Friday, June 17, 2011

What’s with all the “Medicare as we know it” talk?

Background: Medicare, implemented in 1965, pays medical expenses on a fee for service basis. Thus, the more treatments performed the more pay the provider receives. This over utilization plus the fact that treatment costs are going up at twice the rate of national income. Adding to this issue is the fact that an ever increasing number of people are becoming eligible, which adds significant costs. The 2011 Medicare forecast shows it running out of money five years sooner than in the 2010 report. It may be sooner because of some questionable assumptions!

In recent weeks various words have been coming out of Washington DC saying Congressman Ryan’s proposal to fix this would “end Medicare as we know it”. These words are in fact unfounded because federal health reform already introduced two radical changes:

Note: An April 27th WSJ article called the effort behind these words a hoax!

First – When we look around we see more MDs are not taking new Medicare patients today because their reimbursements are 20% or more below what private plans pay. Payments are 30% or more less for hospitals. With that in mind along comes federal reform, which implements payment rate cuts. The result - reimbursements for MDs, hospitals, etc. will be less than Medicaid in about ten years! Some reports say more than 80% of MDs will not accept Medicare patients if the price controls in the law are implemented.

Second - An Independent Payment Advisory Board was created with the power to recommend cuts. This means new medications and treatment technologies, which are generally more costly, may not be approved. Congress then either accepts the cuts or develops their own. If not at the same level the Board cuts will be implemented. Interestingly this Board cannot look at cost containing ideas other than cutting fees!

No matter how much some want Medicare to be left alone it’s costs are unsustainable and must be fixed Thus, the question becomes, which approach is the best way to continue these important benefits:

+ Federal health reform with it’s lowers provider pay and thus far fewer MDs to treat people? Some are saying these changes “save health care costs”! Yes payment cuts will lower actual dollars spent but it also results in making things bad for people and providers.

+ Move Medicare from 1965 to the present! One idea is to change federal policy so only those individuals now 55 or younger, will be offered, in 10 years when they turn 65, Medicare benefits from private companies at 65 in 10 years. Using private companies has worked for the Medicare prescription program, which now has costs about 30% less than projected. An approach like this would put people in charge and provide choices. Medicare payments to the company a person selected would cover most of the cost. An additional payment could be included for people with chronic situations like in Medicare Advantage plans. More support could also be added for those who are older. Putting people in charge of how they receive their benefits is certainly a better approach than having a cost cutting board making decisions for everyone on what is covered.

Bottom line, it is important for everyone to look at the real facts about Medicare’s cost situation and consider alternative ways for it’s important benefits to continue.

No comments: