Obama Thinks Medicare Is A Model For Reform
Meanwhile, many doctors won't take Medicare patients because payments are too low. Grace Marie Turner and Joseph R. Antos write in the WSJ about the realities of Medicare. A few excerpts:
1) Medicare is going bankrupt. The Medicare Trustees estimate that the program will run short of money starting in 2017. Medicare will drown in a sea of red ink, with spending over the next 75 years outpacing dedicated revenues by nearly $38 trillion.2) Private payers are bailing out Medicare. According to Milliman, an independent actuarial firm, Medicare--and to an even greater extent, Medicaid--underpays doctors and hospitals, shifting costs to private insurers. Milliman estimates that the average family in a private PPO health plan pays an additional $1,788 a year to compensate for underpayments by Medicare and Medicaid, representing a "hidden tax" on commercial payers totaling $89 billion a year.
Providers could not keep their doors open without the higher payments from private insurers. A recent letter to Congress from 13 leading health-care delivery organizations, including the Mayo Clinic, said "many providers suffer great financial losses associated with treating Medicare patients." They said that if these rates were expanded to patients who currently have private insurance, the result "will be unsustainable for even the nation's most efficient, high quality providers, eventually driving them out of the market." That means we would say goodbye to some of the best health-care systems in the country.
...9) Medical decisions are made in Washington. Patients and their doctors are slowly losing the ability to decide what course of treatment is best. Medicare's decisions to cut funding for the cancer drug EPO, implantable cardiac defibrillators and virtual colonoscopies, for example, have led to epic battles between providers and politicians, while patients and their doctors watch from the sidelines. Medical decisions, which should be made by doctors and patients, are being made by politicians.
...Instead of pretending that Medicare is the best model for the country, policy makers should recognize that the program is as much in need of reform as the rest of the health system. Before we give the federal government authority over health coverage for tens of millions more Americans, shouldn't the government prove it can do a better job with the "public plan" we already have?
Check out how Medicare works for doctors, from a piece by Budget & Tax News' Steve Stanek:
Failing to Pay Providers
"The main problem is reimbursement rates in Illinois are low," Eupierre said. "And they are late with reimbursements, now about five to six months. Imagine a company trying to stay alive and having to wait six months for customers to pay. We frequently send in a bill, the state finds something to question, and it comes back six months later. So it becomes a year before you're paid. Sometimes you don't get paid at all."Because of increases in the costs of liability insurance, office staff salary and benefits, rent, and other operating expenses, "many physicians cannot afford to see Medicaid patients," Eupierre said. "If I see three Medicaid patients and get $30 an hour, I'm getting $90 an hour. It easily costs me $300 an hour to be open. I'm losing $210 an hour. Many doctors in areas where Medicaid is the main population have a hard time staying open or have to see seven or eight patients an hour. I, as an internist, cannot see that many patients per hour."
And then, begging the question, "Do you think the entire American public is drunk, high or just really, really stupid?" there was this groaner from Obama's speech the other night:
Reducing the waste and inefficiency in Medicare and Medicaid will pay for most of this plan.
And Arnold Kling's perfect reply:
And if we don't pass this plan, does he intend to keep the waste and inefficiency, out of spite?
"We frequently send in a bill, the state finds something to question, and it comes back six months later. So it becomes a year before you're paid. Sometimes you don't get paid at all."
Yes, that happens all the time, and it's not just doctors. My bosses own a private ambulance company in Laredo, and the majority of their transport patients are on Medicare or Medicaid. Government agencies find any excuse they can not to pay, or to slow-pay. I think, at last count, Medicare was at least 8 months late on the majority of the money the company was owed, and the amount was hundreds of thousands of dollars. Really. Personally, I would never, ever go into any type of business that depended on payment from the state or federal government.
ahw at September 11, 2009 8:10 AM
Doctors don;'t take this or that when it turns out that they can make more money by doing otherwise. In fact, many doctors I know prefer those with insurtance4 because they can rip off insurance and let the patient's pay for the later insurance raises.
Ask those getting Medicade, medicare, V.A. hospitals if they are willing to let it go.
fred lapides at September 11, 2009 8:50 AM
Sure, Fred, it is far easier to rip off an insurance company whose existence depends on staying profitable versus defrauding the government, which just makes it up by taxing us more.
Your assertion doesn't even pass the smell test, so I'm not going to ask for your evidence. Google NY medicare fraud if you want mine.
MarkD at September 11, 2009 8:59 AM
Medicare/Medicaid are going broke. I suggest that the current rush for "health reform" is driven by that fact. Democrat politicians are trying to scurry for political cover, to avoid blame for promising benefits that they can't deliver.
"Going broke" means that the current medicare taxes of 2.9% on wages is not nearly enough to pay for Medicare. The shortfall is about $38,000 billion. Not a typo. The total production of the US this year is about $13,000 billion (1/3rd of the shortfall). Medicaid is mostly a mandate on the states with federal matching funds from general taxes. That is going broke also. The total tax payments by "the rich" are currently about $1,000 billion.
Politicians (I think) know that they can't raise taxes enough to fund the Medicare/caid promises, and want a way to hide their respoonsibility for the denial of services.
One way is to put everyone into the medical care pot. We then all get equal amounts of services at whatever high tax rate the government can levy. The young must be coerced into this system to extract as much money from them as possible to serve the old.
Of course medical services will be meager for everyone under "health reform", with rationing and slow delivery for everyone. That is what is expected when you promise $38 trillion in services and can only deliver about $15 trillion (a guess). This also kills any progress in medical care, as we all stew in the rationed system that covers over the fraud of the politicians, mostly Democrats.
Of course, the alternative is more fair but also ghastly. The government made promises to the now-old that it can't keep, and the now-old did not pay enough for their own care or retirement, relying on the lies of the government.
The moral question is, are the now-old responsible for the choices of the politicians that lied to them? I think that they mostly are. Everyone who supported and voted for these government programs deserves a lot of the problems that they are going to have.
The government is supposed to be a wise planner, arranging for a future that is beyond the calculation of most people. Instead, it has acted selfishly and wastefully, taking the money (resources) that the now-old could have used more wisely, and squandering it so that it is not now available.
The younger portion of the population should watch out. They fancy themselves to be caring and moral people. The government is going to hold them to that vision by extacting very high taxes, or trying to. It will be interesting to see if that personal, moral vision holds out against 30-40% taxation.
----
Above, I said that the medicare tax rate on wages is 2.9%. But, the government says that the rate on the worker is only 1.45%, with the employer paying an equal amount.
Wake up. You generate all of the wealth that pays your salary and all of the taxes associated with your employment. The employer writes a 1.45% check, but you earned that money, and it would be part of your take-home pay if the burden did not exist on the employer. Competition for skills would arrange that outcome.
In the same way, when a company pays for your health insurance, it is merely writing the check with part of your earnings, earnings that you never see, but could control yourself.
Company Paid Health Insurance is Part of Your Salary
Andrew_M_Garland at September 11, 2009 1:02 PM
"The moral question is, are the now-old responsible for the choices of the politicians that lied to them? I think that they mostly are. Everyone who supported and voted for these government programs deserves a lot of the problems that they are going to have."
But even if others believe that the now-old are not to blame, it doesn't justify shifting more costs onto today's or tomorrow's taxpayers. If one party (today's retirees) is conned by a second party (previous administrations), it does not justify calling on a third party (later taxpayers) to make good on the promises. It would be akin to an individual losing their money to a conman and then asking a random person to make good their losses.
I agree that people who are now old should be held responsible for the choices they made. For a long time there has been plenty of evidence to show that most developed nations are headed for serious problems with aging populations and low birth rates. Older generations have largely chosen to ignore these problems and wish away reality, while staking much of their future on clearly unsustainable welfare state programs. You make your bed, you have to lie in it.
Nick S at September 11, 2009 6:34 PM
"The younger portion of the population should watch out. They fancy themselves to be caring and moral people. The government is going to hold them to that vision by extacting very high taxes, or trying to. It will be interesting to see if that personal, moral vision holds out against 30-40% taxation."
The fairest solution would be for those who claim to care the most about the elderly to have to foot more of the bills. i.e. put your money where your mouth is.
Nick S at September 11, 2009 6:39 PM
An under the radar piece of Obamacare is the redistribution of Medicare dollars. Currently, Academic Medical Centers get paid higher rates then non AMC's. The reason is AMC's train the new Docs. Which is expensive. Most new docs when they first get patients on their own start ordering all kinds of tests because they don't yet have the experience to rule things out without them. The hospitals eat the costs for most of those extra tests (It's complicated but that's how it works)
An underreported part of the Obamacare debate is the campaign by rural (Non-AMC) area Reps to get a bigger slice of the medicare pie for their districts. If they are successful their will be massive layoffs at all the famous Hospitals you recognize by name. Most are AMC's.
In all likelihood it will hit as a double whammy for these hospitals as overall rates will probably fall too.
That's what The Messiah means when he says he's going to "reduce costs". He's going to reduce reimbursement rates, which will force hospitals to cut staff and services. Less healthcare will be practiced (rationing) and voila. Less cost.
The Public Option is the quickest route to this. When 100 million people are using that plan because it's cheaper for their employer than the commercial insurance plans then the public plan will dictate what treatments they are willing to pay for and how much they'll pay.
Welcome to a crappy UK type system.
sean at September 11, 2009 9:32 PM
A lot of doctors locally won't take my insurance either. All the hospitals do but a lot of doctors won't.
Fortunately, the new doctor I went to I liked. It's been a long, hard search.
I still say something needs to be done. I'm disturbed that he won't let you pick the public option if you already have insurance. Mine sucks eggs so bad I just might.
The only other options are HMO's. Least of half a dozen evils offered by my employer I'm currently using.
muggle at September 12, 2009 10:11 PM
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