-cost procedures will not improve everyone’s health unless we have a university health insurance system that is not based upon profit; a universal health system without increased primary care or cost-effectiveness criteria for procedures will not achieve either goal of improving America’s health or saving money. They are all necessary legs for the stool of cost-effective, high-quality, universally-accessible health care to stand up.


[1] K. Davis, C. Schoen, and K. Stremikis, How the Performance of the U.S. Health Care System Compares Internationally 2010 Update, The Commonwealth Fund, June 2010.
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Tax Breaks for the "Masters of the Universe" or for the rest of us?

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In an Associated Press story from November 28, 2010, “Tax break for employer health plans a target again” (it was widely picked up; here I’ve given the link to the Pensacola News-Journal), Ricardo Alonso-Zaldivar writes about the resurgence of interest in eliminating the employer tax break for contributions to employee health plans. This proposal, put forward from time to time, has been given new prominence by the recommendations of Erskine Bowles and Alan Simpson, the. not dumb and dumber but right-and-righter co-chairs of the President’s task force on deficit reduction, which they have morphed into a task force on cutting taxes. For Bowles and Simpson, it is one of only a number of proposals they make that would take away middle-class tax benefits, and not even the least popular: that honor would almost certainly go to the elimination of the mortgage interest deduction.

The employer’s ability to deduct contributions to their employees’ health insurance goes back to the post-World War II era, when there was tremendous competition for workers (imagine that!) and wage and price controls made it impossible for businesses to compete on the basis of pay, so fringe benefits – specifically health insurance – became a real perk. The unions liked it because they could bargain for this benefit for their members. The losers, of course, were all of us, who did not get a national health insurance program. And for many years this benefit has been a real advantage to being employed by a company with a collective bargaining agreement, and clearly unions will strongly oppose any effort to make it more difficult for them to achieve this benefit.

Meanwhile, some Medicare recipients, concerned about maintaining one of the few benefits the elderly still have, have come out against much of the health reform bill. Many of the most vocal opponents are the wealthy elderly, but unfortunately many middle- and working-class seniors are in this group. This is the subject of James Surowiecki’s piece “Greedy Geezers?” in the New Yorker, Nov 22, 2010, as noted by Tallgrass Activist David Kingsley. While the title might be offensive, many of his points are well taken: “There’s a colossal irony here: the very people who currently enjoy the benefits of a subsidized, government-run insurance system are intent on keeping others from getting the same treatment.” One example of what seniors can see as real cutbacks to their benefits are the cuts to the Medicare Advantage program. Medicare Advantage (also known as Medicare Part “C”) is a program that basically takes your Medicare payment, and an additional payment from you, and enrolls you in an HMO that provides you benefits beyond that which traditional Medicare offers (such as glasses, hearing aids, a better drug benefit, especially before Part “D” was enacted). It was created by the Reagan administration as a way to, at least in part, privatize Medicare, and was accompanied by higher payments from the federal government to these insurers than was spent on traditional Medicare beneficiaries. This was a corrupt program that ACA was right to eliminate, but because those seniors enrolled in it were getting a benefit, they receive a cut. Of course, the cut (appropriately) is much greater to the insurance company, which was getting most of the benefit (the extra benefits received by the enrollees were worth much less than the insurance companies were being paid).

What a great example of divide and conquer! Bowles-and-Simpson’s (now they are one, ostensible bipartisanship aside) proposals, while they were supposed to be about deficit reduction, are all about decreasing taxes. And especially decreasing taxes on the wealthiest Americans and corporations, a strategy that has been demonstrated by the last decade to be extraordinarily beneficial to – the wealthiest Americans and corporations. Trickle down economics, decried by George HW Bush as “voodoo economics” during the 1980 election, are no less so now, although to call them that insults voodoo. Interviewed on NPR’s “All Things Considered”, Bowles-and-Simpson are asked about the criticism of their proposals by economist and NY Times columnist Paul Krugman, who says it is about redistributing wealth upward. While Simpson says Krugman has “lost his marbles”, he doesn’t address Krugman’s criticisms.

The fact is that the wealthiest are doing great and everyone else is being penalized. This cannot be justified by any reasonable economics, voodoo, trickle-down, Friedmanesque or anything else. The elite have a Congress that they have bought and paid for, as discussed in his November 28, 2010 column, Still the Best Congress Money Can Buy, by the NY Times’ Frank Rich. He refers us to recent Times articles documenting the recent enormous corporate profits (“Corporate Profits were the highest on record last quarter” by Catherine Rampell, November 23, 2010) and profligate spending by the Wall St. “masters of the universe”[1] (With a Swagger, Wallets Out, Wall Street Dares to Celebrate, November 23, 2010, by Suzanne Craig and Kevin Roose), while the Times’ editorial page reminds us that while they grow wealthier regular people, who still can’t get jobs, also can’t even get their unemployment benefits extended (The Unemployed Held Hostage, Again, November 28, 2010).

Our health system has long been terrible, in lack of equitable access for many while there have been enormous profits for the insurance and pharmaceutical industries, in excessive interventions and procedures for the well-insured masquerading as the “best health care system in the world”, quantity masquerading as quality even for those who have had health coverage. As developing countries such as India seek to develop their own health systems, the US is notable as a model for what should not be done (see the interview with Nobel-prize winning economist Joseph Stiglitz in the Times of India 'The US model of private health insurers is inefficient, expensive' (thanks to Don McCanne in his wonderful Quote of the Day). The ACA was a first step to fixing it, but scarcely a final one. It is time to stop talking about how to inflict more economic pain on the bulk of Americans, unemployed and working, until we stop giving the store away to the elite.

Surowiecki notes that “seniors think of Medicare as an “entitlement”—something that they have a right to because they paid for it”. Why not? Even though he notes that today they “get far more out of Medicare than they ever put in,” he adds, appropriately, that “There’s nothing wrong with this: the U.S. is rich enough so that the elderly shouldn’t have to worry about having health insurance; before Medicare, roughly half of them didn’t have it”. He’s right on that. And we all should have it – Medicare for all, coverage for all of us. After 45 years of it working for seniors, it is time for it to be an entitlement for everyone. Something, finally, for the 99% who are not the “masters of the universe”. Sounds good to me.

[1] A phrase coined by Tom Wolfe to refer to Wall St titans in his 1987 book The Bonfire of the Vanities, Farrar Straus and Giroux.
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Hospital Readmissions: Who pays, who decides, and for whom?

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I recently attended a Forum on health reform put on by the Sunflower Foundation of Topeka, Kansas in Lawrence. The keynote speaker, John McDonough, PhD, gave an excellent rundown of the contents of the ACA health reform law. Prior to that a panel of experts from state government, that included Sandy Praeger (a Republican), Kansas Insurance Commissioner and former chair of the National Association of Insurance Commissioners (NAIC). She made it clear that the requirement that large insurers spend 85%, and small ones 80%, of their premiums on actually providing health care (infamously known as the “medical loss ratio” in insurance circles) will be taken seriously, and that insurance commissioners in NAIC, which is the group charged with making the recommendations on this issue to HHS, will not blithely allow insurers to load lots of costs not obviously related to patient care (like marketing and paying the folks that deny your claims) into this bucket. Other participants included Andy Allison, head of the Kansas Health Policy Authority, a governmental agency that, in addition to doing health policy runs the state Medicaid program, and several people from area foundations and consumer advocacy groups. One might have thought, listening to the discussion, questions from the audience (largely health advocates and professionals), and the responses to them, that Kansans are not only thoughtful but caring, worried about the health of their neighbors and fellow citizens, and hoping that health reform will really bring about positive change.

So, all the rest of you non-Kansans, keep this in mind when you see who we elect to statewide office, to our legislature, and to Congress. They don’t represent everyone in this state. Maybe their positions don’t even represent their own beliefs but rather crass political calculations. Or, perhaps, financial calculations; looking at where the big contributions are coming from, and serving the interests of those donors.

As panelists discussed what they saw as important parts of ACA, I was struck by the comment of one person, representing a consumer group, that a big way that ACA would save money would be in Medicare not paying for hospital re-admissions. (Actually, the term, in Section 3025 of the ACA, Public Law 111-148, p. 290, the term is “excessive” readmissions.) The assumption here is that the re-admission was a result of inadequate care on the previous admission, premature discharge (motivated, presumably, by the length of stay guidelines that are widely in use by organizations such as, say, Medicare!), etc. This is an attractive idea; after all, if you bring your car in to be fixed, and it breaks down shortly thereafter, should you pay for the second visit to the mechanic? (She didn’t say that; it is my metaphor.)

But, of course, only if it for the same problem, right? Not if the first hospitalization was for a broken leg, and the second for heart failure. After all, if your car had its brakes fixed and the transmission goes 2 weeks later, it is not the mechanic’s fault. Unless, maybe the second hospitalization was for a complication of the first, like say a blood clot in the lung. Especially if the patient was not given proper clot prophylaxis the first time. But what if they were given that prophylaxis and the clot happened anyway? It is not always so simple.

It is not always so simple even when the re-admission is for the same problem. People with advanced chronic diseases have advanced chronic diseases. They can be treated as outpatients, but will frequently decompensate, and require hospitalization. Remember Red, Blue, and Purple: The Math of Health Care Spending (October 20, 2009)? This is one of the main groups comprising the 5% of people who use 50% of the health care dollars; even when they are brought into the hospital and “tuned up” (yes, this automotive phrase is in fact used), even, or especially, when they have spent time in intensive care, they get sick and require hospitalization again. Their body is dying, but modern medical care can do remarkable things to forestall that death, to patch folks up, to send them back home, or to a nursing home -- for a while, until their body resumes its inevitable decline; the closer a person in this condition is to dying, the more frequent the readmissions. To continue the automotive metaphor, it is one thing to bring in a 3 year old car for new brakes and have them begin to fail 2 weeks later and bring it back; it is quite another when the car is 15 years old, has multi-system failure and won’t run, but the great mechanic can patch it up so you can drive it off – when it fails again in 2 weeks, is this the mechanic’s fault?

It is obviously unreasonable to say that you won’t pay the mechanic the second time, or for Medicare or other health insurance to not pay the hospital and doctors for the work they do on the re-admission. It might be reasonable to decide that the person, like the car, is not salvageable beyond the very short term and should not be readmitted, but this is a decision that can’t be made by the treating doctors and hospital, and it is unreasonable to not pay them when the patient returns because they did such a good job of keeping him/her alive the last time. When are these readmissions “excessive”?

So who should make the decision? Ideally, the patient, in consultation with family members or others s/he trusts, maybe even his/her doctor. This is, after all, the idea behind what we call “Advance Directives” such as Living Wills and Durable Powers of Attorney for Health Care. But not everyone has them, not everyone has even discussed their preferences with their family or their doctor, not to mention put their decisions down on paper so that those responsible for making decisions when s/he cannot have both something to guide them and, indeed, something that requires them to do it. Doctors are not paid to have these extensive discussions with people, although many of them do it anyway; the component of ACA that was going to reimburse for these discussions was struck after being maligned as (wrongly) being “death panels” that would “decide to kill your grandmother”.

But who should decide? If an elderly person is demented, cannot communicate, is in kidney failure and heart failure and has been admitted several times, including to intensive care, and kept alive by medical technology, who should decide if they will be readmitted from the nursing home when they get worse? Often the nursing home just sends them. If there is family, they are the ones who currently make these decisions, provided that they can agree. What if the patient cannot swallow without choking, but the family doesn’t want him/her to “starve” – should this person get a big central IV to give basic nutrition, or have a surgical procedure to feed directly into the stomach? The family does not pay, Medicare does. What would you decide? You would never do this to your parent or want it for yourself? Are you willing to be on the “death panel” that overrules the family? What about the similarly demented and sick person who has been admitted to the intensive care unit 3 times in the last year, amazingly “survived” to discharge, and finally, after several later readmissions, finally does die. And the daughter wants to sue because “somebody” must have done “something” wrong? Should we not pay the hospital? Should we tell the ambulance not to pick her up? Will you be the one to tell the daughter that the fact that she has obviously unresolved issues, and that she should have accepted during the first 6-week ICU stay that her mother was going to die soon?

I hope you will be. I hope you will be out there, helping support the healthcare professionals to make the right decisions, not because Medicare is paying but because they are right. And help us to figure out what the right decisions are. While all of us feel differently about those close to us than about strangers, "save money on them, spend it on me!" is not a reasonable, or moral, strategy.
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Health Care Needs Should Guide Health Reform

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As the debate over health care reform proceeds in the Senate, and in the nation, it is important to take stock of the key assumptions of those planning the changes. The Democrats have chosen to combine increased regulation and requirements for insurance companies with economic incentives, in an effort to cover more people and reduce skyrocketing costs. The Republicans have chosen to combine a core opposition to any proposal originating from the Administration or the Democratic leadership (articulated by New Hampshire Republican, and almost-Obama-cabinet-appointee, Judd Gregg) with cynical attempts to portray themselves as the defenders of currently-insured Americans by opposing cuts while criticizing the proposal for not saving enough money. The classic here is John McCain, who campaigned on a platform of quite draconian cuts in Medicare, screaming that the much more modest cuts in the Democratic proposal will, essentially, kill old people.

While the Democratic proposal does resemble an effort to patch the chinks in a leaky old house as winter approaches, leaving lots of holes and at cost greater than fixing the whole thing, the Republican scare tactics should be seen as what they are. Across the board cuts in Medicare would be a bad idea, as are almost all across-the-board cuts in any organization, but cuts which reduce the over- and unnecessary use of expensive tests and procedures, while increasing access to primary care, would save a lot of money. To be sure, the doctors and hospitals who provide those tests and procedures would take a financial hit, but it is unlikely to lead them to food stamps. A colleague who is in the health care field, but not a physician, told me that he had been at a meeting in which a Canadian doctor talked about the structure of their payment system, which pays subspecialists less than they make here, and observed that such change would be opposed by the specialists who would not welcome their income being reduced from, say, $600,000 to $400,000. What is there to say? Life is tough? It is hard to see the American people, worried about their jobs and future, increasingly (as I have recently discussed) on food stamps, fighting to prevent such losses. And, more important, I am sure that we will find doctors in those subspecialties who are willing to work for the $400,000.

The bigger problem with the Democratic proposal is that most of its solutions are based on creating business and economic incentives to try to get insurers to do the right thing, or at least a little more right and a little less evil. This is, I suppose, good insofar as it goes, and seems to be convincing even progressive economists such as Paul Krugman (“Reform or else”, New York Times December 4, 2009). But the idea of patching the house of health care using economics is intrinsically flawed, when the model should be based on social justice, morality, and doing the right thing for our nation and our people. Sophisticated businesses, whether Wall St. banks or health insurance companies, will always find ways to “game the system”, to find profit by reducing service, no matter how the economic incentives are structured (although surely they can be structured better than they are now). Even organizations that are intended to meet the health needs of the underserved can, because of the way incentives are structured, find that they can do better (or even simply survive) by caring for some needy in preference to others.

A case in point is one of our local Federally-Qualified Health Centers (FQHCs), also known as Community Health Centers (CHCs). I discussed these entities nearly a year ago, on December 30, 2008 (Community Health Centers, and more recently on September 3, 2009, Public/Private funding: We’re all in this together). These clinics are financially supported by the federal government largely because, in return for caring for the poor and meeting other federal service and reporting requirements, they receive cost-based reimbursement for Medicare and Medicaid patients, leading to Medicaid payments that are usually several times that paid to private doctors. They also usually receive a federal grant that helps support care provided to the uninsured. However, that money is never enough, and the additional funds from Medicaid and Medicare help subsidize that care for the uninsured.

One branch of the local FQHC located in northeast Wyandotte County, KS, where I live, served a desperately poor neighborhood. Indeed, most of the people are not on Medicare (because they are too young) or on Medicaid (because, while many are unemployed and others work for low wages at businesses that do not provide health insurance, either they are not families with young children or, if they are, they are often undocumented and ineligible). So the clinic was financially unable to support itself, and has solved its problem by moving to another part of the county, where the percentage of poor people with Medicaid is much higher. Still poor, to be sure, and in need of providers, but a good business move for the FQHC.

The problem, of course, is those people living in their old community. They did not go away, become more prosperous, or become more likely to be insured. They just lost their only source of health care. It’s hard to completely blame the FQHC, for all other providers left that community long ago, although the FQHC was specifically designed to fill these gaps. It is possible, and popular, to blame the “illegals” who make up much of this abandoned population, but while this works for propaganda, it is not so smart in reality. These people are here, and absent access to primary and preventive care they will continue to show up in emergency rooms to receive care for advanced disease that could have been treated more cost-effectively.*

Fortunately for this community, an independent, non-federally supported, safety net clinic (disclaimer: I am on its Board) has opened a small satellite in the basement of a church in that community. In doing so, it is not employing a traditional business plan; it is going where the need is, rather than where it can expect to make money. This will be a good thing for the people of that community, but it is no solution to the health care crisis, and cannot be expected to be replicated everywhere as a means of patching those chinks in our system. Not only does it depend upon funding from private foundations to exist, it depends upon enormous “in kind” contributions from its health care providers, doctors and dentists and nurses, who all receive the same wage as every other worker in the clinic, currently $12/hour.

But it could work on a national basis; not the part about doctors and dentists earning $12 an hour (we’re not talking here about $400,000 instead of $600,000!), but rather a national plan for a system that is predicated not on profit but on caring for people. A health care system which did not discriminate among people, but ensured that providers caring for everyone could survive and make a living, so that there would not be big parts of our population left out. Like a single-payer plan. Like Medicare for All.

Our system is upside down. Every other first world country has a health system built upon the idea that everyone is entitled to access to health care. Financial incentives to providers and insurers may work to fill some gaps. Ours uses financial incentives to provide care to a majority of our population, but it is a shrinking percent and even for them the coverage is decreasing and the cost is rising, and volunteerism and sacrifice are relied upon to fill the holes.

A health system for our country should start with ensuring access to high-quality health care for all our people. As I have discussed before, it may actually save money, but the reason to do it is that it is the right thing to do.

*This is not to mention that they work and pay taxes – often payroll, but certainly sales taxes – for low wages. What happens when they really leave – see “Arizona” – is there aren’t enough people to do these jobs, and aren’t enough people to rent housing – causing a major negative financial ripple effect.
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