What's with all the "Medicare as we know it" talk?

Background: Medicare, implemented in 1965, pays medical treatment expenses on a fee for service basis. Thus, the more treatments performed the more pay the provider receives! This results in over utilization plus the cost for treatments continues to go up at twice the rate of national income. Then too, an ever increasing number of people are turning 65 and being covered, which adds significant costs. The 2011 Medicare forecast shows it running out of money five years sooner than in the 2010 report! It may even 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 ended what we know by introducing 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 no longer taking new Medicare patients today because their reimbursements are 20% or more below what private plans pay. Rates are 30% or more less for hospitals. Adding to today's under payments federal reform implements, over the next few years, payment rate cuts for MDs, hospitals, etc. The result - reimbursements will be less than Medicaid in about ten years! Some reports say more than 80% of MDs will not accept Medicare patients if these cuts in the law, which are price controls are implemented.

Second - An Independent Payment Advisory Board was created with the power to recommend payment cuts. This means new medications and treatment technologies, which are generally more costly, may not be approved. Congress then either accepts the boards recommended 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 the cost increase trends are unsustainable and must be fixed. Thus, the question becomes, which approach is the best way to continue these important benefits:

+ Federal health reform, which lowers provider pay and means far fewer MDs to treat people? Some are saying these changes “save health care costs”! Yes the actual dollars being spent will be lower because of the cuts but the effect of this savings is it makes things bad for people and providers!

+ Move Medicare from 1965 to the present! One idea is to change federal policy so individuals now 55 or younger, will be offered, in 10 years when they turn 65, Medicare benefits from private companies. People currently 56 or older and those now on Medicare will use the current system. The idea of using private companies has worked for the Medicare prescription program, which now has costs about 30% less than projected when it started. 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. Since expenses go up as we age more premium support could 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.