The Republicans are right. We should cut Medicare. And I know how: Keep Medicare’s funding for actual health care but eliminate bureaucratic waste, profits, and the expensive and preposterous ban on negotiating drug prices. In other words, get rid of Part C and Part D and absorb the extra features into traditional Medicare.
Strong majorities of Americans across the political spectrum agree that Medicare needs to negotiate the price of prescription drugs. Prices here are roughly double what patients in other countries pay for the same drugs. Over the next ten years, Medicare is projected to spend $1.5 trillion on prescription drugs. Clearly, negotiating drug prices would save a lot of money.
Medicare Advantage, formally known as Medicare Part C, was created as a way for the private insurance industry to help control the cost of Medicare. But instead of saving taxpayers money, these for-profit insurers successfully lobbied the federal government to pay them significantly more than would have been paid for comparable patients in “traditional” Medicare.
Although Advantage plans aren’t allowed to overtly exclude costly (read: unprofitable) patients, they have found ways to push high-cost patients back into traditional Medicare by charging high copayments for drugs and services that are mostly used by high-cost patients. For instance, the Advantage plans have raised copayments particularly quickly for ambulance services, home health care, partial hospitalization, and inpatient services. A new analysis shows that the resulting shift of high-cost Advantage patients to the traditional Medicare program saved the for-profit Advantage plans $5.2 billion in 2007-2009.
Advantage plans save additional money by limiting care. Compared to traditional Medicare enrollees, seniors on Advantage plans received 24 percent fewer diagnostic tests, 38 percent fewer flu shots, and 15 percent fewer colon cancer screening tests. That’s just not good medicine.
Because Medicare pays Advantage plans a higher premium for sicker seniors, Advantage plans have learned to cherry-pick healthier seniors and lemon-drop the sicker ones. For example, Medicare pays Advantage plans several thousand dollars extra for patients with heart failure. But insurers know that heart failure ranges from nearly undetectable (and inexpensive to care for) to overwhelming (and very expensive to care for). Insurers have become remarkably effective at attracting the undetectable and shunning the overwhelming. Witness the mobile echocardiogram units that provide free screening for heart failure, a strategy guaranteed to identify trivial — but reimbursable — disease.
And what is the “advantage” of throwing tax dollars at private insurers whose overhead averages 30 percent, compared to a bit over 3 percent for traditional Medicare?
Medicare Advantage insurers have learned how to maximize their payments from the federal government. They have learned to “upcode” — overestimating their members’ disease burden and justifying higher federal reimbursements — to the tune of $2 billion a year. Between upcoding and other schemes, Medicare Advantage plans are paid an average of 105 percent of what comparable patients would cost the traditional Medicare program.
Medicare Advantage is an increasingly popular choice among seniors, and now attracts more than 18 million members. The growth is easy to understand: These plans often come with richer benefit designs and reduced financial exposure for patients. But the trade-off is narrow networks of physicians and hospitals. More than one third of Advantage plans fail to include even a single National Cancer Institute center. None of the Advantage plan networks in the New York City area, for example, include Memorial Sloan Kettering Cancer Center.
Patients with short-term nursing home stays are nearly three times more likely to switch out of an Advantage plan and those with long-term nursing home stays are five times more likely. Twenty-seven percent of those leaving plans with relatively high disenrollment rates do so because of problems getting needed care; 41 percent leave because their preferred provider is not in the plan’s network. The sicker you are, and the more you actually need access to your choice of health care, the less advantage you see to an Advantage plan.
Medicare Advantage plans continue to grow in popularity, now attracting 31 percent of all Medicare beneficiaries. People make this choice because most Advantage plans offer reductions in copays and deductibles, along with enhanced benefits like membership in gym clubs or including a Medicare Part D pharmacy benefit. We could embed these modest features into traditional Medicare and still reap substantial savings for the national budget.
The arithmetic is easy, the benefits are clear, and the money is there. Take the profit motive out of Medicare to save billions. It’s just a matter of political will.
Ed Weisbart, M.D., is a family physician and chair of the Missouri chapter of Physicians for a National Health Program.
Thanks for an interesting article, Dr. Weisbart. Not sure what issues caused at least one commenter to have such an emotional reaction to what you wrote, which is well-reasoned and researched. I would be interested in your opinion on this: do you worry that giving one such dominant market player (Medicare) the ability to fully exploit their “approaching-monopoly size” position would be intrinsically unfair to business? I do worry about this.
Your comment is absurd. I am a poor senior-citizen pensioner on a fixed income that is being attacked by the medical community. Can you at least understand why that might be worth getting emotional about?
The reason I am so emotional about it is that the article that you consider “well reasoned and researched” is based on at least nine lies, which I specifically called out in detail, providing government sources — by page number — for the truth. This conniving viciously deceitful doctor who wrote this article wants to increase my annual medical costs by over $2500 while also giving me much worse medical insurance (and possibly worse health care). But back to your country club, doc.
Thanks for the question, Dr. Crawford. The answer depends on which business sector you’re thinking about.
For non-healthcare businesses, Improved Medicare for All would be a major victory. Many businesses today consider healthcare a weight around their ankle, making them lose when they compete globally. Their financial commitment in funding healthcare as part of their employee benefits would become far more predictable, manageable, globally competitive, and less subject to the specific risk pool of their own employees and choice of insurer. And that’s assuming that they would have any role at all in funding healthcare — those specifics would inevitably be a negotiated component of the prevailing legislation. Funding could be partially through employers, entirely through a progressive income tax, or any of many potential permutations of these and other elements. But each of these options greatly increase predictability and thus favor business prosperity, certainly not be intrinsically unfair.
The answer is somewhat different within the healthcare sector. In many other modern nations, the delivery side is typically reimbursed at levels roughly comparable to those in the USA, though the nuances are often better aligned with public health needs. In particular, the wide gap between primary and specialty care incomes in the USA are atypical for the rest of the world as others better align their finances to incentivize careers in primary care while still respecting the additional years of training for highly subspecialized physicians.
American physicians are among the world’s least satisfied, largely because of spending far more time managing their relationships with the insurance industry and corroding their relationships with patients. American physicians often spend more than 10 hours per week on non-clinical administrative work; Canadian family physicians spend 2.4 hours per week on that. Physicians in my state, MO, have roughly $200,000 in accounts receivable, aging to one year. This doesn’t exist in Canada.
Every year in my practice, a material percentage of patients would leave me because of changes in their employer’s insurance offering, and then be back-filled with new patients from a different employer who simply found me on their employer’s new directory. I want my patients to stay or leave my practice based upon what they think of the care I’m giving, not based upon a financial decision their employer needed to implement.
So no, I’m not worried about the issue you raise regarding the delivery side of healthcare. In fact, I see Medicare for All as a unique strategy to empower patients to make their own decisions.
On the supply side, the country would benefit by having prices for drugs and devices come closer to global norms. For example, as you probably know, Americans pay roughly double what those in other modern nations pay for prescription medications. Our fragmented system makes this difficult to achieve today. As in any negotiation, success would require both sides to be able to continue in the market, as long as they are adding demonstrable value. All modern nations have access to new treatments for hepatitis C, for anti-TNF factor agents, etc., but at a fraction of the price here. The manufacturers do business in those countries because it’s profitable, despite the less outrageous pricing.
We have many elements in our society where we have determined that a monopsony is the best way to coordinate purchasing without compromising the supply chain. We already do this through the military, highways, police and fire departments, utilities (power, sanitation, etc.). None of these are without problems, all require ongoing vigilance and reiterations, but imagine how much less efficient it would be were they run as we do healthcare today. I, for one, would not want to have to spend time annually reselecting my vendor for trash collection. I’m perfectly fine having my municipality do that for my community, negotiating for the optimal balance between service and price, knowing that I can complain to my elected leaders if that service is under par. Chances are, they and their family would be running into the same service problems. Were they to ignore that problem, they’d have to deal with complaints from their own friends and family, and ultimately suffer at the next election. I don’t want daily trash collections — that would be wasteful — but I want our streets clean and safe.
The very same dynamics should be applied to healthcare finance, and done in a manner that preserves the dynamic range of innovative delivery models we are so proud of in the USA.
The root of all evil……money
Excellent article. Original Medicare banned private companies from duplicating their services for a very good reason.
This article is full of nonsense and lies, the typical tripe put out by a weird doctors’ organization that longs for the days when doctors owned Blue Cross and Blue Shield and they had Wednesday afternoon off to play golf.
1. It is a lie that there is a “ban on negotiating drug prices” in Medicare
2. Public Parts C and D of Medicare are the most popular creations of Medicare with over half the people now fully joining Medicare for the first time choosing Part C over expensive private insurance from AARP and similar crooks (and almost everyone else at least choosing Part D, primarily because they can’t choose Part C because most doctors — probably including the author of this article — won’t accept it)
3. Medicare is almost totally (all four Parts) run by what this ignorant author stupidly calls the “private insurance industry.” In fact the truth is just the opposite of what this liar states.
— Most of public Part C Medicare Advantage, a type of Part C health plan, is sponsored by forward thinking doctors’ organizations, charities, unions and churches — not insurance companies.
— On the other hand, all of Original Democratic Party LBJ Medicare is run by five insurance companies (four of which are for-profit): Anthem, Noridian, BC of Florida, BC of South Carolina and Wisconsin Physicians Services.
The article includes a half dozen additional lies.
Please identify yourself and your occupation and interest in this subject matter. I know Dr. Weisbart. Why don’t you just state what you think the facts are and leave out the defamation and speculative personal attacks? Family medicine doctors and internists like myself work hard caring for patients choosing lower reimbursement in favor of a personal connection with our patients. We work weekends and at night and put in 50-80 hours per week. We are there doing work on Sunday which is sometimes denied reimbursement only on Monday when the 9 to 5 insurance business opens to tell us they think the extra day in the hospital was not necessary. Who are you? Dr. Weisbart’s statements are backed by data.
Not that there is any need to identify oneself on a public comment board — never mind react to your arrogant boastful comment — but a simple Google would tell you that I am just a poor senior citizen on Medicare who is sick of doctors like you claim to be lying about Medicare in general and about public Part C Medicare in particular. I am retired, have never had anything to do with the health-care or insurance business, and I am dependent on Social Security. I understand that you come from a mindset that thinks that real people like me, poor people like me, can’t read and think for ourselves and should just believe every fantasy you weave.
If Dr. Blowhard is the great upstanding person you say he or she is then he or she will go check the lies he or she has made here and correct this article.
Specific to the three lies I have already called out:
1. Medicare drug negotiations–See the recent testimony for the new HHS Secretary in Congress for a basic thumbnail explanation of how Medicare drug negotiation works but also see multiple reports by MedPAC and CBO over the last 10 years concerning how the current negotiation process is wildly successful (pay attention to the difference in the research and the testimony to the difference between list and net pricing). I don’t need this head-up-your-backside gobbledygook academic crap however to know this is true; my Part D premium has been roughly the same for almost 10 years. That’s all the proof I need.
2. Dr. Blowhard’s call to kill the most successful parts of Medicare, Parts C and D — The statistics I cited about the popularity of public Part C and Part D health plans are well documented. Dr. Blowhard even cites some of the relevant statistics that prove my point among his or her lies while inexplicably at the same time calling for my public insurance to be killed, forcing me onto expensive private insurance from AARP or similar crooks (perhaps Dr. Blowhard is a shareholder). If Part C were abolished as this deceitful person has called for in this article, my costs per year would be over $2500 instead of under $1000 (plus the Part B premium which is the same for everyone on Medicare depending on income). It is typical that doctors like you have no understanding of the costs we poor seniors face.
3. Insurance companies run Original Medicare–Sections 1816 and 1843 of the Social Security Act as passed in 1965 specify that crappy Original Democratic Party LBJ Medicare be run by insurance companies. It is arrogant of you to claim otherwise. LBJ could not have got Medicare passed had he not allowed insurance companies to run Medicare. Today Original LBJ Medicare is run by five insurance companies (what Dr. Blowhard stupidly calls “private” insurance companies). My public Part C health plan on the other hand is sponsored by a non-profit charity and most public Part C plans are sponsored by such charities or forward looking providers such as Kaiser Permanente.
As for the other lies in the article
4. As I wrote above, most public Part C health plans, of which Medicare Advantage is a type, are not sponsored by for-profit insurers
5. Besides being 10 years old and therefore totally irrelevant, Dr. Blowhard’s research that says Medicare Advantage has raised co-payments is just plain nonsense. Public Part C plans provide we real people a choice rather than the one-size-fits-all Original Medicare crap you want everyone to have. We can choose Part C plans with high co-pays, low co-pays or virtually no co-pays. It is our choice, just like everyone else in the country gets. Any research paper that says otherwise is patently foolish.
6. It is documented in dozens of places that people on public Part C health plans, including Part C Medicare Advantage plans, get the same or better preventive care than people on crappy Original Democratic Party fee for service — FFS — Medicare (see page 370 of most recent MedPAC Report to Congress, which is consistent with over a dozen other research reports ). Crappy Original Medicare does not even cover an annual physical exam; almost every Part C health plan does. To say otherwise is Dr. Blowhard’s biggest lie. Not only is the crap research cited by Dr. Blowhard on this point also 10 years old (as with point 5) but it misses the obvious major and widely acknowledged criticism of crappy Original Democratic Party Medicare (that is, because crappy Original Medicare is FFS, the number of services called for by you doctors are way overdone)
7. There is no cherry picking. It is absurd that Dr. Blowhard would claim that there is cherry picking and upcoding in the same article. Why would anyone cherry pick if they can upcode? It has been clearly demonstrated in many places that FFS doctors are just not coding correctly (because they get paid either way), which throws all coding statistics off.
8. The overhead for crappy Original Democratic Party Medicare is more like 30% as opposed to 3%. In citing 3%, Dr Blowhard leaves out expenses borne by other parts of the government as well as the net improper payment rate (10% for Original Medicare vs 3% for Part D and -1% for Part D) and years of estimates of waste and abuse by you FFS doctors (see comments by former CMS administrator Berwick when he left office).
9. It is a lie that “Medicare Advantage plans are paid an average of 105 percent of what comparable patients would cost the traditional Medicare program.” With that claim, Dr. Blowhard is leaving off key words “on a like set of beneficiaries” from page 356 of Chapter 13 of the recent MedPAC report cited in point 6. When you adjust for the MedPAC calculations (which include the expensive EggWipe program for unions that is being phased out as explained in the MedPAC report) and use the correct calculations from Table II.B.1 of the Annual Medicare Trustees Report, you find that Medicare spends 2% less on people on public Part C vs people on FFS, just the opposite of the lie you are spreading
Hurry, doctor. It’s noon on Wednesday. Your foursome is waiting