04 October 2008

Predictable

I just knew, just knew that when I mentioned Medicare approvingly in the last post that it would bring the trolls out of the woodwork, and I'd wind up getting sucked into a "Medicare sucks" argument without end.

Sigh.

OK, here goes. I'm going to say for the record that I'm feeling grumpy that I have to argue that the earth is not flat and I find the prospect of an eternal flame war in the comments unappetizing. So I'm going to make my case for the intuitively obvious and then I'm going to leave it there.

Good things about Medicare:

  1. I wasn't alive in 1965, so I don't know about then, but now, medical care is really expensive. Especially if you're sick. Especially especially if you're old and sick. Because old people always die (100% of the time!) and they often get sick shortly before they die. If you are old and sick and not named Warren Buffett, you might have trouble paying for your health care out of pocket. So you would probably have to go get medical insurance to pay for your health care. But the problem is, you're old, and that means you probably don't work any more, so you can't go to your employer for health insurance. And so you would have to go to that nice Mr McGuire at UnitedHealth to see if he would like to sell you some insurance. Now Mr McGuire doesn't want to give away his shareholders' money by taking on a lot of clients whose claims are likely to exceed their premiums ('cause you're old and sick), so he's either going to decline to sell you insurance, or he's going to charge you an actuarially-derived premium that will cover the expenses you are likely to generate. Since you're old (and sick), this is probably going to be a lot of money -- statistically the same as paying out of pocket, because that's what actuaries do. Since we already established (see above) that you are not Warren Buffett, you probably can't afford that. So, you see, it is going to be hard to find a for-profit private company that can create an affordable business model that includes paying for health care for the people who are statistically most likely to cost money. It turns out that this is something that government does well, because they can collect premiums and taxes and they don't need to make a profit.
  2. Medicare is really, really efficient. I run a $16 million, 50-physician corporation. Medicare is our best payer. No, they don't pay us the most, more's the pity. But they pay us the fastest, and with the least hassle. The average claim lag is like two weeks, and they never ever reject a claim. If all my patients were on Medicare, I would collect somewhat less money, but the administrative savings would almost-but-not-quite make up the difference.
  3. Medicare is really, really efficient operationally. Their administrative overhead is about 3%, which is to say that of every dollar in their budget, 97% goes out in claims paid. Private insurance firms simply cannot be this efficient. The typical overhead for commercial insurance, depending on which data you think is most accurate, is between 8 and 20%. (This is also consistent with my experience administering a medical insurance plan for our employees.) Medicare has some inherent advantages in this game -- it's not a fair fight. they don't have to pay stockholders a profit, nor executive salaries, nor do they need to market their services much. Since they have no profit motive, neither do they need to spend a lot of money figuring out the best way to deny claims, nor do they need to engage in pesky maintenance of a network of physicians. (Consider this fact the next time you rail against inefficient government bureaucracy.)
  4. Patients love it. When I said medicare was one of the most popular government programs, I was not referring to its popularity within the medical community, but among its 43 million beneficiaries. As I said, I am grumpy and too irritated to pull up real data, but here is one study showing Medicare as the third-most popular government service. (Strangely enough, behind the National Park Service. Go Smokey!) Or you can sift through the 250,000 hits on this Google search yourself and the many media reports which refer to medicare as a wildly popular service.
Now, having thrown out the troll bait, I will immunize myself a bit against the inevitable backlash. Yes, there are bad things about medicare, some inherent, some remediable. Here are a few, but none in my opinion are so awful that they outweigh the massive benefits of having the program around in the first place.
  1. Medicare distorts the market. They set the price for medical services in two ways. First, their conversion factor, updated annually, determines how much docs get paid en masse: Medicare is the biggest payer, and many private insurers pattern their reimbursement on Medicare rates. Second, their adoption of the RVRBS and the procedure-based bias of the RUC prevents physicians from setting prices for individual services at the level that the market could bear. This is directly responsible for the declining reimbursement that is so threatening the future of primary care in this nation. (This is partially remediable -- the RVRBS can be fixed, but Medicare will always be the 800-lb gorilla setting prices.)
  2. Medicare may be my best payer, but it's also the only one that can send me to jail. If Blue Cross doesn't like my coding, they can demand a refund. If Medicare audits me, or if the RAC contractors start paying attention to physicians, I have no recourse.
  3. Medicare is intrusive. When you get a letter from your local QIO suggesting that you have an EMTALA violation and they want to review all of your transfers for the last three years, that's a bad day for your practice. They set half-thought-out P4P measures, force you to accept the burden of the Joint Commission and EMTALA, and bring out half-baked Quality Measures of the week.
  4. Medicare is fickle. The reimbursement is subject to the whims of Congress in the budgetary cycle, and the SGR is the sword of Damocles hanging over our heads. The reimbursement level is always shrinking, which is not sustainable over thee long haul.
  5. Medicare is expensive, and has more severe sustainability issues. This is not the fault of the program. The growth of Medicare is almost entirely driven by two factors: the rate of inflation of medical services to all comers has drastically exceeded the general rate of inflation over the past two decades; and the demographic "graying of America." Simply, Congress is going to need to face up to this fact and increase the FICA tax to support medicare, or it will go broke. It is possible that this necessity can be staved off for a while with means-testing or benefit reductions, but it's coming and is inevitable.
Enough. Also, it's off-topic but I'll say it again, before the inevitable comments spring up: I am not in favor of Single Payer. It's theoretically appealing, but fundamentally flawed. Medicare is not single payer, and my support for Medicare does not indicate that I am secretly in the tank for single payer. Medicare is special case where government provision of this service is better than private, and we should all be glad that Ronald Reagan and his right-wing apparatchiks were defeated when they sought to block its enactment. I can only hope that we can be similarly successful in transitioning to a universal health insurance system.

(Fun link: Krugman, discussing and linking to the history of the right's efforts to block Medicare.)

6 comments:

scalpel said...

Whether patients find the program wildly popular or not is irrelevant unless there are enough physicians like you who feel likewise. Which in my very large state, there aren't.

When a strip club offers $1 table dances, those are wildly popular among the unwashed herd too. Not so much among the actual providers of the service. Or so I've heard.

Thus the valuable commodity that is wildly popular but underpriced is caused to be more difficult to obtain and ultimately provided at lower quality and less enthusiastically than it should be.

Anonymous said...

Big problem: Fewer and fewer private practice physicians are accepting Medicare patients, or are capping the number they're willing to see.

Bigger problem: Too many doctors think of Medicare (or substitute Medicaid) patients as members of the "unwashed herd" they'd rather not deal with.

Biggest problem: More and more of us are beginning to fall into the "unwashed herd" category.

Nurse K said...

Maybe if there was more oversight and "administrative fees", there wouldn't be millions of dollars of Medicare fraud each year.

Ladyk73 said...

I just don't understand the rational of hating Medicare. Of course there are issues with gaps in coverage and faulty payment structures. Those can be fixed. It is like throwing out a big healthy and happy elephant because he has a few thorns and teeth missing (an other flaws that make the elephant not as efficient as he would like to be).

Yeah...my symbolism is a little weird.

And If one is looking to private insurance as the answer....Well, without Medicare, My god, they may be free to give providers LESS money. I am sure that would cause patients to pay more money. And then it comes to a point where people wonder why they should even get insurance, oh except in case you are really sick....so lets only get castro-frock-it insurance for when I fall down and go boom! So I am no longer insured, so I stop going to a doctor, and go to chiroprator instead. He only charges me $50 a visit.

Oh...crap...now I am really sick so know I will end up at the hospital. My big insurance kicks in....

Then the country realizes that everyone is getting really sick because they don't have prevention care. So then the government and everyone says...we must fund the hospitals! So all private providers go out of buisness and end up relucently working for the hospital. So then the department of health regulates all of the hospitals....and in a sense we have a VA type care for everyone, underpaid providers, unhappy patients, and a one system health care.

So maybe Medicare insurance model...is not so bad?


Sorry...too much caffiene and albuterol.

Anonymous said...

It is funny how we do exactly the same thing but see it totally different. Maybe it is genetic. Medicare is a ponzi scheme that is nearing the end of the game. In a few years it will be about as good as medicaid.

My aunt and new husband were happy to reach retirement and settle in Central Oregon. They can't find a doctor within 80 miles that will take a new medicare patient. We are talking freaking Bend, Oregon, one of the very nicest places a doctor would want to go and live as well. I told them medicare is crap but you can come see us in the ER because we have to take it.

Socialists decry the fact that a select few become filthy rich under capitalism. Maybe there should be some social engineering to have them share some more. On the other end of the spectrum there is the exorbitantly "health care rich" that drain the socialist system. These are actually the very sick, the 1% that spends 50% of the health care dollar. These are the dialysis, transplants, 24 week preemies, brain dead people in the ICU patients. Just because we can doesn't mean that we should. If you want to pay for it yourself then fine, but maybe the taxpayer shouldn't. Maybe private insurance shouldn't either. We could have really good health care if we didn't. Yes it's Darwinistic and would probably be political suicide, but that is what will be needed to "save" the system

Anonymous said...

But doesn't Medicare also pay for "migraineurs" and "back pain" people. Maybe thata the problem. The service has been duped into paying for those plus "Hover-rounds" that MAY be needed.

Steve