Over at Kevin M.D.’s excellent website, The Happy Hospitalist recently posted a “Reader’s Take” on Medicare that sparked a fierce debate.
The Happy Hospitalist began by pointing out, rightly, that Medicare is approaching a financial crisis: “On March 25, 2008 the Boards of Trustees released their Annual Report of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds. In this 43rd edition, the Trustees note [Medicare is] a government program covering just over 44 million people at an expense of $425 billion dollars during 2007. That equates to approximately $10,000 per beneficiary.
“Ten thousand bucks. A cost accelerating at an unsustainable rate”
This is entirely true. If we continue in our profligate ways, Medicare will break the bank. But then Happy Hospitalist explained his solution:
“The appropriate course of action should be a radically new approach to the Medicare entitlement program…A restructuring of the program towards a transparent means based qualification system is necessary. Having Uncle Sam pay for an elective cataract surgery so grandma can go on an African safari is inexcusable in a time of financial collapse.”
Often I agree with The Happy Hospitalist. But on this point, I cannot.
A “means-based qualifcation system” would limit Medicare benefits for
high-income seniors. The Bush administration has already moved in that
direction. In 2003, as part of a veiled campaign to eliminate Medicare
as a public program, the Medicare Modernization Act opened the door to
“means’ testing,” hiking Part B premiums for seniors with incomes over
$80,000. This raised concerns that wealthier Americans might begin
dropping out of Part B, the optional part of the program that covers
doctors’ bills and outpatient services. Today, Presidential candidate
John McCain proposes going a step further by hiking prescription drug
co-pays for those earning over $80,000.
Means’ testing was debated back in 1965, when Medicare born. At the
time some conservatives argued that the program should be means-tested
so that upper-income and upper-middle-income individuals would not
qualify. But as Carol S. Weissert and William G. Weissert point out in
their 2002 book. Governing Health: The Politics of Health Policy (2nd
edition), Medicare’s supporters understood that if this happened
Medicare would become “a poor program for the poor.”
Medicare is the most popular social program this nation has ever
created; it enjoys such enormous support because it covers everyone.
With Medicare, the U.S. achieved something that often seems just out of
reach: social solidarity.
Today, if the Happy Hospitalist’s proposal were implemented and both
wealthy and upper-middle-class beneficiaries (earning over $80,000)
were asked to pay more—while receiving fewer benefits –no doubt many
would drop both part B and part D (the optional part of the program
that covers prescription drugs), and find another way to finance their
healthcare.
Without their premiums, Medicare could quickly become a “poor program
for the middle-class.” Keep this in mind: half of all Medicare
beneficiaries have a total income of $20,000 or less. So if
means-testing begins at $80,000, the people who would most likely
remain with traditional Medicare would range from those who quite poor
(earning less than $20,000) to those with an income of $79,000. [Note
if you take $79,000 out of your 401-k or IRA each year that counts as
“income” of $79,000.) Over half who remained with Medicare earns $20,000—or less (including retirement withdrawals.)
Together, the poor and the middle-class would have a hard time scraping
up the premiums and deductibles needed to keep Medicare afloat. Would
wealthier Americans be willing to pay higher FICA taxes to make sure
that the program continued to offer rich benefits? Probably not.
When the Happy Hospitalist suggests that “Grandma” pay for her own
cataract operation, he argues that this is, after all, elective
surgery—and if she can afford to go to Africa, she can afford to pay
for the surgery herself. But while the surgery is elective in the sense
that a person won’t die if they don’t have it, eventually they will go
blind. Moreover, if Grandma has been paying into Medicare for her
entire working life, it seems outrageously unfair to deny her care that
we know is effective and needed.
Neverthless, the Happy Hospitalist believes that it is time to “say No”
to seniors. “No to dialysis. No to life support. No to elective
procedures [which would include artifical hips and knees] . No to brand
name drugs. No to the latest expensive technology. We will have to
place greater weight on quality of life over quantity of life. We will
have to demand hospice care in futile situations. We will have to
demand palliative comfort over slice and dice. We will have to reject
marginally effective proceduralization and imaging of our elderly. We
have to. We don’t have a choice. There is no other way.”
When I look at this list I agree on some items. “Futile care” is
clearly unnecessary care. But often, we don’t know whether or not it
will be futile. Every day elderly people do emerge from ICUs and go
home to play with their grandchildren. As for “brand new drugs,” and
“the latest expensive technology” regular readers know that I believe
that everything depends on whether the new technologies have been
tested and proven effective. We cannot afford to squander Medicare
dollars on drugs, devices and procedures without knowing whether the
patient will benefit. And I certainly prefer palliative care over
“let’s try another surgery. Can’t do any harm.” (Except to the patient
who suffers through it).
So I agree with the Happy Hospitalist in some areas, but not in
others. But as I continued to read the comment thread, I began to hear
voices that were clearly hostile to the elderly. And this was
disturbing. For example:
“Every medicare benificiary should have a limit of
“1. 5 generic drugs
“2,200k in lifetime expenditures paid by medicare
“After that, pay for it your damn self.”
“Countries are going to quit investing in the U.S. Why
would th[e]y buy bonds to pay for demented grandma with CHF, COPD, DM,
PVD, ESRD repeat stay in the ICU??????”
This was signed “tired of futile care.”
Then “Peter” weighed in with a “free-market solution.” Specifically,
he wrote “the easiest, fairest, most effective solution is to allow
‘balance billing’ on all healthcare transactions. As it stands now,”
Peter explains “the government prevents physicians from billing the
patient in addition to what Medicare pays for services.”
For example, if Medicare pays your eye doctor $80 for a visit, and he
feels his time is worth $250, he is not allowed to bill you for the
extra $170—unless he stops taking Medicare patients.
Peter believes that if doctors were allowed to shake down seniors for
what they deem the full value of their services, “patients would
realize the full cost of the services they demand, and so they will
demand fewer services and they will demand cheaper services; physicians
will be paid appropriately for a single visit and so they will not
increase volume unnecessarily to compensate for arbitrarily low
payment.”
On the face of it, this may sound reasonable. But, keep in mind, when
an elderly patient needs expensive care, he is not “demanding” a
service; usually he “needs” the service. Eighty percent of our health
care dollars are spent on people who are seriously, chronically ill. If
diabetics cut back on the services they ask for because they cannot
afford to pay the “balance,” many more will wind up in the hospital,
enduring amputations—one toe at a time, then the foot, then part of the
leg, then further up the leg . . . (This happened to a friend’s father.
He also went blind.) And this will cost all of us more.
Moreover, in a capitalist society, people who provide a service aren’t
usually allowed to simply set the price and insist that buyers must pay
it. If an electrician told you that if you want him to come to your
house, you have to shell out $600—just for him to look at the
job—chances are you would say “no.” (Maybe your brother-in-law will
come over, look at the situation, and give you an idea of what you
need. In other words, you have options.) But if you have cancer, and an
oncologist tells you that a preliminary consultation will cost $600,
Medicare will pay $200 and you will have to pay the rest—you may well
feel you have no choice, particularly if the other oncologists in town
are all charging $600. While physicians do not sit down and “fix”
prices, they do tend to know what other doctors in their area are
charging.
Peter ended his message by saying “forget about changing the RVU
system, and forget about asking the government to become more involved
in the selection of services for certain patients” [based on whether or
not they are medically effective.]
Here, Peter is referring to a Medicare advisory committee called the
RVS Update Committee (or RUC) which regularly updates the fees
Medicare pays for various procedures. The RUC flies under the radar.
It’s quite secretive and many people have never heard of it. Yet it is
enormously powerful. It sets the prices for Medicare’s fee-for-service
payment schedule, a price-list that has become the basis for most
private insurers’ payments as well.
Who is on the RUC? It’s dominated by specialists. So, it should come as
no surprise that a specialist’s time is deemed to be worth far more
than an internist’s or a family doctor’s time. An article in the June 2007 Annals of Internal Medicine provides a quick example.
“In 2005, the Medicare fee for a typical 25- to 30-minute office visit
to a primary care physician in Chicago was $89.64 for a patient with a
complex medical condition (Current Procedural Terminology [CPT] code
99214). By contrast, Medicare’s fee for a gastroenterologist in the
outpatient department of a Chicago hospital performing a colonoscopy
(CPT code 45378)—which also takes about 30 minutes—was $226.63. And if
the specialist performed the procedure in his own office, where he pays
for equipment and nursing time, he could charge Medicare $422.90 for
his thirty minutes.”
When Peter says “forget about” adjusting the fees, he is referring to
the fact that The Medicare Payment Advisory Commission’s (MedPac’s)
recent suggestion that Medicare raise fees for primary care while
lowering some others. Specifically, it might make sense to pare fees
for particularly lucrative services which fall into the “grey area” of
medicine where we don’t know whether patients benefit
MedPac’s chairman has recommended creating a second panel that has no
financial interest in the outcomes to go over the fee schedule. He has
suggested that the panel might be made up of physicians who work on
salary rather than piece-meal, fee-for-service.
Peter says “Forget about it.” It crosses my mind that perhaps Peter is a specialist sitting near the top of the income ladder.
In the interests of full disclosure, let me admit that I also joined
the discussion—and drew rather unfriendly fire from someone named
“anonymous.” Though as a friend points out, it’s hard to become too
become too upset when attacked by “anonymice.”
Other comments were more thoughtful. But I continued to be surprised by
suggestions that people who have paid into Medicare all of their lives
should be cut off, at the end of life. The Hospitalist Refugee wrote:
“I don’t think the patients are usually greedy when it comes to the
pissing away of healthcare dollars at the end of life. But I do think
that there comes a point where you cannot justify the resource
expenditure for the return on that investment. And sadly, yes, this
sounds like a business decision. But every other tiny piece of
micromanaged healthcare in America IS a business. Why shouldn’t this
be? If you can PAY for the liver transplant at the age of 85? Go for
it. If you can foot the bill for 10 years of dialysis and the countless
R/O Sepsis admissions you will incur? Be my guest.”
He continued: “It seems heartless to say ‘no’ But why do you think
hospitals used to be charity outfits run by tax-exempt religious
organizations? It has become a business. And as one, it cannot survive
if you are expected to give your services away. But every year we give
a larger and larger percent of that care away. The line HAS to be drawn
somewhere, beyond which we say ‘No.’ Accept this, or prepare for the
entire works to crash into the ground in a blaze of glory.”
To me, of course, this is the problem: even non-profit hospitals see
themselves as businesses—and act accordingly. Too many doctors define
themselves as “entrepreneurs” rather than as professionals. Anybody
can get an MBA and become an entrepreneur. Only very talented, and one
hopes, committed people can make it through medical school and become
physicians. These are the folks who can help us wring the hazardous
waste out of our money-driven healthcare system. We do not need to
ration Medicare based on cost. But we do need to “say no” to
over-priced, unproven, ineffective treatments. This means standing
up—not to the elderly—but to the lobbyists.
Finally in some of the comments I sensed the seeds of a generational
war. Is some of the contempt for “grandma” part and parcel of a general
dislike of older generations—especially boomers? Don’t these people
have grandmothers?
Maggie,
Since Medicare is, in effect, a single payer health insurance system with universal coverage for the over 65 population (and certain disabled people), I wonder if you can offer any insights into differences among developed countries in how they treat their elderly from a medical standpoint. Lack of preventive care should not impact the elderly to anywhere near the extent that it affects the under 65 population that lacks health insurance.
I have made the point before that I think doctors in other countries have a very different definition of what constitutes good, sound medical practice than we do in the U.S. Some of that may be related to the litigation environment. Some may relate to differences in patient expectations. Some may result from different political judgments as to how much of a given society’s GDP should be spent on healthcare even if overall per capita GDP is roughly comparable.
If I could implement one change, aside from a more sensible litigation environment, in the U.S., it would be for doctors to change their practice approach from do everything and try anything unless the patient specifically declines it to apply common sense depending on circumstances. We should gain a more thorough understanding of how good, sound medical practice is defined in other countries, especially as it relates to treating the elderly. I suspect we may have a lot to learn that could help us to bend the medical cost growth curve back to something approaching the growth in GDP.
It is true that the RUC is composed mostly of specialists, since there are far more specialty groups as compared to primary care….It is also secretive (I wonder why?) Imagine a group of less than 30 controlling the economy of provider practices….
I do believe that the criteria for cataract removal has become a bit too loose. But this is based upon the increase in longevitiy and the increased quality of life of senior citizens. Also the much better outcomes and far fewer complications. This has to be individualized….as in other conditions…you cannot set a blanket standard….
At any rate, we are in deep deep poo-poo. There is not going to be any easy solution.
Children are going to have to be more directly responsible for their own family without leaving it to society in general..
There are many adult chldren who can take care of Mom and Dad to one degree or another.
Gary–
I agree that it is a good thing for children to take care of their aged parents. But I also think Medicare must treat all seniors equally. It is this egalitarian aspect of it that is both its strength and the source of its strong popularity. What of folks who don’t have children? Or who are estranged from their children? Or whose children can’t help? Are their benefits, in effect, going to be less than those who have the luxury of a large and supportive family? That’s my fear.
I think it is appropriate for seniors to buy additional benefits if they wish beyond the standard Medicare package, as they can do now. Call me a socialist (you won’t be the first), but that standard benefit package must be sufficiently generous so we don’t get a two-tiered system, with those at the bare-bones bottom getting inadequate care.
Gary, we are in deep deep poo-poo because of stupid and greedy politicians that want campaign contributions from the insurance and health care providers. Barring those we would have implemented a direct Medicare Drug program: physician writes prescription, patient buys at drug store and pays a deductible, and drug store bills Medicare the balance. All without a wasteful insurance bureaucracy draining $780 billion over the next decade. And we would have mandated that Medicare negotiate lowest price.
But instead our corrupt politicians made a “deal” and now Medicare is going broke. They also made a “deal” with Medicare Advantage programs to pay them a 17% premium over traditional Medicare costs. That also is helping Medicare go broke. And they are refusing to perform oversight to eliminate the 20-30% of misuse and overuse.
And Bush and the Republicans attempted to cut physician payments by 10% so they’d start refusing Medcare patients thus driving them to the Advantage programs he attempted to protect.
Is it any wonder Medicare is in trouble?
Yes, I’m over $80K and on Medicare and I support means testing. I can pay for my own cataract removal.
But in the meantime we have to get Medicare out of the hands of the politicians and into the hands of a non-partisan health board…. much like the Fed with 14 year staggered terms.
Why is it the libertarian types always attack the victims?
There are two sides in the supply/demand equation and in this case the “demand” is not usually very optional.
If treatment costs were better controlled then the amount of “demand” wouldn’t be of so much concern. Let’s have some discussions about drug regimens costing $100K and the price of medical devices. Let’s have some discussion of the failure of the government to build or require a national record keeping system. Let’s have some discussion about the promotion of unhealthy lifestyles by the food and beverage businesses.
If we want to blame the victims why don’t we “means” test the payroll taxes devoted to Medicare. If you are overweight, smoke or engage in other risky behavior you pay a higher premium. Private insurance companies do that so why not public.
We’ll soon find out if these self-righteous types are as healthy as they expect old people to be.
It’s not that old people are consuming too much health resources, it’s that the prices of the services have been artificially inflated by a monopoly industry. GE is getting out of light bulbs and appliances, but ramping up the medical equipment businesses, they know where the money is.
Barry–
When it comes to end-of-life care and whether everything possible should be done, there are religious groups in this country (Christian but also some others) who feel
very, very strongly that God decides when people should die. (I don’t happen to agree with them, but they have become increasingly powerful politically).
Many are even adamantly opposed to palliative care and see palliative care specailists as people who assist suicides.
In most other developed countires there is a much greater separation between church and state than there is, today, in the U.S.
This is why I don’t see the U.S. adopting the views about death and dying that you see in the U.K., Italy, France, Germany, Denmark etc–even though I believe that those countries are more humane.
I just hope palliative care will spread. I generally trust palliative care specialists to protect a patients’ rights, to keep him or her out of pain, and to support a death with dignity.
Balance billing of Medicare patients and no adjustment to the RBRVS for Medicare”
That is really the crux of the problem in health care is that nobody (including physicians) are willing to give a little to get the required reforms needed. I do get tired of hearing the issues about how specialists in this country are underpaid and undervalued. Just flies in the face of some much evidence to the contrary.
Gary L.–
Thanks for your comment.
You are right about cataracts. There are questions about how soon they should be removed, and some doctors recommend surgery when a patient is not experiencing loss of eyesight.
But it’s my understanding that if you live long enough, eventually you go blind. And since people are living longer–and are more active, driving at night etc.-I don’t think we want to ask them to endure dimming eyesight.
We do need (and I believe have) guidelines on this. Questions a doctor should ask the patient about his eyesight as well as tests that can be done to tell if it’s time for the operation.
As for children taking care of elderly patients. There was a time when more children could do this because women didn’t work.
But today, most women do work. And those who try to continue working–and care for an elderly parent–or give up work altogether to care for mother or mother-in-law are often extremely stressed. It just isn’t a good situation for anyone.
And as Chris points out, many elderly people don’t have children who live nearby or have the room to take them in.
The reason to have Medicare is so that all elderly people can get the care they need–not just those who happen to have children who have the time or money to care for them.
An answer to the rising Medicare and food costs?
http://en.wikipedia.org/wiki/Soylent_Green
Robert–
You wrote: “It’s not that old people are consuming too much health resources, it’s that the prices of the services have been artificially inflated by a monopoly industry.”
I agee. The problem is on the supply side.
And we shouldn’t blame the old for being old–or poor (as more than half of the elderly are.)
Jack Lohamn–
I completely agree that we need to remove Medicare from the political scene and have it overseen by people who are not worried about campaign contributions.
At the same time, I’m convinced we don’t want means testing. Too mnay people with income over $80,000 really wouldn’t be willing to contribute even today’s level of FICA taxes to keep the program going.
Jack Lohamn–
I completely agree that we need to remove Medicare from the political scene and have it overseen by people who are not worried about campaign contributions.
At the same time, I’m convinced we don’t want means testing. Too mnay people with income over $80,000 really wouldn’t be willing to contribute even today’s level of FICA taxes to keep the program going.
Robert, you wrote:
“It’s not that old people are consuming too much health resources, it’s that the prices of the services have been artificially inflated by a monopoly industry”
This is absolutely true. In the healthhare market,patients have very little leverage. They need the product, and can’t wait until something cheaper becomes available. (Which is why it’s raref or the price of medical technologies to come down. In virtually every other sector, the price of technologies fall because we can afford to wait until competitors come in with lower prices. That’s not true of healthcare.
Maggie,
I appreciate your detailed response to my comment made earlier.
You wrote, “keep in mind, when an elderly patient needs expensive care, he is not “demanding” a service; usually he “needs” the service.”
My hope is that an economic market such as the healthcare industry would return to fundamental economic principles which permit other aspects of society to run efficiently. For instance, every person “needs” food and shelter; this is true of middle-class Americans as much as any other class, yet the government is not involved in wide-spread price fixing, forcing below-market prices on the goods and services provided by individuals. Why should healthcare be a fundamental “need” for Americans to the point that the government should be forced to step in, wreaking havoc, to ensure that any elder citizen can get whatever good he or she demands from the market for a price that is not reasonable from the perspective of suppliers? (Demand, in this sense, refers to economic players purchasing goods/services in a market, but not referring to demands in the patient-physician relationship.)
This is precisely why the Happy Hospitalist speaks of rationing. People need to say no to unrestricted spending. I do not believe the government should be involved in telling individuals no. However I do believe that personal financial responsibility and thus financial inhibition is one of the strongest deterrents against wasteful spending that we have.
You wrote: “Peter says “Forget about it.” It crosses my mind that perhaps Peter is a specialist sitting near the top of the income ladder.”
I am merely a medical student at this point, and my emphasis on “forget about it” is to enunciate the point that fundamentally changing the economics of healthcare delivery will have the longest-term implications. While modifying the RVU system would be beneficial in the short-term especially for primary care physicians, it is merely a superficial fix that ignores why Medicare/RUC is broken in the first place. I go back to the rationing idea: is it more fair for a government to tell your grandmother that she should not be allowed to amputate her gangrenous foot because it costs too much, or should your grandmother make the decision herself on whether she should have the operation based on her personal finances? It is a very difficult question to answer, but I think most would say that it is UNfair for the government to step in and say what is allowed and what is not allowed. Even trickier is when you introduce the idea of distribution of cost in a socialized system, wherein the “taxpayer” foots the bill for your grandmother’s care when the average taxpayer is completely unrelated to her.
Trust me, I believe that RUC is one of the most arbitrary systems of price fixing that we have encountered in this country and that it is in extreme need of reform. I just think that allowing balance billing will be the end-all fix to compensate for the evils of the RUC.
Finally, you wrote: “Moreover, in a capitalist society, people who provide a service aren’t usually allowed to simply set the price and insist that buyers must pay it. If an electrician told you that if you want him to come to your house, you have to shell out $600—just for him to look at the job—chances are you would say “no.” (Maybe your brother-in-law will come over, look at the situation, and give you an idea of what you need. In other words, you have options.) But if you have cancer, and an oncologist tells you that a preliminary consultation will cost $600, Medicare will pay $200 and you will have to pay the rest—you may well feel you have no choice, particularly if the other oncologists in town are all charging $600. While physicians do not sit down and “fix” prices, they do tend to know what other doctors in their area are charging.”
This is a fundamental principle of economics: economic equilibrium, which is when suppliers agree with demanders on price and quantity. If there is no colluding among physicians to set prices (like RVS does), and if people will buy the service at such a price, where is there wrongdoing? It may not seem fair to pay $600 for a physician’s service when you think the service should cost $10, but is it fair when you are “forced” to pay $25,000 for a brand new car when you think the car should only cost $1,000? Let suppliers determine what they want to charge for services, and let the demanders pay what they believe to be appropriate for a service. If the suppliers agree to a price which is outside of equilibrium with demand, then suppliers will not find anyone to buy their product. Fundamental economics.
Peter–
Our fundamental difference of opinion, I think, is that I don’t think medical care follows fundamental principles of the marketplace. For example, in medical care, excess supply seems to create demand, rather than reduce it; excess hospital beds and specialists drive the demand for their services, and the price doesn’t come down–it seems to go up. I also don’t think medical care should follow those rules. It is not a commodity–I think it is a right of every citizen. Our challenge is to figure out a way to honor that right in a way that is both fair and does not bankrupt the economy. I think it can be done. Fixing Medicare is the first step of that process.
Maggie, I assume means testing adds a higher co-pay for me on “optionals” like cataract surgery. It doesn’t mean I don’t get it, I just pay more. I don’t have a problem with that.
Peter,
I can see both sides of the balance billing argument. Doctors who agree to take private insurance accept the insurer’s reimbursement as payment in full. If they don’t like the reimbursement rate, they don’t accept the insurance and are allowed to balance bill as an out of network provider. Doctors don’t have to accept Medicare patients either. Of course, not many can sustain a practice with cash paying customers only. If doctors were allowed to balance bill, there wouldn’t be any point to insurance networks, and it would expose patients to potentially infinite out of pocket costs.
In the old days, doctors used something called the “sliding scale.” If the doctor knew the patient had little or no money, he might agree to treat him/her for free or for a nominal sum that the patient could afford. If the patient were a well heeled investment banker, for example, the full retail price was charged. As it relates to Medicare, people like Jack (and me in a couple of more years) could live with balance billing fairly easily for most procedures other than catastrophic events. Most Medicare patients can’t because their income is too low. They shouldn’t be expected to mortgage their home or liquidate their modest savings to pay doctor bills. At the same time, if they are likely to die without the treatment or live in severe discomfort, what do you suggest they do?
Peter–
Thanks for your long reply.
A couple of points: first, doctors do collude to set prices. The first thing a specialist does when he arrives in a new town is to find out what local specialists charge for procedures. This is not illegal, but it is price-fixing.
Secondly, and far more importantly, you write:
“Is it more fair for a government to tell your grandmother that she should not be allowed to amputate her gangrenous foot because it costs too much, or should your grandmother make the decision herself on whether she should have the operation based on her personal finances? It is a very difficult question to answer, but I think most would say that it is UNfair for the government to step in and say what is allowed and what is not allowed. Even trickier is when you introduce the idea of distribution of cost in a socialized system, wherein the “taxpayer” foots the bill for your grandmother’s care when the average taxpayer is completely unrelated to her.”
Since you are a medical student, I assume you have a fair idea of the pain and suffering involved in dying of gangrene.
You also must know that amputation and the hospitalization invovled would cost well over $250,000. (A 7-10 day hospital stay for a relatively minor procedure now averages $200,000)
The average Medicare patient has an income of $20,000.
You believe it is “fair” to tell an elderly woman that it is her choice: die of gangrene or somehow come up with the money (sell her home–if she has a home. . . )
And this is okay because we are not related to her?
On this blog, we’ve talked quite a bit about the lack of social solidarity in this country. France has such a good healthcare system because the French feel that nothing is too good for another Frenchman.
Unfortunately, we do not feel that way about each other. This is tragic, and helps explain how we treat each other.
In this country, the old-fashionied Golden Rule : “Do unto others as you would have them do unto you.” has been forgotten by many, many people.
So we step over homeless people lying on the sidewalk; we ignore the screams of a child who is being abused; we cheat each other when we sell homes and cars, hiding defects . . . I could go on.
The problem with Medicare is that it is available only to the elderly. Of course there is going to be generational warfare. I am not in favor of Medicare for all, but I am an advocate of healthcare for all, the mechanism to be determined. Were this the reality, and were we all in the pool together, perhaps our perspectives on what was and was not appropriate healthcare would be governed more by compassion than by profits.
Speaking of business, healthcare should be more of a business, but it needs to reorganize drastically. Let’s be fair, the elderly could not “abuse” the healthcare system without the complicity of providers, the drug companies and the insurance companies. The system is a disaster run by those who benefit financially from it. This is a shame, because there are so many outstanding people trying to do good work, but who are caught up in a corrupt system.
“Medicare is the most popular social program this nation has ever created; it enjoys such enormous support because it covers everyone.”
Medicare doesn’t cover anyone who dies before age 65, even if they pay a lifetime of taxes supporting it. Remind me again how that’s “fair”?
Oh come on Kip, it is the most fair and most efficient health care system we could hope for. Yeah, it’s an “insurance” you may not use, but it is the most humane system we have. Oh sorry. I should have used the word “compassionate.”
“Too many doctors define themselves as ‘entrepreneurs’ rather than as professionals.”
This is an astute observation. When you read what doctors are saying on the blogs, they act like everything they have learned is 100% because of them and they should be allowed to do with it whatever they want, especially earning money. Unfortunately, when we start seeing ourselves as entrepreneurs, we betray the trust of the patients who got us where we are today. We betray the trust of the person who donated his or her body so we could learn anatomy. We betray the trust of all those patients in the hospital who obliged our clunky history-taking and exam skills because they knew they were helping us to learn to be better doctors in the future. We betray the trust of other physicians who opted to take academic positions as educators rather than settling into more lucrative private practice physicians.
We only got to be physicians because of people who helped us get there. When we stop thinking of ourselves as professionals who have been entrusted with knowledge and education and start thinking of ourselves as businessmen it is to the detriment of our patients and our profession.
If we built all cars so that only the poorest of people could afford them, and forced manufacturers to sell them at prices so all poor people could afford them, you would get bad cars with bad service and no sense of ownership for the overall badness.
How we can create a medical system based on the lowest common financial denominator and then expect all the players to be paid on that premise, and expect success is beyond me. I can’t think of another aspect of life that is forced into equality. Housing? Nope. Education? Nope. Food? Nope. Job? Nope. Utilitities? Nope. Clothing? Nope. Medicare? Amazing. The only program that tries to create equality where equality doesn’t exist is Medicare.
It’s the wealthy and their money that drives excellence, innovation and competition. And it brings up the standard of living for all. It wasn’t a homeless drunk that developed the iPhone or the LCD TV. 20 years ago nobody but those with money had a cell phone or a lap top. Now it’s ubiquitous, even those at the bottom of the financial ladder. I see Medicaid and no pay patients every day walking into my hospital with cell phones designer cloths and bling up the wazoo. It was money that raised the comfort of all financial quintiles. And that money creates millions of good paying jobs that otherwise didn’t exist. Capitalism pulls all financial quintiles up in the ladder of quality and comforts of life because the reward available to the few who have enourmous success shows up in so many ways in those economically less fortunate. The inequality drives a rising standard of living on the entire boat.
We will always disagree on the supply driving costs argument. The supply is there because the demand is first guaranteed. The demand is Medicare. They pay for everything, in all the wrong places. If Medicare said tomorrow they would stop paying for PET scanners, every PET scanner in the country would go belly up. PET scanners on every corner drive costs, not because they are available (supply), but because Medicare pays for it (demand). And you didn’t have a PET scanner on every corner until Medicare gave the go ahead to pay for it. The same will happen with CT coronary scanning. The same with every other “medical necessity” procedure that is billed. I see things every day that get billed out as medically necessary that I don’t think would pass my bullshit radar. But a few key words here and there and viola, paid, paid, paid. And there are no breaks to the madness.
Interesting discussion all around, I must say
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A couple of points: first, doctors do collude to set prices. The first thing a specialist does when he arrives in a new town is to find out what local specialists charge for procedures. This is not illegal, but it is price-fixing.
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Thats incorrect. Try calling up a random GI practice and ask them how much they charge–they cant tell you and even if they knew they wouldnt reveal that info. Thats part of the problem in healthcare, there’s no price transparency.
Furthermore, they charge 100 different rates to 100 different insurance carriers, so to call them up and ask what they charge for a scope is a question thats too complicated to be answered in a phone call.
The only rate schedule thats publicly available information is the Medicare schedule–and by law its standardized and made public–so you can hardly cite that as an example of price collusion.
Insurance companies and doctors practices consider reimbursement rates proprietary info and wont reveal it to anybody, so to say that I could call up a random practice and they’ll tell me what they charge for a bunch of different services is ridiculous. Only a few isolated urgent care clinics use price transparency.
Chris, Jack, MG, Robert, Barry, Bill, Kip Esquire
Thanks for your comments.
Chris–I agree. In many cases, children cannot take care of their parents. And many elderly either have no children or have no children who live nearby or can take them in.
And as I noted in another comment, since most women now work (and have to work to help support the family) they are not available, as they once were, to take care of elderly relatives.
Chris, Thanks also for your comment to Peter. I agree.
Jack–As Barry points out, the fact that you and he could afford to pay for your own cataract removal is a moot point.
Most seniors can’t. (And Happy Hospitalist wasn’t talking about a co-pay. He said No elective surgeries: no knee replacements, hip replacements, cataract surgeries, breast reconstruction after a total mastectomy, knee surgery, etc. unless the older person can pay for it himself.
Means testing is an attempt to separate the rich from the middle-class; if the wealthy are not involved in Medicare most would vote to reduce FICA taxes and reduce the benefits seniors receive–just as most wealthy people vote for lower property taxes if they a) don’t have children or b) their children go to private schools.
These divisions in our society are undermining it. If we are going to have health care reform, campaign reform, education reform we desperately need to think collectively. And the way to do that is to make sure that we’re all in one boat, rowing together.
Robert– Why do the libertarians blame the victims?
The demographics of the libertarians are pretty interesting.
The Cato Institute reports that, according to Pew Polls: “One-third of Pew’s libertarians are between 18 and 29 years of age. Libertarians are thus fifty percent more likely to be found among the young than in the population as a whole. They also are more likely than the rest of the population to have a college degree, to be in the highest income category, and to come from the West. . . Bush got 57 percent of libertarian vote last time.” (This suggests to me that they are not quite as smart as they think they are.)
In other words, a great many libertarians are very young, privileged people with very little life experience. Many feel that they “deserve” their place in society and that people who are poorer, sicker, etc. are lazy or stupid.
Libertarians ignore the fact that they were born on third base.
A little later in life when they buy a home, marry and have children, many will change their views. If their young child is in a terrible bus accident, if their wife develops breast cancer, if their teen-ager develops a brain tumor . . . they will discover that life is a lottery, and that no one is safe from tragedy.
Then, they will develop some appreciation of the importance of helping each other –even if we are not related. And they will see why we need government to provide safety nets.
MG– You write:
“the crux of the problem in health care is that nobody (including physicians) is willing to give a little to get the required reforms needed. I do get tired of hearing the issues about how specialists in this country are underpaid and undervalued. Just flies in the face of some much evidence to the contrary.”
I agree completely.
Barry– YOu write that balance billing would “would expose patients to potentially infinite out of pocket costs” Exactly.
And you ask: As it relates to Medicare, people like Jack (and me in a couple of more years) could live with balance billing fairly easily for most procedures other than catastrophic events. Most Medicare patients can’t because their income is too low. They shouldn’t be expected to mortgage their home or liquidate their modest savings to pay doctor bills. At the same time, if they are likely to die without the treatment or live in severe discomfort, what do you suggest they do?”
I wish Peter would answer that question.
Bill–YOu write: ” am an advocate of healthcare for all, the mechanism to be determined. Were this the reality, and were we all in the pool together, perhaps our perspectives on what was and was not appropriate healthcare would be governed more by compassion than by profits.”
I hope so. Let me add, though that the problem with Medicare is not that the elderly “abuse the system.” Most health care that the elderly use is supply-driven: they are in the hospital because doctors tell them they need to be there; they are taking medications that drug-makers sold to them on TV etc. etc.
Kip Esquire– you write:
“Medicare doesn’t cover anyone who dies before age 65, even if they pay a lifetime of taxes supporting it. Remind me again how that’s “fair”?”
Medicare doesn’t make life “fair”–it simply tries to protect people against the fact that life is unpredictable and we are all vulnerable to tragedy.
If you die at 60, you will never use your Medicare. If you are lucky enough (or unlucky enough, depending on your point of view) to live to 95 you will receive many Medicare benefits.
Right now, if you are 30, you have no way of knowing which group you will fall into. The only reliable predictor is the color of your skin. If you are white are are much more likely to enjoy more years on Medicare. (This has been used to argue that Black Americans should pay lower Medicare taxes. I’d rather see them given better care.)
You are wrong. Doctors do collude to set prices. It’s called “usual and customary.” And if you think transparency is the key I have a bridge to sell you. Few, if any, will send themselves or loved ones to the lowest bidder. Not me and I doubt you either. It will have the exact opposite affect intended.
Maggie, I realize that “most seniors can’t,” and thus it is not a big issue. But for those who can, means testing is not unbearable. The wealthy are not going to avoid needed surgery because of it. But I hope you win this one so I can pass on more of my estate to my kids.
Joe Blow–
Jack is right.
First of all, doctors no longer charge 100 different insurers 100 different prices.
Since 2000, the vast majority of insurers simply follow Medicare’s fee schedule most of the time.
Secondly, if you call a doctor’s office to ask about fees, they will not tell you.
But if a fellow specialist who is new to the state asks over lunch or dinner, he will be told.
Fees vary greatly by location, but within a given location, everyone has a pretty good sense of what the going rate is, who charges more (and doesn’t take insurance) and who charges less (and takes Medicaid patients.
As I said, this is not illegal price-fixing. Doctors don’t get together in a room and vote. The Medicare panel (RUC) that is dominated by specialists actually takes the lead by setting fees in the first place.
Jack–
I don’t want to win this one so that you can pass more of your estate on to your kids. (If you knew what I thought about inheritance taxes . . . well let’s just say I tend to agree with Warren Buffett.)
The reason I’m against means-testing is that I think too many wealthy people would cease to support rich benefits for Medicare beneficiaries if they weren’t going to be one of those beneficiaries.
Your argument is sound, Maggie, and for the record I also support Warren Buffett on inheritance taxes.
And interestingly, many people are against welfare, except that which comes to them in the form of inheritances they didn’t have to work for 🙂
Maggie, you write: “Since you are a medical student, I assume you have a fair idea of the pain and suffering involved in dying of gangrene. You also must know that amputation and the hospitalization invovled would cost well over $250,000. (A 7-10 day hospital stay for a relatively minor procedure now averages $200,000) The average Medicare patient has an income of $20,000. You believe it is “fair” to tell an elderly woman that it is her choice: die of gangrene or somehow come up with the money (sell her home–if she has a home. . . ) And this is okay because we are not related to her? On this blog, we’ve talked quite a bit about the lack of social solidarity in this country. France has such a good healthcare system because the French feel that nothing is too good for another Frenchman. Unfortunately, we do not feel that way about each other. This is tragic, and helps explain how we treat each other. In this country, the old-fashionied Golden Rule : “Do unto others as you would have them do unto you.” has been forgotten by many, many people. So we step over homeless people lying on the sidewalk; we ignore the screams of a child who is being abused; we cheat each other when we sell homes and cars, hiding defects . . . I could go on.”
What is the reasonable limit for paying for other individuals’ health expenses? Should one individual be allowed to cost the system $1,000,000 for experimental cancer therapy? Should $10,000,000 be the limit? $100,000,000?
Is it wise to say “I want other people to pay for my medical treatment, regardless of the cost, because they are socially responsible for my illnesses”? (Essentially, that is exactly what we have been saying in this country so far, and Medicare has been in a financial crisis for the past few years and it will continue to be in crisis unless something severe is done.) Medicare beneficiaries for the most part are over 65 years of age and for the most part are retired, so they would not have any income from a job, but rather from their investments and savings. Why should the ordinary citizen be forced to pay for the medical cost of someone else’s $1,000,000 therapy instead of the beneficiary paying for their fair share of their own expenses.
Regarding French citizens, my impression is that they freely pay for their fellow young citizens, but the young are reluctant to pay for the elders in that country such that the elders do not get the care they need due to government rationing. Prime example is a heat wave in France which resulted in hundreds of elder Frenchmen dying due to rationing.
You might disagree with my approach to fixing the healthcare mess we have in this country. What I see is a situation in which society bears the burden of some people’s medical expenses, causing increased insurance premiums, increased costs of services, and billions of dollars in waste. For too long have the economics of healthcare markets been ignored in favor of treating everyone for whatever price. This is a contributing factor to the disaster we are in right now with Medicare. If forcing the people who use services to pay for it is not palatable, how is the government choosing who will die and who will live any more palatable? My main thrust is that it is unfair to everyone else who has to pay for the personal medical expenses of a handful of very sick people, especially when I do not expect other people to do the same. Your main thrust seems to be that we must collectively pay (sacrifice our personal resources) for a few unrelated people to get very expensive care because it’s the expectation of a proper society (perhaps a socialist society).
You wrote: “You believe it is “fair” to tell an elderly woman that it is her choice: die of gangrene or somehow come up with the money (sell her home–if she has a home. . . )”
I believe it is more fair for society to tell that woman that it is her economic choice to have the procedure or not, versus the government rationing her healthcare and flat-out saying “NO”.
Finally regarding price fixing or collusion, what doctors do when they ask other doctors in an area what they charge for medical services is for the sake of approximating the equilibrium price in that local market so that they avoid the problems of setting too high a price for a service only to have so few patients come in to pay for the services, or the converse where they set the price of their services too low and they are inundated with and overwhelmed by patients seeking the “sale” price of such good or service. Price fixing, as what Medicare is doing, would involve doctors making it a rule that in order to practice medicine and be board-certified, you absolutely must hold a certain price for a service. Any deviation will result in being kicked out of the profession.
A right to Medicare?
Maggie Mahar responds to The Happy Hospitalist’s Reader Take over the weekend.
Excellent back and forth debate touching upon rationing, means testing, futile care, balance billing, and the shadowy, specialist-dominated RUC.
Peter–
I’ll write a fuller reply to you and others later, but for now, let me just clear up one point:
You suggest that the majority of people over 65 have income of only $20,000 or less becaue they don’t have jobs. But you assume that, of course, they have income from investments.
As I explained in the post, the $20,000 or less includes every dollar that comes into the house including capital gains, dividends, Food Stamps, Social Security checks etc.
You must have grown up in a very privileged world. Half of the adults in this country have no investments.
This is because they are scraping along, paycheck to paycheck, just making the rent or mortage, buying food, etc.
What would you guess the average (median) joint household income in this country is?
It’s roughly $55,000. That’s joint income. That’s income from all sources. That’s before taxes.
That’s the median–which means that Half of the households in the U.S. earn Less than that.
Try to imagine raising one maybe two kids on, say $45,000–before taxes. Your kids are bright, so you are also trying to put away something for a possible college education–at least a community college.
You really don’t have any money left over to invest or to put into your own retirement savings.
I have a feeling that you really have never known many (or any) families living on $40,00 –or $30,000- or even $50,000, joint.
Probably you don’t realize that many of these people work hard. Some work two jobs. Many are not well-educated because they were born into poor families and went to schools in poor neighborhoods.
Some may just not be as intelligent as you are–through no fault of their own. Those were the cards they were dealt when they were born.
We have Medicare because, as a society, we believe that people who have worked their entire lives have a right to medical care when they grow old. (You’re not eligible for Medicare unless you have put a certain amount into the system.)
Also, so many French people died in a heat wave, not because they couldn’t get health care (they could, but becuase few French buildings have
air-conditioning.
I wonder–have you ever traveled to France or spent much time there? If you had, you would realize that they just don’t have AC. (This is one reason why everyone who possibly can leaves Paris in August.)
I have spent quite a bit of time in France as well as Italy adn the U.K.
Most young French people are willing to pay for health care for the elderly.
Respect for older people in France (and virtually all of Europe) is much, much higher than it is here–particularly for older women.
I’m sorry to sound patronizing or condescending.
You are very young–which is no crime. And probably you grew up in a fairly sheltered environment where you had little contact with people who are less fortunate than you are. Which, again, is not your fault, just as someone who grew up poor should be not be blamed for their lack of education (in a different way.) They know more of the world; you know more of the information needed to score well on tests.
That lack of world experience explains why 1/3 of all libertarians are 18-29, high income individuals. With age and experience, many change their views.
I’ll come back and reply to more comments as well as to some of your specific points later.
I don’t see why it has to be all or nothing. Obviously there are some areas of medicine which lend themselves to the free market more than others. Believe it or not most people can afford their visits to their PCP, dermatologist, cardiologist, etc. I am talking about office visits that usually center around prevention. Now what people can’t afford is when they have to have their foot amputated or get a kidney transplant.
Why can’t we work towards a free market system for the small things that people can afford and have some sort of mandatory national insurance system for the big ticket items that people can’t afford?
I don’t see why we have to so black and white. Car insurance doesn’t pay for you to change your oil, but it will pay if you total your car. How much of course depends on how much of your own fault it was ;). Write me back Maggie.
“Furthermore, they charge 100 different rates to 100 different insurance carriers. (Joe Blow)”
This is a minor point, but physicians do not charge different insurance companies different amounts. Physicians have to charge everybody the same amount – even uninsured patients – otherwise they can be found guilty of defrauding the Medicare. The physican negotiates (yearly) with each insurance company and settles on a re-imbursement (not charge) rate, usually a certain percentage of Medicare (i.e. 110% or 120% of Medicare reimbursement).
The physican’s fee schedule – i.e. the amount they charge – cannot be disclosed to other providers because they can be found guilty of price fixing. On top of that, contracts with insurance companies usually prohibit negotiated re-imbursement rates from being disclosed to other providers. This allows insurance companies to have an edge on physicians during contract negotiations. The fewer physicians there are in a group, the less market share they have, and the less negotiating power they have with insurance companies.
The difference between what physicians charge and what they get paid cannot be collected (balance billing) or redeemed as tax credits, e.t.c.
The problem with programs like Medicaid, is that they often reimburse physicians about 60% to 70% less than most private insurers, and the patients tend to be some of the most demanding in time and effort. Medicare reimburses about 50% of private insurance, and the patients tend to be demanding in time and effort as well (I’m not saying they’re not sweet – I love my Medicare patients – they’re just usually medically complicated).
So, from the perspective of the physician – if you see too many Medicaid patients, you can actually go bankrupt because Medicaid does not usually cover overhead expenses. If you see too many Medicare patients, you are less likely to go bankrupt, but you are going to sacrifice a lot of potential income and work a lot harder for less. Most physicians try to keep a mix of patients that keeps Medicaid and Medicare limited to a certain percentage of their patient panel.
I’m not saying any of this is right or wrong, I just thought I’d give your readers a little insight into the billing/collections/business strategy of a typical physician’s practice.
Great discussion!
Jonathan is essentially correct, but I think where we are getting confused is “physician prices” versus what they “accept” for payment, which is all over the place. “Prices” are often fixed and a multiple of the Medicare fee schedule, up to perhaps x4 CMS rates. Then physicians complain that Medicare doesn’t pay them anywhere near their “charges,” which are often astronomic compared to normal business markups.
CMS fees were established to cover overhead, labor, equipment costs, and a reasonable markup.
Another med student,
Thanks for your comment.
You write “Believe it or not most people can afford their visits to their PCP, dermatologist, cardiologist, etc.”
I have a feeling you don’t know many elderly people living on $20,000 a year.
Half of of All Seniors in the U.S. Have Income OF $20,000 OR LESS -and that Includes Soc. Security checks, dividends, capital gains, interest on banking accounts–everything.
How far does that stretch? Let’s do the math.
Say you live in Brooklyn –and not in one of the expensive parts of Brooklyn.
You might live in a two-family house at a rent of $1500 month.
(My daughter actually pays $2,000 for a flat in a two-family house in a mixed neighborhood of mainly two family houses. It’s a somewhat run-down but basically safe neighborhood where there are many older people, fenced in gardens in many front yards, No good restaurants or grocery stores nearby and a very long subway ride to Manhattan. But it’s relatively safe.
A senior earning $20,000 couldn’t live there–yearly rent is $24,000.
Let’s say he or she lives in an inexpensive part of upstate New York where my son recently lived. There, he could afford a two-flight walk-up in a very run-down building for $700-$800 a month– assuming he could do the stairs. If he can’t do stairs and wants to live in a less run-down building with no mice he would have to pay $1,000-$1200.
But, of course, many older people own their homes. They don’t have to pay rent. But they do have to pay property taxes and home-owners insurance. And certain things have to be repaired (the furnace, a leaking roof, front steps that are broken and have become hazardous. You have to pay someone to shovel or blow snow and cut grass. All in all, even if your mortgage is paid off, you’re going to spend $700 to $1200 on repairs, taxes,upkeep and insurance almost any place in the country.
That leaves a senior living on $20,000 a year with $900 to $400 a month (after housing) to buy food, pay utilities, pay for car repair and gas or public transportation, (if it exists) minimal clothing, cable television (which for an older person home alone is almost a necessity) an occasional movie or gift for a grandchild, busfare or airfare or gasoline to visit grown children in another state at Christmas.
A doctor’s visit will cost him somehwere between $80 (upstate) to $175 (an eye doctor in Manhattan–particularly if he/she has glaucoma or AMD)
Many seniors suffer from 5 or more chronic conditions. So they probably need to see 5 or 6
specialists twice a year or more.
(While I’m not that old, I have glaucoma and have to have the pressure checked every three months. Several tests have to be done several times a year. As a women I also need regular gynecological exams and mammograms. Since there’s skin cancer in the family, I go to a dermatologist from time to time to have weird spots or leisons checked.
So here I am, a healthy adult, not close to 65, who firmly believes that less care is better. And I need roughly 9 doctor’s appointments a year. And that’s without ever going to a primary care physician for a physical (Don’t believe they do any good–see our earlier post on this.)
Sorry to bore you with so much detail. But this is reality.
Because med school is so expensive in this country most med students come from a fairly narrow swathe of society– famlies in the top 20 percent on the income ladder. And because the gaps on the income ladder are so wide in the U.S. I think many just honestly (especially younger doctors and med students) just don’t realize how little money the average patient has.
Median joint household income in the U.S. is about $57,000 a year. Half of all households live on less.
Johathan Dee,
Jonathan– I agree, it’s an interesting thread.
You are right that Medicaid pays sharply less than private insurers–or Medicare.
And many doctors do take a mix of patients so that it balances out–which is great. If everyone did that Mediciad patients wouldn’t have so much trouble with access.
(In New York City few specialists in private practice take Medicaid).)
Medicare payments, on the other hand, vary widely depending on your specialty and region. In some parts of the country Medicare pays nearly as well (or badly, depending on your perspective)as private insurers–and is a lot less hassle. Medicare pays on time. Typicaly private insurers play with your reimbursement for
90 days.
So some doctors, in some specialtites, in some regions are just as happy with Medicare. This does not include primary care physicians who receive low fees from Medicare.
On specialists sharing info on what they collect–it would be illegal if at all organized, and even one physician talking to another may well be illegal, but the fact is that this does happen. Who is going to report it–the physician who asked or the physician who answered the question?
And I’m not even suggesting there is something wrong with this. I’m just saying that there tends to be a “going rate” for doctors on Park Avenue in a given specialty–or doctors in a medium-sized city upstate–just as there is a going rate for other products and services.
Jack–You are absolutely right– there’s a difference between what doctors “charge” and what they “accept.”
I would like to bring up a few comments.
1. This group of elders that we are currently dealing with are much less poorer than the group of elders that we are planning for the FUTURE of medicare for. If I have read right, the upcoming group of elders are actually going to be much better off than the rest of the population… correct me if I’m wrong.
2. Why do blogs like this always have to use the extremes to make their points. You say that the AVERAGE total incoming money to an elder is 20,000. Then you go on to state how in New York this is way too little money. Well, this is a ton of money out in rural Nevada where I am from. So your same logic, I could say that rent is about 200 dollars a month, and so and so forth. The point is that the person in New York is most likely going to have greater than the AVERAGE coming in so it makes your numbers game unrealistic.
3. Do these stastics that you are using take into account the money just sitting in the back account? Do people now have a right to die without touching their retirement accounts or are we only allowed to ethically charge someone for services if it comes from dividends or interest?
Don’t project your New York economics on the rest of the country becuase a vast percent of the country doesn’t play by those rules.
Another med student:
I can’t find age-adjusted data just now, but according to the US Census Bureau (http://www.census.gov/hhes/www/income/income06/statemhi3.html )median household income in Nevada is actually higher than it is in New York state (50,819 to 48,201). I suspect the rural areas of both states are also pretty equivalent.
I live in New Mexico, which is a pretty poor state, and the struggles poor old folks out here go through are pretty similar to those laid out by Maggie regarding New York City.
Maggie,
Since you are bringing up sociological points, let me ask you: why do so many Americans live from paycheck to paycheck? Why do so many Americans think that the world is owed to them? Why do so many Americans waste money on things they can not afford by borrowing against their homes which are overvalued pieces of real estate?
Take a look at the evil that the government has done with the housing bailout bill: it has systematically given excuses to corporations and individuals to make extremely stupid economic decisions because, after all, someone will be there to bail them out. It teaches that some nebulous “other” will pay for their stupidity. You try to assert that the lowest economic strata in society represent the vast majority of people in this country, completely ignoring the middle class which has the means to live within their means but choose not to. Many people live paycheck to paycheck because they consistently choose to spend more than they are able to afford. Should I be liable for this mistake? If they go into debt, should the ordinary American be forced to bail this person out? Of course not. I choose to live within my means. I don’t take out credit card debt to buy a large plasma screen TV. If I can not afford it, I have no business buying it. Where has personal responsibility gone in this country when people no longer care about their own financial condition? (I agree that the lowest strata in this country need help from the rest of society, but where does it end? Should the richest of the rich retirees have the same exact pricing structure with Medicare as the poorest of retirees? Of course not.) I think that structures such as Medicare, among other government entitlements, give the excuse to middle-strata individuals to live life in this way. The more bail-outs you give the people, the worse the financial decisions they make. You can not ignore the fact that if an individual on Medicare or other insurance needs $10,000,000 for a cancer treatment, they will be willing to go through with it because someone else is paying for it. Moral hazard is an undeniable aspect of 3rd party payer systems.
Enough with the sociology. If elderly people have savings for retirement, they should be spending that money during retirement on things that really matter, such as their own personal health.
Regardless of the phrasing you use, you are essentially trying to make the point that “someone else” should always cover for the other person because of differences in income, differences in education, differences in neighborhoods. You are trying to justify that wealth should be redistributed so that the individuals who are in the middle of the economic spectrum can continue to buy more than they can afford and charge more than they can pay back. The socialist ideal simply does not work in modern societies. Abuse will occur, and, most importantly, RATIONING will occur. Patients will be DENIED access to the healthcare treatments they want because the government no longer wants to pay for that. Tell me, how is that more fair than putting the economic decision on the individual to decide?
There needs to be a dramatic overhaul of the payment system with Medicare, an overhaul which absolutely needs to address fundamental economic principles, namely government price controls, moral hazard, and overregulation.
another med student–
Half of all retirees have very little or no savings–and no retirement accounts. (About half of all American adults have no investments.)
Do you rent an apt. for $200 in Nevada? Or is that just how you think elderly people should live?
No, the upcoming retirees will not be better off than today’s retirees.
Here is a 2006 table of savings by age:
Age
All 25-34 35-44 45-54 55+
Less than $25,000
52% 70% 50% 41% 39%
$25,000
13% 12% 15% 14% 12%
$50,000
11% 9% 14% 13% 7%
$100,000
12% 5% 10% 17% 23%
$250,000
11% 4% 10% 16% 19%
Note that the percent of people with savings under $25,00 who are now 45-54 is very close to those 55 plus– and it’s roughly 40 percent. They are not going to suddenly have $200,000 in savings by the time they turn 65.
Note that the share of 45-54 year olds with $250,000
in savings (16 percent) is less than those with $250,00 who are 55 plus.
Again, people in this bracket are not going to suddenly accumulate great savings.
So no, generationally we’re not making great progress with savings.
This is in part because wages for the majority of workers have been flat or down (after inflation) for the last 25 plus years.
Table is from http://www.finandom.com/blog/2006/03/11/news-average-retirement-savings-by-age/
Peter —
You write: ” Why do so many Americans waste money on things they can not afford by borrowing against their homes which are overvalued pieces of real estate?”
You really need to get out more.
Most Americans do not live in homes that are overvalued pieces of real estate.
In much of the U.S. real estate has not spiraled in recent years the way it has on the East Coast, West Coast, and some other “gold coast” regions.
Most people don’t spend money on things they can’t afford because they don’t have discretionary money to spend.
Half of the households in this country earn less than $57,000
I challenge you to sit down and do the math. Figure out how you and a partner would raise one child, living in the area where your live (or where you grew up) on a Joint Income of $57,000 or less.
Try $40,000. $35,000.
After paying for absolute necessitites– housing, food, heat and light, minimal clothing, health insurance, necessary prescription drugs, etc–how much would you have left over to squander on things you can’t afford ??
For Peter and all those others who think means testing is fair, I wonder what your tune will be when you are 65 and need Medicare’s services?
It’s easy to criticize seniors who have less in the way of savings. But today’s seniors are not the generations who squander everything they have. They are the survivors of the Depression and the shortages of WWII. This is not the entitlement generation–that’s OUR generation–the one that doesn’t need Medicare yet.
Societies are judged by how they treat their least members. We will be judged by how we treat our elderly.
Many societies could not comprehend how we could abandon our elderly the way we do. In many other cultures, growing old is cherished, the elderly have great status and honor, and caring for them is the duty of the young.
My mother often tells me she does not want me to have to support her in her old age. She thinks she would rather live in a nursing home than with me. She believes she should not expect me to care for her when she is old.
I cannot fathom this. Why the heck SHOULDN’T I care for my aging parents? They cared for me for 18 years, and have often helped and supported me in adulthood, even if just through their unconditional love.
I don’t regard caring for my parents as a burden, and I’m willing to do what I have to. But I also believe that as a society we must be willing to care for the elderly who have, after all, put decades of work into Medicare and have earned their right to its benefits.
Maybe we should go back to the days of free, religiously or community supported hospitals, and get big business out of health care.
Maggie,
First, if half of Americans right now are earning less than $57,000, why are you forcing the ones making more than $57k (or the ones who make less than $57k) to pay for the medical expenses of wealthy retirees with personal savings who are on Medicare benefits? That doesn’t make any sense whatsoever.
Second, due in part to a massive shortfall of funds for programs such as Medicare and a diversion of funds to pay for the Iraq war, the Fed has embarked on dramatic inflationary monetary policy which is causing an extreme amount of hardships on the middle and lower strata of Americans. How is using inflationary policy to pay for Medicare fair when the inflation hits the lower and middle strata the hardest?
Third, Medicare is in a severe financial crisis that will not ease up any time soon and will certainly get worse every year. How will more wealth redistribution suddenly reverse the failure of Medicare?
Panacea,
It is right and proper that you take care of your parents in the old age. It is certainly the right thing to do and every child should be involved in this. However, why should ordinary unrelated Americans, many of whom make less than $57k, be forced to pay for your own parents? Why should you be paying for my parents as well? It is not fair for me to force you to pay for my parents: paying for my parents is my responsibility, not yours.
I wholeheartedly agree with your statement about the need to get big business out of healthcare. I would also encourage taking that to the next step by saying we need to get big government out of it as well.
I do not advocate means testing. Balance billing gives physicians the freedom to reintroduce the concept of sliding scale billing which is the most wide-reaching and fair way of fundamentally changing the economics of Medicare. Without such a dramatic change, in a few years Medicare will not be able to pay for any retiree due to being in the red by hundreds of billions of dollars.
Maggie,
I find it hard to put a lot of stock in the income distribution numbers that you cite. I see rampant hiding and underreporting of income all around me between the underground economy and the small business sector. Everyone from doctors who receive cash payments from patients to waiters who don’t declare all of their income from tips to nannies and housekeepers who work off the books to plumbers, electricians, landscapers and millions of others who are either self employed or work in the small business sector have ample opportunity to hide some or all of their income. While the IRS is pretty good at matching up documents like W-2 and 1099 forms, it’s audit function is not effective at combating income underreporting (or non-reporting) because the number of people who are audited is so small that most taxpayers think they can get away with it and, for the most part, they’re right. Those of us who work for large companies, by contrast, and/or collect dividends from stocks or interest from bonds or banks or realize capital gains from selling stocks at a profit don’t have any ability to hide income. I’m sure there are plenty of elderly people who earn income that is never reported to any taxing authority as well.
As for housing costs, these vary tremendously on a regional basis as you well know. A brand new 2,500 square foot house in many parts of the Midwest and elsewhere can be had for under $200K. A co-op or condo of that size in a decent neighborhood in Manhattan will cost a couple of million dollars or more depending on age, condition, and amenities. Older people who have moved in with children or other family members can have zero housing costs which allows their modest income to go a lot farther.
Several generations ago, it was a lot simpler for family members to take care of their elderly relatives. The society was much more agrarian. Several generations lived in the same household. People did not travel long distances to jobs or on business trips. There were more children to help out on the farm. Medicine of the day could not do much for people anyway. There were no feeding tubes or ventilators or chemotherapy or bypass surgery or very much in the way of drug therapy either. As the end of life approached, nature took its course.
Finally, I am sympathetic to the notion of moral hazard. While I recognize that it was a market failure to provide health insurance to the elderly at an affordable cost that gave rise to Medicare, I think it is interesting to note that two sectors of our economy – healthcare and education that have a heavy component of third party payment or government subsidy have seen much greater cost inflation over the last 25-50 years than sectors that are largely financed by the actual user of the product or service. When someone else is paying, demand goes up and market discipline and the ability to control costs go down.
Barry–
I really don’t know what to say. Usually, you are very rational, but this notion that elderly people are hiding stacks of income . . .
70-year-olds who report income of $15,000 are not, by and large, working as doctors (they would be audited if they reported $15,000), waiters, or electricians. If, perchance the 70-year-old was able to do an odd job for a neighbor and was paid in cash, we’re probably talking about a few hundred dollars.
I know you have a hard time believing just how little income most people in this country have. I suggest driving to upstate New York– say Cortland–and just walk around. There is a huge country out there that bears very little resemblance to the world that you (and I) your friends and clients live in.
The average American really is trying to raise a family on something like $50,000, joint, before taxes. For that family, a $200,000 house is expensive. First, you have to save $30,000 for a 15 percent downpayment. This is not easy to do on $50,000, before taxes, a year . . .
Peter, you write:
“However, why should ordinary unrelated Americans, many of whom make less than $57k, be forced to pay for your own parents? Why should you be paying for my parents as well? It is not fair for me to force you to pay for my parents: paying for my parents is my responsibility, not yours.”
I think your comment really cuts right to the heart of this entire discussion–our society’s responsibilities to all its members. You imply each should take care of himself and those closest to him, bearing little (or even no) responsibilities for others. I disagree. I suppose there’s no other place than the ballot box to decide between those two worldviews.
Barry:
I think the establishment of Medicare represented more than just a failure of the private insurance industry to provide an affordable product for the elderly; I think that failure was inevitable. As you point out, much of medical care until the middle of the twentieth century could be forgone without harm because it didn’t help anyway. When that changed, when we had useful therapies for the chronic conditions older people get, expense was bound to rise for that group. The only way to control it (sort of) was to have the biggest risk pool possible. A huge problem for Medicare is that, although it has an enormous risk pool (all the elderly), it’s still comprised nearly exclusively of the subset of the population with the greatest healthcare needs. (And the exception–chronic renal failure patients–makes the situation even worse.)
On the other hand, I agree with you that Medicare has been, by and large, an enormous gravy-train for medicine, particularly for academic medicine. Once Medicare started paying for graduate medical education, the size and power of academic centers exploded with the arrival of all the foot soldiers of academia–the residents, fellows, and junior faculty.
Maggie,
My comments about people underreporting income apply to the working age population. While that includes some among the elderly, I recognize that it is a distinct minority. It is the income distribution figures for the entire population that I am questioning, not so much those for the elderly subset.
I think there are a considerable number of middle class elderly, however, who attempt to game the system when one spouse needs to enter a nursing home. There are eldercare lawyers who can help them set up trusts and shift ownership of assets so the individual needing care can look sufficiently poor on paper to qualify for Medicaid. While I understand the motivation of not wanting to see their life savings swallowed up by a couple of years of nursing home care, that doesn’t make it right. I don’t know how many elderly people are living with family members, but for those who are, their housing costs are probably zero or nominal. If they are reasonably healthy, they don’t need nearly as much income to support a middle class lifestyle as young people with a mortgage, children to feed and educate, and job related expenses. According to CMS data, in any given year, 50% of Medicare beneficiaries (about 21-22 million people) account for only 4% of the program’s costs. While there is plenty wrong with Medicare that I think you and I agree on and the program drives payment policy for private insurers as well, I’m not in favor of scrapping it, making beneficiaries pay their own way for primary care or denying it to upper income people who paid into it during their working years. I do think it needs substantive reform, however.
Regarding low savings among much of the middle class and lower middle class, I think at least some of this has to do with excessive expectations as to what constitutes an acceptable lifestyle. After World War II, when Levitt built and sold 800 square foot homes on Long Island to returning veterans and their families, most thought they had achieved the American dream. Now, for many, anything less than 2,000 square feet or so is unacceptable. A previously owned (used) car is no longer adequate. It has to be a new car. In fact, lots of people will lease a better car than they can afford to buy which further inflates their costs. At the same time, in Europe, a 1,000 square foot house is common among the middle class while people drive small cars because gas prices are much higher than here. The bottom line, in my opinion, is that a lot of the so-called middle class squeeze (and low savings) has as much to do with inflated expectations as with inadequate or stagnant income.
Barry–
I’m relieved to know that I misunderstood you.
I count on your rationality in these discussions. Would hate to think that you’ve suddenly gone round the bend.
One point where you and I (and other reasonable people) do differ is on what we mean by “middle-class.” When I look at government statistics on income broken up into a 5-step ladder, with the lowest
20% of the population on the bottom rung and the top 20% on the top rung,
I consider the people on the 3rd rung of this 5-rung ladder “middle-class.”
Depending on where they live and the cost of living where they live, some on the 2nd rung and 4th rung may count as middle-class.
But the top rung is clearly Upper-upper-middle class to rich.
People with Joint Household Income Over $85,000 (before taxes, from all sources) are on the Top Rung. (or the top 20%).
You are no doubt right that some of these people are hiding some of their income. but it’s hard too hide too much without setting off the computers at IRS. (Restaurants, for example, are frequently audited both by states and the IRS)
So let’s say that people reporting $85,000 are, on average, really earning $100,000, joint income
That means that any household bringing in more than $100,000 is somewhere between Upper-upper middle class and rich.
These are the people you are talking about–who buy new cars, not used cars, etc.
The other 80 percent of the population can’t afford the excesses you’re describing.
Below a snapshot of median-income households, and the cost of just putting a roof over their heads-
First of all their home is 6 rooms and sits on one-third of an acre. It’s worth $150,000.
Meanwhile, this home costs them $18,000 a year –or about one-third of median income (which is in the mid $50,000 bracket for median households)
(See detail on costs of owning a home below).
After they pay for food, clothing, healthcare, car and tranporation expenses (just to get to work) perhaps trying to save for a child’s college education, etc. etc. etc. they have very, very little discretionary income to use to finance a brand-new car (or lease one)
Note: One-Half of All American households Who Own Their Home live in a home that is Smaller and Worth Less Than $150,000.
I think you’ll find the detail below interesting:
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Each year the US Census Bureau conducts what they call the American Housing Survey. The survey is conducted to provide up-to-date information on certain aspects of home ownership to the U.S. Department of Housing and Urban Development (HUD). The results of the survey are based on the responses from 56,000 participants.
The second survey we examined is sponsored by the Bureau of Labor Statistics and it’s called the annual report on Consumer Expenditures. The survey, which is also conducted by the U.S. Census Bureau, consists of two components:
Recordkeeping Survey – this is a diary that is used by survey participants to record their daily expenditures.
Interview Survey – this involves five telephone interviews conducted at three-month intervals.
The results of this second survey are based on 15,000 recordkeeping diaries and 30,000 interviews. And while there is certainly some homeownership data overlap between these two studies, there is also information that is unique to each survey.
Average Home Characteristics
Using the 2005 American Housing Survey we’re able to draw some conclusions as to what constitutes an average American home. More accurately, the report tells us about the “median” home. The median is the mid point in the data, meaning half the American homes have more, and half have less, than the midpoint values below.
Typical American Home
Given the above definition, the following are characteristics of the typical American home:
Built in 1974 – meaning the home was around 30 years old
Two Stories High
Six Rooms
Three Bedrooms
1.5 – 2.0 Bathrooms
1,858 Square Feet
0.38 Acres
There really shouldn’t be any surprises when looking at the above information. Most of us would view this housing information as that of a modestly-sized home. And now that we have a good feel for size of typical home, we can start to talk about the costs associated with owing a home.
Monthly Home Expenditures
The following data are the median costs to own a home – again using information from the American Housing Survey. Remember that the median means half the households will spend more than the amounts below, and half of the households will spend less than these amounts.
Real Estate Taxes – $127 per month or $1,524 per year
Mortgage Payments – $767 (principal and interest) per month or $9,204 per year
Property Insurance – $52 per month or $624 per year
Electricity – $71 per month or $852 per year
Natural Gas – $71 per month or $852 per year
Fuel Oil – $104 per month or $1,248 per year
Drinking Water – $35 per month or $420 per year
Trash / Garbage Disposal – $19 per month or $228 per year
Routine Maintenance – $27 per month or $324 per year
Finally, and to put things in perspective, we’d like to point out that this typical home cost $165,344. Adding the above numbers we can conclude that owning a home costs the average American $1,169 per month or $14,028 each year.
Consumer Expenditures
The second set of data we examined comes from the Bureau of Labor Statistic’s 2005 report on Consumer Expenditures (published February 2007). As you recall, this survey relies on telephone interviews and written records of expenses. For purposes of evaluating the cost to own a home, we’ll be looking at the following types of expenses:
Housekeeping Supplies and Services – which includes bathroom tissue, brooms, laundry and cleaning detergents, light bulbs, maid service, mops, paper towels, and sponges.
Housewares and Small Household Appliances – such as blenders, coffee makers, cooking utensils, dinnerware, glassware, irons, utensils, pots and pans, telephones, and toasters.
Home Furnishings – such as art work, clocks, curtains, lamps, picture frames, pillows, plants, refrigerators, rugs, sheets, sofas, stoves, table cloths, tables, towels and vases.
Housing Expenses – including cable TV, electricity, garbage removal, heating/cooling, insurance, maintenance fees, mortgage payments, property taxes, rent, and telephone charges.
Home Maintenance – such as hardware, lawn supplies, hand tools, improvement and repair equipment, lawn / garden equipment, nails, power tools, screws, supplies, and services.
The corresponding monthly and annual costs for the above items as found in this study, and which pertain to the cost of owning a home, include:
Utilities, Fuels, and Public Services – $265 per month or $3,183 per year
Household Operations – $66.75 per month or $801 per year
Household Supplies – $50.92 per month or $611 per year
House Furnishing and Equipment $147.25 per month or $1,767 per year
Housing – $1,263.97 per month or $15,167 per year
Cost of Owning a Home
Based on the survey results above, what conclusions can we draw concerning the cost of owning a home? To answer this question, we need to see how the results of the two surveys compare.
The Consumer Expenditures survey is clearly a more comprehensive study – especially since it relies on a written record of expenditures and the span of household expenses is more wide-ranging. Overall, the claim would be that it costs around $21,500 per year or $1,792 per month to own a home.
From the American Housing Survey we initially concluded that it cost around $14,000 a year to own a home. But that result did not include some of the expenses found in the Consumer Expenditures survey such as home furnishings, household supplies, operating expenses, and some of the utilities. If we were to add these values to the American Housing Survey results we’d conclude that the cost to own a home would be around $18,700 per year or $1,558 per month
Maggie,
Thanks for the detailed information about the housing cost data. Just for fun, I checked my own housing costs – rough estimates but pretty accurate that you might find of interest. It’s a one story Levitt tract house built in 1962. It has 3 bedrooms, two baths; a one car garage, is about 1,700 square feet (counting generously) and sits on a sprawling lot of 0.27 acre (70 x 110 feet). It’s primarily a first time buyer’s community here though there are still some original owners around. I joke that my wife and I bought a starter house in 1973 and we never left.
Anyway, our housing costs based on the items you listed and a couple of others add up to approximately $15,000 per year, but the mix is very different. Mortgage interest is zero (paid off in 1978), but property taxes are roughly $7,000 per year. Other costs (per year) include: natural gas, $1,800; electricity, $1,300; water and sewer, $1,100, lawn maintenance and landscaping service, $2,000; homeowner and umbrella liability insurance, $1,600; and heating and air conditioning system maintenance, $250. The phone and cable TV bill combined would add another $3K.
Our particular model (a ranch) sells for around $350K these days, and the young couples buying them generally need to make $100K combined to qualify for a $300K mortgage. Salaries are generally higher in the NYC metropolitan area to reflect the higher cost of living, so I don’t know to what extent the income distribution figures for NYC metro differ from the national numbers you cited. Interestingly, when our house was first built in 1962, it and similar models in this 1,900 home planned community sold for $16,500 and property taxes were $450 per year. At the time NJ had neither a sales tax (introduced in 1966) nor an income tax (began in 1976). So, it’s fair to say that the cost of state and local government has skyrocketed in the interim as compared to general inflation measured by the Consumer Price Index or GDP Price Deflator.
I’m sorry to get off the topic of healthcare and health insurance, but I’m such a data driven numbers guy, I couldn’t resist.
Thanks for the advocacy of sensible patient oriented palliative care in your comment to the Happy Hospitalist Reader Take.
Maggie,
Just one follow-up comment on housing costs.
A young couple taking out a $300,000 mortgage at 6.5% for 30 years to buy a $350K house similar to mine in the same town would have annual mortgage interest and amortization costs of approximately $22,000 (before tax benefits) vs. zero for me and others with fully paid for homes while their other housing costs would be roughly similar. Along the same lines, California residents who owned their current house prior to 1978 when Proposition 13 (limiting property taxes) passed pay much lower property taxes than neighbors who own very similar or identical homes but purchased them much more recently.
The two takeaways are (1) people who live in similar homes in the same town or even on the same block can have wildly different housing costs and (2) older people are much more likely to own their home debt free. A debt free home, fully grown children who are on their own and no job related expenses account for why it is possible for reasonably healthy retirees to live a middle class lifestyle on a much lower income than young families need to service a mortgage, raise children and commute to a job.
This doesn’t mean there aren’t lots of elderly people who are living on very little and have significant health needs as well. It does suggest that it is difficult to completely trust statistics that don’t tell anywhere near the whole story.
Maggie,
What are your thoughts on the government of Oregon denying expensive cancer treatments to Barbara Wagner and instead recommending assisted suicide for her? I think that government rationing, at least in this case, is devastatingly brutal.
Peter & Barry–
Thanks for your comments.
Peter– The folks who oppose Oregon’s assisted suicide law, along with the press (always eager for a sensational story) have distorted what is going on here.
First, Oregon refused to pay for this over-priced $4,000 drug after looking at how much benefit it would or wouldn’t offer the patient.
The drug didn’t meet Oregon’s generally reasonable and long-standing “five-year, 5 percent rule.” Oregon won’t approve payment for treatment that doesn’t provide at least a 5 percent chance of survival after five years.
In other words, this is in No Way a life-saving drug.
It might allow her to live more months–but she’ll still die of the lung cancer. And the quality of life during those months will not be high.
Too many companies are making a fortune on drugs that they price at $40,000–or $100,000–and that give the patient only a few extra months of suffering–extending the dying process. (Lung cancer is not a pleasant disease.)
Meanwhile, Oregon offers Medicaid patients very good palliative care. (Recently researchers at the University of Wisconsin rated the pain-management policies of Oregon and four other states as best in the nation.)
Palliative care does Not mean that Wagner has to sign up for physician-assisted suicide. It means that the patient is given choices about what treatment they want to pursue, has access to counseling, and is kept out of pain.
All Oregon has said is that this particular $4,000 drug isn’t one of the options taxpayers are willing to pay for because the benefit isn’t that great. But she does have other choices.
This decision has nothing to do what the fact that Oregon allows physician-assited suicide.
Separately, Oregon’s voters have decided that they want physician-assisted suicide to be legal–and that taxpayers are will to pay the cost of physician-assisted suicide for people on Medicaid.
Meanwhile, as one rational story in an Oregon paper pointed out, taxpayers (and the state of Oregon) have not turned there back on this patient:
. ” The program that subsidizes health care for low-income Oregonians has paid thousands of dollars over the years for Wagner’s cancer care, and it will continue to do so.
It stopped short, however, of paying for a cancer drug that failed to meet the state’s long-standing “five-year, 5 percent rule.”
Taxpayers simply can’t afford to pay for every over-priced marginally effective drug that manufacturers choose to hype.
But here’s the good news: ultimately the company that makes the $4,000 drug offered to give it to Wagner free. (Which is what they should have done in the first place.)
If the drug-maker truly believes that the drug would give her many months of high-quality life, then this is one of those cases where the drug-maker should step foward (and show the world just how effective this drug is.)
Drug-makers often claim that they offer expensive drugs for free, or a steep discount to virtually everyone who is truly needy, could be helped, and can’t pay.
That isn’t true of course. But in this case, the publicity forced the drug-maker to do something.
Finally, note that much of the uproar over this case was pushed by the right-to-life people who are opposed to abortion and have seized on the issue of physician-assisted suicide to further their cause.
They are not concerned about Barabara Wagner; their main concern is to impose their religious beliefs about abortion on the rest of the country.
These same groups also try to smear palliative-care specialists, claiming that by helping people come to terms with death they are “killing patients.” In fact, they are just explaining risks and benefits in a way that allows patients to say “no” to futile care that will only increase their suffering.
Always be wary of these heart-wrenching stories about a single individual. When you’re told that tens of thousands of poor children aren’t being covered under SCHIP–that’s real journalism. But the overly colorful stories about one person tend to be selected primarily to sell newspapers.
Barry– While older people who own their home have fewer work-related and child-related expenses, they are likely to have new expenses:
–out-of pocket spending on prescription drugs– often $50 per prescription
— co-pays to the six or seven doctors they see
–co-pays for outpatient
procedures and operations
–help to do things they can no longer do themselves from snow-removal and leaf-raking to house-cleaning
–more major repairs on the house that is now older
–higher transportation costs (reluctant to drive at night, seniors are more likely to fly to visit children and relatives rather than driving 10 hours.)
–higher costs for hearing aids and glasses (not covered by Medicare)
and finally, because retired seniors have more time, they quite naturally want to do things that they didn’t do before:
hobbies (which can be costly–fees to play golf, photography equipment going to the theatre . . .)
Since they have much more free time, they are also more likely to go on modest 4 and 5 day vacatoins to a nearby state, etc.
This means more driving–and more spending on gasoline.
But most seniors don’t want to sit in front of a TV all day.
Studies show that to maintain a lifestyle equal to what you had when working, most seniors need at least 80% of what they earned when working. And this assume that they don’t have major medical expenses.