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