While our elected representatives wrangle over slicing entitlements, virtually no one seems to be paying attention to an eye-popping fact: Medicare reimbursements are no longer accelerating at a break neck-pace. The new numbers should be factored into any discussion about healthcare spending: From 2000 through 2009, Medicare’s outlays climbed by an average of 9.7 percent a year. By contrast, since the beginning of 2010, Medicare spending has been rising by less than 4 percent a year. On this, both Standard Poor’s Index Committee and the Congressional Budget Office (CBO) agree. (S&P tracks healthcare spending with the help of Milliman Inc., an independent actuarial and consulting firm.)
What explains the 18-month slow-down? No one is entirely certain. But at the end of July David Blitzer, the chairman of Standard &Poor’s Index Committee, told me: “I’m hesitant to say that this is a clear long-term trend. But it’s more than a blip on the screen."
Since then, I have talked to an analyst at the Congressional Budget Office who is involved in putting together numbers on Medicare payments for CBO’s Monthly Budget Review. He confirmed that they, too, have seen a dramatic slow-down in Medicare spending.
When I asked, “Why?, he replied: “We have some theories.”
Would he share those theories?
“No,” he responded. “You would quote me.”
This is true.
Probably he was reluctant to see his name in print because these days, news that Medicare spending is beginning to level off –without Draconian cuts–could create political waves in Washington.
Standard & Poor’s Blitzer was more forthcoming. In the S&P report on healthcare spending released on July 21, he wrote: “many participants [in the healthcare system] have indicated that providers are trying to address health care reform and are looking for ways to control costs. If true, this combination certainly would be a contributory factor to the moderation in cost we have witnessed since early 2010.”
Zeke Emanuel, an oncologist and former special adviser for health policy to White House Office of Management and Budget director Peter Orszag, is certain that this is what is happening. When I spoke to him last week, Emanuel, said: “This is not mere chance: this is directly related to the initiation of health care reform.” It is not the result of reform, Emmanuel emphasized. The reform measures that will rein in Medicare inflation have not yet been implemented. But, he explained, providers are “anticipating the Affordable Care Act kicking in.” They can’t wait until the end of 2013: “They have to act today. Everywhere I go,” Emanuel, added, “medical schools and hospitals are asking me, ‘How can we cut our costs by 10 to 15 percent?’
“This is doable, since there is so much fat in the system” said Emanuel, a doctor who is well aware of just how often unnecessary tests and procedures hike medical bills, while exposing patients to needless risks. It is worth noting that Emanuel is far from cavalier about cutting Medicare benefits that could help patients. A medical ethicist, he has recently been chosen to lead the medical ethics department at the University of Pennsylvania’s Perelman School of Medicine. But Emanuel understands that patients do not benefit from waste, and that today, our medical culture encourages health care providers to "do more," without always considering whether medical evidence justifies another test or treatment.
Meanwhile, thanks in part to the heathcare debate, combined with spiraling insurance premiums, the majority of Americans realize that we cannot afford out of control healthcare spending. There is now a nationwide mandate to rein in health care inflation, not just in the public sector, but in the private sector. “Either we get volume under control, or prices paid both by private insurers and by Medicare will drop,” says Emanuel. “Hospitals know this. They is why they want to make their systems more efficient.”
The Numbers
As the S&P chart below reveals, Medicare’s outlays began to plunge at the beginning of 2010 (See the dotted line at the very bottom of the graph labeled “Medicare Index.”) Spending by private insurers also fell, though the slow-down began later and was not nearly as dramatic. (See the solid line at the top of the graph labeled “commercial index.”)
(Click to enlarge)
In the twelve months ending in May, overall spending by commercial health insurers climbed by 7.35 percent. By contrast, over the same span, Medicare claims rose at an annual rate of just 2.6 percent.
S&P breaks down the spending: over the course of the year, Medicare’s reimbursements to hospitals crept up by only 1 percent, while payments to doctors and other professionals rose by 4.7 percent.
The Congressional Budget Office confirms the trend. In June, CBO ‘s Monthly Budget review showed that over the 12 months ending in May, Medicare spending was growing at an annual rate of 3.8% — down from recent annual increases that ranged from 4.7% in 2010 to 15 percent in 2006.
(CBO & S&P report different numbers because, inevitably, they use different methods to track healthcare spending. For the complete methodology, and supporting research for the S&P Healthcare Economic Indices click here. www.healthcareindices.standardandpoors.com As for CBO, their analyst told me that they take their numbers from the Treasury Department’s monthly report on Receipts and Outlays.)
But what is important is not precise estimates of current outlays (which are open to later revision) but the trend over the past 1 ½ years.
For decades, Medicare’s outlays have grown far faster than GDP. Now, it seems that Medicare is beginning to “break the curve” of healthcare inflation. It is easier to see the bend in S&P’s 12-month chart of moving averages below. The top line tracks reimbursements by private insurers; the bottom line reflects growth in Medicare payments, and the middle line blends the two, presenting a composite index of public and private sector health care spending nationwide.
(Click to enlarge)
The turn in the Medicare curve does not mean that we should “rest on our laurels,” Emanuel observes. “This is still much to be done to improve the quality of Medicare and get the waste out of the system.”
I would add this: Fed Chairman Ben Bernanke recently warned that we can expect GDP growth to remain sluggish for the next two years. I would not expect to see the economy growing by more than 1 1/2 to 2 percent a year. This means that we should aim to rein in Medicare inflation to 3 percent a year– at the very most.
I believe that the cuts built into the Affordable Care Act (ACA) will be able meet that goal as we slice overpayments to Medicare Advantage insurers, and trim annual increases in payments to hospitals, nursing homes and other institutional providers by 1% a year, for 10 years. In addition, under the ACA, financial carrots and sticks will encourage providers to deliver better care at a lower cost.
Why?
Still, the question lingers: Why have Medicare’s reimbursements slowed so sharply in the past 18 months– and, most importantly, will this trend continue?
We understand why private insurers are spending less on healthcare. As Naomi explained not long ago, in a recession, people with high co-pays and deductibles put off doctor’s visits and elective procedures. Others are losing their insurance as they lose their jobs, and simply cannot afford to pay for doctors’ visits out of pocket.
But Medicare patients are not losing their insurance. Since most are retired, the rise in unemployment has not had a major impact on their use of healthcare. Finally, their deductibles and co-pays are not that high. The vast majority have supplemental “wrap-around” insurance in the form of Medigap or Medicare Advantage plans that, in many cases, reduces co-pays to zero.
In part 2 of this post I will explore the multiple factors contributing to the moderation in Medicare spending. There are good reasons to believe that this is a trend that will last.
In addition, I’ll explain why aging boomers are not going to have a significant impact on Medicare spending in the next five to ten years. A recent article in Health Affairs suggests that between now and 2013, Medicare spending will spike, in large part because so many aging boomers will be joining the system. This is just not true. Our fears that a horde of former hippies will suddenly descend on the nation, bankrupting both Medicare and Social Security, are greatly exaggerated.
Boomers will turn 65, just as they were born, slowly, over a period of many years. As I explained on HealthBeat several years ago, we will not suddenly face a “tsunami” of greedy geezers. There is no reason to expect that Medicare reimbursements will jump anytime in the near future. But, as I will discuss in Part 2, there are many reasons to believe that Medicare spending will continue to ease.
As I’ve said before, I share most of your optimism on this issue. One thing that does trouble me a little, though, is that the CBO forecasts a roughly 1% nominal dollar decline in Medicare spending for 2012 vs. 2011. For the full ten year period from 2011-2021, though, it estimates average annual growth of 5.8% per year. This is probably the biggest single area of potential positive surprise in the long term federal budget outlook. I also expect a significant drop in defense spending as a percentage of GDP (4.8% currently) as the two wars wind down. There is potential to reduce the growth rate of Medicaid spending as well but I think different strategies will be required. The biggest one is to make greater use of managed care, especially for the expensive to treat dual-eligibles which now cost taxpayers about $300 billion per year for only 9.7 million people or an average of just under $31,000 per year each.
Separately, I would like to mention three different examples of medical overtreatment that I think are driven by our litigation system which could be fixed by appropriate changes in that system. All three are examples of defensive medicine more broadly defined. They are:
1. a patient calls his PCP with a problem and seeks to make an appointment. The PCP can’t see him until the next day but thinks there may be a very small probability that it could be a serious issue. To be safe, he directs the patient to go to his local ER.
2. A nursing home resident falls but is not injured as far as anyone can tell. To be safe, he his sent to the local hospital, probably by ambulance, to be checked out.
3. A patient facing an end of life situation has no living will or advance medical directive and nobody to make decisions on the patient’s behalf that providers will accept. They proceed to “do everything” because they’re afraid they might be sued if they don’t.
While I don’t know for sure, I think practice patterns in other developed countries would be more conservative or less aggressive and costly in all three of these cases.
Barry–
Thanks.
On CBO’s projections of Medicare spending over the next coulple of years– they don’t seem to be taking what they have seen over the past 18 months into account. Or at least, they don’t want to talk about it.
So they are not factoring in the real possibility that the baseline has fallen.
Secondly, most projections assume that Medicare’s rolls are going to begin to swell in the next few years. In fact, relatively few babies were born in the late 1940s– if you look at a chart, you’ll see that the real bulge didn’t come until the mid- 1950s.
Servicemen had to come home from the war, meet girls, and save up some money before they married. Even then, they didn’t all have babies 9 months later.
Finally, on the threat of litigation:
If I call a PCP and he
says he will see me tomorrow, I would not have a case to sue him if something happened overnight. No lawyer would take the case.
If a nursing home resident falls, you would have to show that the fall was preventable in order to have a possible suit. I would add that it is probably wise to have her checked out by a doctor–particularly if she is frail.
If a patient has no living will or advance directive and no relatives to help making decisions, is appropriate to “do everything” — unless the patient himself is in a position to say: “stop here.”
Doctors are supposed to try to save lives. And, as palliative care specialist Diane Meier points out, in a great many cases we just don’t know whether a “dying” patient can be saved. In the case of certain cancers, it can be pretty clear, toward the very end of life, how much time a patient has.
But when patients are suffering from other diseases it is not nearly as clear.
Three good examples. And the more conscientious the doctor or other professionals, the more likely they will go for what also costs more in the name of “erring on the side of caution and/or safety.” In all three examples costs will be way down any list of considerations.
I’m in favor of requiring all Medicare beneficiaries to execute advance directives or have one filed on his or her behalf to put a damper on #2 and avert #3 altogether. I think Ezra Klein floated the idea once and it seems obvious to me.
I don’t think #2 is included in advance directives but some document should be on file form the time of admission which might cover that and other marginal decision areas as well.
John–
Advance Directives sound like a very rational solution to end of life care.
And I myself have a Living Will.
But I don’t expect that it will help me unless my son
(who lives in another state) is able to be at the hospital,living will in hand, and insist that the doctors follow my instructions. (My daughter lives close by but I know (and she has confirmed,) that she could never agree to letting them stop feeding me, etc.)She’s too tender-hearted.
For a great many reasons, Advance Directives are often ignored: “A study by Miles, Koep and Weber published in Archives of Internal Medicine in May 1996 indicates that only 5 percent to 25 percent of advance directives are actually made part of the care plan for the patient.”
“Most state laws regarding advance directives carry little or no penalty if the directive is not followed.”
In addition, at the end, patients often change their minds. (Contemplating death when you’re 50 and sitting in a lawyer’s office is one thinking. Facing death at 67 is something else.) At that point they tell their relatives–“I don’t want to die.”
Clearly a hospital cannot insist that a patient stick with a decision that he made 25 years earlier.
Relatives frequently over-ride Advance Directives.
Finally, the situation is often not clear-cut. The patient may or may not die.
Consider this situtation: If he survives, it is likely that he can live another 10 years, his mind intact, enjoying a relativelly high quality of life.
His chances of surviving might be only 15%, but if his quality of life would be good, virtually any son,daughter or spouse would want to give him the chance– as would most doctors and nurses.
As I have suggested many times, if you want to
protect yourself against unwanted care at the end of life, tell your relatives that if you are very sick you Do Not Want to enter a hospital unless they have confirmed that it has palliative care teams. (Most larger hospitals now do.)
This is a reason to go to the larger big city hospital rather than a small suburban hospital close to home.
You (or your relatives) can then insist on a palliative care consult –even if your oncologist or surgeon is reluctant. Some support pallative care; some don’t.
A palliative care specialist will spend time with you (and your family) listen to you, and give you a realistic assessment of what is likely to happen if you choose X, Y, or Z.
A palliative care doctor will also stand up for you if another doctor is trying to bully you — or talk you into something you don’t want to do. And a palliative care doctor will explain to your relatives that this is your life, and in the end, the decision is yours, not theirs. They should not try to make you feel guilty about “giving up.”
(A pallaitive care doc would put this more gently, and less bluntly.)
On the other hand, if you want to fight to the bitter end, a palliative care specialists will support your right to do that.
Regarding the other examples: As I said to Barry, you don’t have a lawsuit if you call a doctor Tuesday, he says he will see you Wed, and you die Tuesday night. See my recent posts on Malpractice, parts 1 & 2.
It is very expensive to bring a malpractice suit, and the plaintiff’s lawyer bears the financial risk.
He won’t take the suit unless a) it is quite clear that he can win or b)
exactly what happened in the hospital is totally unclear (hospital and doctors are stonewalling) but if relatives are right in their suspicious, this would lead to a very large settlelment.
In those cases, the attorney may take the case, and begin the legal process called “discovery.”
During discovery he often finds out that the relatives were wrong. Their suspicions were unfounded. In those cases, the attorney virtually always drops the case. He does not want to spend more money on a losing case.
Finally, if my elderly, frail mother was in a nursing home and fell, I would want a doctor to check her out. Elderly people are not in a good position to stand up for themselves, and too often, they suffer horribly in nursing homes.
Maggie: some thoughts on Barry’s suggestions based on my professional observations.
1. Most doctors practice in groups. You can call and try and make an appointment, but you are unlikely to actually speak to the doctor unless you are calling after hours. During hours you talk to an office manager who will simply make the appointment. After hours, you are more likely to get the doctor “covering” for your doc. He doesn’t know you. He doesn’t want to take chances. He’ll tell you to go to the ER.
Just because he’s not likely to lose a suit doesn’t mean he’s willing to take the risk. Barry is right here; it’s going to take some education in how to handle telephone cases. In such instances, professional telephone triage nurses can cut through the murky symptoms enough to make reasonable decisions about who needs to go to the ER right now and who doesn’t.
What’s really maddening to me is when I’m working my part time job as telephone triage for hospice, try to contact an attending, and get . . . his medical assistant (a non-licensed non professional technician who are replacing nurses in doctors offices).
2. All falls are preventable. All falls. So I understand a facility’s concerns regarding them.
That being said, not all elderly patients who fall need an ambulance ride to the ER to be “checked out.” Again, here is a situation where a skilled nurse can do a physical assessment, review medications, and consult with the physician over the phone. There are portable x ray machines that can be brought to the long term care facility to do simple x rays of hips or ribs.
Most falls really don’t result in any serious injury other than bruises.
And many “falls” really aren’t falls at all. Maybe the patient stumbled, and was guided to the ground by a staff member. That still counts as a fall, even though there is no injury.
Maybe the resident slid down along a wall and slowly sat on the floor. Still counts as a “fall.”
And sending these patients to the ER creates other risks. Alzheimer’s patients don’t do well when their surroundings change. They become agitated and at greater risk for . . . you guessed it . . . falls.
Better to change the system than blithely assume all falls are falls and require a physician’s attention. They don’t.
3. Barry’s last point would be the most contentious to change, specifically because advanced directives are really not enforceable, and allowing a non-relative hospital employee to make the decision opens a can of worms. I don’t know there is a solution to that problem, since not all outcomes can be forseen.
What we really needed was the mandatory end of life consult that was proposed for the PPACA, to educate patients and have frank discussions about end of life needs. Until we get that, or until we get hospital ethics committees who look at these cases and say, “what are we doing?” that problem will be hard to solve.
Panacea –
Thanks for your very helpful and informative comment.
Regarding my first point about calling the PCP to seek an appointment, on at least two occasions, I avoided a trip to the ER by calling my insurer’s nurse hotline. They use computerized decision support tools to help determine whether immediate medical attention is needed or not. One of these occasions happened when I was just starting my vacation (on a Sunday) over 2,000 miles from home in Utah. I was told that I could safely wait until the next day to call my PCP which I did and got the guidance I needed over the phone. Other colleagues have called and were told that they needed to see a doctor for their issue and, in one case, should go to the ER immediately. I think the nurse hotlines are a very helpful, competent and cost-effective resource.
The Georgia health care directive form has places for two backup agents to be contacted if the first one cannot be reached. In a gerontology class I had someone made the very rational suggestion that up to five or six identical copies be executed with as many designated agents, all of whom know who they are and have agreed to be named. Of course advance directives are only applied in the event that someone is not able to communicate and no provider would take a chance on countermanding the decisions of anyone still able to do so, no matter what they may have done or said earlier.
Last I checked the Georgia form is 7 pages, very comprehensive and easy to find online. Since learning about the idea I have become something of an evangelist of the cause. BTW I don’t think it needs to be done in a lawyer’s office if it is executed and witnessed properly.
Really? “All falls are preventable?” My dad was 80, with dementia, in an assisted living place when he fell one morning in his room, which was cheap carpet over concrete slab. He broke his hip, which sent him on the merry-go-round of hospital, nursing home, hospital, nursing home–both of them turfing him back and forth. He had the hip surgery but of course because of the dementia his prospects in physical rehab were limited. He died in the nursing home 3 months later.
I guess that fall could have been prevented if the assisted living facility had 3″ foam under the carpet and someone monitoring him every time he got up to go to the bathroom. I’m not blaming anyone for that event, but I’m just not seeing how all falls are preventable, unless we equip all our elderly with donut hip-huggers (probably feasible) to keep them from falling if they are headstrong enough–and that old man certainly was–to resist any kind of intervention. His dementia at that point was that he thought the Depends that the staff procured for him were hand towels.
Do we even have any really good ways to cope with dementia? Dementia + falls = death.
Just a 63 year old woman:
Your example really does prove my point that falls are preventable.
A 3″ foam might have made the fall softer, though it wouldn’t have prevented the fall.
But cheap carpet that is not installed properly can contribute to falls: it bunches up and causes patients who shuffle when they walk to trip. Even healthy adults can trip.
But primarily, staff need to identify who is at risk for falls and monitor those patients constantly. It’s not the dementia itself that always causes the problems: it is a) whether or not the dementia affects the part of the brain in charge of mobility, or b) if there are other mobility issues present (such as arthritis, degenerative spine conditions, or a history of previous fractures).
A history of falls increases risk.
Some things that can be done:
1. Put patients at risk for falls closer to the nurses station.
2. Make more frequent rounds on confused patients
3. Use bed or chair alarms to alert staff when confused or mobility challenged patients are trying to get up unassisted.
4. Remove items that contribute to fall risk: furniture poorly placed, bunched up carpeting, electrical cords, over bed tables, etc.
5. Install hand rails in hallways to assist patients with mobility problems.
6. Supply physical therapy to assist patients with mobility problems maintain or improve mobility
7. Create a culture of safety among staff.
This isn’t to say falls will never happen. But if we don’t treat them as inevitable, and if we learn what we can from each fall to removes systems errors (not assigning blame), then we can see how falls happen, how they can be prevented, and significantly reduce them.
Facilities that have applied these evidence based methods have had significant reductions in fall rates.
Just a 63 year old woman:
Regarding dementia.
We are still learning a lot about dementia: what causes it, how to slow it down (or if it can be slowed) and how to care for these challenging patients.
Having worked in long term care early in my career and working in hospice now, I can tell you the care of these patients has greatly improved over the past 25 years.
Deep involvement of the family is key to good care, regardless of whether they are cared for at home or in a long term care facility.
The fall prevention methods I describe in my previous post work with demented patients if applied correctly and consistently.
But you are right: dementia + falls = death. The 5 year survival rate of dementia patients who have hip fractures is dismal.
Just a 63 year old woman:
I agree with all that’s been said. Couple of thoughts…
–Working in a retirement setting I learned that developers appealing to the senior market often fail to consider a few details beyond handicap accessibility. Two that come to mind are insufficient square footage in dining areas to allow for walkers, wheelchairs, canes, etc., and avoiding carpet padding. (Your assisted living facility was right to have a carpet without padding. It can become a tripping hazard as well as bunch up under the weight of wheeled scooters and motorized chairs.)
–When my mother matriculated from assisted living to long-term care she was ambulatory and fairly self reliant. My sister and I were taken aback when we saw everybody paddling around in wheel chairs, including Mom, until we realized it was much safer and helped her be comfortable and safe anywhere she went. She navigated to the dining room, religious services and activities just fine and was a happy camper, making her own bed until a couple of weeks before she died.
Maggie:
This is good
Barry,run 75411, John, Panacea,
Barry– I agree that calling your insurer’s nurse hotline can be very useful (I did this on one occasion when I was travelling and got great advice. It solved the problem.)
run 75411–Thank you. I know that you have thought about this subject and researched it, so I greatly appreciate your thumbs up.
John Ballard– You wrote:
“My sister and I were taken aback when we saw everybody paddling around in wheel chairs, including Mom, until we realized it was much safer and helped her be comfortable and safe anywhere she went. She navigated to the dining room, religious services and activities just fine and was a happy camper, making her own bed until a couple of weeks before she died.”
This makes sense. I’m sure that your Mom was much happier (and safer) “paddling around in a wheelchair,” rather than worrying about feeling dizzy, falling and breaking her hip.
This not to say that every senior of a certain age should be in a wheelchair. Some active seniors in their 70s or 80s maintain a good sense of balance, and would be extraordinarily frustrated to find themselves in a wheelchair.
Much of this has to do with your gene pool; it’s not about living better,or living healthier. Some gene pools just age better than others.
This is why we should never “blame” seniors who don’t age as well as others in their age group.
Panacea–
You write: “What we really needed was the mandatory end of life consult that was proposed for the PPACA, to educate patients and have frank discussions about end of life needs. Until we get that, or until we get hospital ethics committees who look at these cases and say, ‘what are we doing?'”
I totally agree.
As you say, what we really need is a mandatory end-of-life consult– when the patient is very sick, not 20 years earlier. And the patient should be consulting with a palliative specialist who has been trained to consult with patients when they are very sick.
Assuming the individual mandate is the key to the ACA succeeding, we now have another Federal appeals court coming down against the constitutionality of this mandate. Anyone want to guess the odds in the Supreme Court?
I personally believe that forcing people to buy private sector materials under penalty of a fine is unconstitutional. If the government provides that issue to all as part of social policy and funded through a fair tax-like process, then it is legal, but not like this ACA tries to do it. I realize politics was the forming-guiding issue that resulted in this law, but the constitution is the constitution!
NG:
Here is a couple of articles to read which I believe will clarify the constitutionality of the ACA. Both of these lawyers, I know quite well.
“Under current constitutional law, the federal health care law is clearly constitutional. It is not even a close question. The key issue is whether Congress has the authority to require that all individuals either purchase health insurance by 2014 or pay a penalty to be collected by the Internal Revenue Service. Opponents contend that the minimum coverage provision is unconstitutional as exceeding the scope of Congress’s powers. But this is constitutional both under Congress’s authority to regulate commerce among the states and as an exercise of congressional power to tax and spend for the general welfare.” Erwin Chemerinsky “The Healtcare Law is Constitutional” http://www.scotusblog.com/2011/08/the-health-care-law-is-constitutional/
Beverly at Angry Bear explains how SCOTUS might rule here: http://www.angrybearblog.com/search/label/Beverly%20Mann%20%28Supreme%20court%29 Read the series of articles she wrote on Angry Bear and Paul Clements who has represented the 26 states.
run75441,
Thanks for the links, which I read. Let me propose one scenario which shows my displeasure with forcing citizens to buy from a private company or get fined. Let us say there was only one company in an area selling this required product. Why should the federal government require citizens support that company, unless of course it is also regulated as a public utility. Then there are some cost safeguards. So either let the government provide the coverage with cost being covered thru taxes or at least regulate the private companies strongly as utilities. Then I could feel some fairness about this way of requiring purchases!
Run 5411 & ng–
Run– Thanks very much for sending these excellent links!
NG– Thanks very much for actualy reading them!
I can’t tell you how happy it make me when readers learn from each other.
I realize that those links don’t answer all of your (entirely legitimate)concerns.
But let me add this: Under the Affodable Care Act, the Exchanges must provide at least two (maybe three– Ican’t remember) insurers to choose between (amogn)
This is one reason why I think that we will wind up with a public option that will create with private insuers– a govt’s sponosored “Medicare-for all” type plan.
The regulations under the ACA are tough enough that many insurers will drop out of the business. (Wall Street is already writing about this.)
In order to provide the required choices, I would wager that we’ll create a public option before 2014.
Many people who are not enthusiastic about the mandate will feel better if one of the choices is a public plan.
If Joe Lieberman hadn’t decided to intervene, we would probabably have a public option today. (If you google my name, Lieberman, Health Beat and option, you should find the post where I wrote about this.)
In addition I think we may see more non-profit insurers joining the field. Some are these are excellent.
Btw I would be perfectly happy if we were paying for universal coverage through progressive taxes (based on income.)
But this Congress just will not raise taxes. And while the majority of Americans favor raising taxes on the top 1% (individuals earning more than $380,000) that wouldn’t raise enough money–nor would it be entirely fair. .
Today, if you look at the top 5% (individiuals earning over $160,000), you’ll find that they, like the top 1%, are paying relatively low taxes (historically).
When you compare those in the top 5%, to those in the lower 60% to 70% (individuals earning less than $60,000) you will find that if you include, not just income taxes, but payroll taxes (“FICA–paying for Social Secruity and Medicare), local sales taxes, property txes, excise taxes, (gasoline taxes, etc.) many people who are truly middle-inome are paying a disproportionate share of taxes.
(Keep in mind that 50% of all Americans earn less than $33,000, Those who live one step up on the ladder are the true middle-class, and they are being squeezed.)
So I would favor raising taxes on the top 5% (folks earning over $160,000). But a great many upper-middle class Americans would disagree. Even if they’re not earning $160,000 now, they hope to in the future.
Americans just don’t like paying taxes. That’s why, if we want universal coverage, we have to finance it in some other way.
In a Democracy, the majority rules.
Just a 63-year-old Woman, Panacea, (and others) on falls–
I agree that many falls just are not preventable– unless we want to strap elderly patients to their beds.
And I really don’t think we want to do that.
Strong-willed patients will get up and decide to walk to the bathroom on their own. These days, nurses are so busy in our hectic hospitals that they cannot always come immeidately when patients call.
At the same time, the remedies that Panacea suggests seem very sensible.
I’m quite sure that they could significantly reduce the damage caused by falls at a relatively low price.
Could they reduce harm caused falls by 25%? ,50%?
I have no idea. But it’s definitely worth finding out.
Once again, I think it’s important to note that Switzerland has no public health insurance option, even for the elderly. There are 84 regulated private insurers that compete for business with the top six accounting for most of the market. The Swiss only spend about 12% of GDP on healthcare vs. over 17% in the U.S. Strangely, everything else in Switzerland is considerably more expensive than it is in the U.S. but, somehow, healthcare is cheaper. Go figure. Perhaps we should look more closely at differences in practice patterns, patient expectations, lifestyles and the litigation environment as compared to whether the payers are private or public, for profit or non-profit.
In the U.S. the health insurance industry will continue to consolidate as technology and scale become more important in the future. The same will be true on the provider side as well.
Barry Carol: I live in Switzerland, and thought your comment was interesting. “Practice patterns, patient expectations, lifestyles and the litigation environment” certainly play an important role here: litigation is rare and not at all seen as a legitimate way of (a) clarifying the law or (b) seeking financial redress, as it is in the U.S.; poor and therefore less healthy people basically don’t exist in the same way (what would be a minimum-wage job in the U.S. will support a family here; unemployment insurance covers 70% of prior salary for the first two years, etc.); and lifestyles are much healthier than the U.S. — we have ~ half the obesity rate you do.
However, there are important structural differences between the insurance markets which may be more important. First, while the government does not provide insurance, the detail of what is/is not covered by health insurance is written into law (and very generous it is, too — better coverage than the UK National Health Service). All insurance companies are mandated to provide it at one flat price to all risk groups with no right to refuse coverage. Likewise, all adult residents are mandated to carry health insurance, and if a policy is not taken out within three months of arrival (for an expat, for example), a policy is assigned by the cantonal health department, and failure to pay premiums is pursued through the (vigorous) public debt-collection and court systems. It is illegal for an employer to pay for health insurance – citizens and residents have a non-negotiable responsibility to choose and interact with insurers.
Finally, after all that, the Swiss pay the most per capita — and spend the highest proportion of GDP — on healthcare in Europe. I believe (though have not checked), that it is the second highest in the world after the U.S.
I don’t know your views on the ACA, but I thought it would be helpful for you and other readers to have the full context for comparison.
Mike S. –
Thanks for the very helpful feedback.
Perhaps you could clarify a couple of things. First, my understanding is that health insurance premiums within a canton vary by age with a very low premium for children 0-18 years old, a separate price category for young adults from 18-26, and a third category for adults older than 26 years. Within a canton, all competing insurers negotiate with providers as a group so they all pay the same price for a given service, test, procedure or drug in that canton. Finally, the premium for the same set of benefits can vary by as much as two to one between high cost cantons and low cost cantons. Insurers cannot earn profits on the sale of the basic coverage but they can on supplemental insurance policies. Switzerland does indeed have the second most expensive healthcare system after the U.S. when measured as a percentage of GDP.
Out of curiosity, perhaps you could provide some insight into how much someone working in a low wage job earns in Switzerland and how does that salary support a family in what appears to be a high cost country. I know lower wage workers receive subsidies to help them purchase health insurance. Are they eligible for significant housing subsidies as well? Do they also get what we used to call food stamps, now the Supplemental Nutrition Assistance Program (SNAP)? Are there other subsidies?
On the deceleration in growth in 2010: it is worth noting that – 1) Medicare spending growth is highly cyclical, 2) reflects overall economy-wide inflation (recently at record lows).
Medicare spending has historically been volatile, with a cycle that has extended roughly 10-18 years from trough to trough. On an inflation adjusted basis, Medicare spending growth dipped below 4% annual growth in 1970, 1986, and 1997-2000. Of course, it soon reaccelerated in each case. There may well be systemic attempts to restrain costs by providers, but it is difficult to disentangle the cycle from the longterm trend. This argues against placing too much weight on a single year’s growth.
Cordelia:
In any case Medicare, Medicaid, and commericial insurance are a reflection of the healthcare industry, pharma, procedures, hospitals, and fees for services. All of these dive the other three.
NG:
I believe Maggie discussed it well; but, I will add to it also. The Senator from Aetna had a chance to be famous and instead he took it out on the people of this country to exercise his vengeance against the Demcrats not once but twice. There could have been a better program and Lierberman denied it to us twice.
Whil there are choices, let me add also there are the MLR which limit the costs of administrative for group and individual insurance. Embeded (I believe) in these ratios are additional ratios which set the costs for young as compared to smokers and the elderly.
What if we do not have the ACA and we go back to what it was? We already have one scenario of this occurring with the death of Hillarycare at the hands of then analyst Elmendorf who is now VBO director. And if the ACA is denied? Here is an article by the Urban Institute “The Failure To Enact Healthcare Reform” http://www.urban.org/uploadedpdf/411965_failure_to_enact.pdf The true cost is not of doing this, it is of doing nothing again. Hillarycare was 20% of the cost of the ACA.
run75441,
As I am trying to show with my posts, I am not against a major system change in healthcare delivery, and God knows we need it. However, no matter how bad the current system, putting in a mongrel new system that trashes the freedoms of individuals in this country is not the answer. Do it consitutionally right or don’t do it at all!
Maggie — I think you are wrong in your belief that the recession has had little or no impact on Medicare utilization. In particular your statement that “the vast majority have supplemental “wrap-around” insurance in the form of Medigap or Medicare Advantage plans…” is incorrect. Fewer than 20 percent have Medigap coverage and only 25 percent have Medicare Advantage, and even these plans typically require some out-of-pocket payments.
Zeke Emanuel may be right in his theory that the threat of the ACA has helped slow provider spending, but it seems just as likely that many Medicare beneficiaries’ use of services has been influenced by a fear of paying deductibles and co-pays in economic hard times. And, if the latter is true, we may see an upswing in Medicare costs if and when the recession ends.
Roger–
I’m afraid you are mistaken.
.
90% had supplemental insurance. As the Medicare Payment Advisory (MedPAC) Commission reported to Congress in June 2011:
“lack of comprehensiveness in the FFS benefit design leads more than 90
percent of beneficiaries to take up supplemental coverage or have Medicaid,
which mutes the effect of high OOP costs. Researchers agree that Medicare
fn
beneficiaries with supplemental coverage tend to have higher use of services and
spending than those with no supplemental coverage. As currently structured, ****NOTE: many
supplemental plans cover all or nearly all of Medicare’s cost-sharing requirements …
You will find this at http://www.medpac.gov/chapters/Jun11_Ch03.pdf — pp. 63 to 64.
NG & run75411–
NG–First ,a great many constitutional scholars will tell you that the ACA is not
unconstitutional. Far- right conservatives and “Tea Party candidates” started this meme, but I’m afraid that the the vast majority have never read the contitution.
Even if the Supreme Court ruled against
the ACA for political reasons, (which I doubt they would do–they care about their place in history) it would
be very easy simply to call the “penalties” for not having insurance “taxes” that you have to pay to keep the insurance pool going so that when you become sick and want to join that pool, you have something to join.(This is much like paying taxes to keep Medicare going so that when you turn 65, you can join Medicare–or a Medicare Advantage plan which is a for-profit private sector plan.)
The constitution gives the Federal govt the right to levy taxes of any kind.
If, as I suspect, we wind up with a choice between a public option and pirvate insurance plans in the Exchanges, the situation would be exactly parallel to having a choice between Medicare and Medicare Advantage.
Of course no one forces you to sign up for Medicare, or MA, but you are required to pay the taxes to support the program.
Please don’t let people on the extreme right who throw around terms like “unconstitutional” confuse you. When you listen to and look at Bachman or Perry
do they really seem to know what they are talking about? I’m not saying that everyone on the right is simply dumb. But the people who seem to be the front-runners on the right are ranting. They don’t offer facts, just
unfounded opinions.(Unfortuantely the same must be said of some Republican leaders in Congress.)
Finally, run 75411 is right– think about who will be hurt if we don’t have the ACA– some of the poorest people in this country, and their chlildren. These are the people who don’t have insurance, not because they don’t want it, but because they cannot afford it. Under the ACA they will get subsidies, and they will be very happy to sign up for insurance.
The subsidies for low-income families will be quite generous.
Conservatives don’t want to pay for those subsidies— and that is the real reason that they are opposed to the ACA. Look at the polls and you will find that may consrvatives say that they do not think that people have a “right” to healh coverage. They believe that taking care of yourself is a matter of “individual responsibility.”
Maggie, the legal hassles with ACA are due to the lack of common terms and transparency at this stage, and that is caused by the politics needed to get this law thru as is. If the explanation you just gave was the way the law was written, then this discussion and the legal hassle would be mute. Of course the law might not of passed, but at least the social fairness terms and tax terms (instead of fees to private companies) would not be easily challenged. I think public policy should be clear, fair and based on precedent and not hidden in mongrel language and terms to get around political and ignorant objections!
Well if its not one thing its another, they will figure out how to generate business. Note this story in USAToday describing exactly how:
http://yourlife.usatoday.com/health/health/story/2011/08/Critics-slam-low-cost-CT-scans-for-smokers-as-marketing-ploy/50001436/1
Cordelia–
The only sustained slow-down in Medicare spending was 1997-2000 and as Kaiser points out “Trends in Medicare spending are affected by legislative changes such as the Balanced Budget Act of 1997, which contributed to the drop-off in Medicare spending growth in 1998 and 1999, and the Balanced Budget Refinement Act of 1999.”
This time around, there has been no major legislation cutting Medicare spending. Though Congress did pass health care reform which will call for greater efficiency– and it seems that hospitals are anticipating that change.
Medicare spending is not cyclical. There are cycles in the private insurance industry that have to do with forces in private markets.
Growth in government health care spending is affected primarily by legislation. When Congress passed Part D, Medicare spending went up. When it approves an increase in doctors’ fees, Medicare spending goes up.
When it passed the Balanced Budget Act, Medicare spending slowed.
Medicare spending is not driven by general inflation. It is driven by the price of drugs, hospitals, doctors, devices, medical equipiment etc, which have climbed, year after year.
Medicare spending slows)only if Congress refuses to accomodate these increases (as it did with the Balanced Budget Act which included the SGR, calling for serious cuts in doctors’ fees.
The other dates that you mention were one-year dips– blips on the screen, not a change in trend. (The next year more than made up for the dip.)
But this time we now have almost 2 years of data showing a slow down.
See part 2 of this post.