By Steven Brill
TIME, February 20, 2013
The Way Out Of the Sinkhole
“I was driving through central Florida a year or two ago,” says Medicare’s (Jonathan) Blum. “And it seemed like every billboard I saw advertised some hospital with these big shiny buildings or showed some new wing of a hospital being constructed … So when you tell me that the hospitals say they are losing money on Medicare and shifting costs from Medicare patients to other patients, my reaction is that Central Florida is overflowing with Medicare patients and all those hospitals are expanding and advertising for Medicare patients. So you can’t tell me they’re losing money … Hospitals don’t lose money when they serve Medicare patients.”
If that’s the case, I asked, why not just extend the program to everyone and pay for it all by charging people under 65 the kinds of premiums they would pay to private insurance companies? “That’s not for me to say,” Blum replied.
In the debate over controlling Medicare costs, politicians from both parties continue to suggest that Congress raise the age of eligibility for Medicare from 65 to 67. Doing so, they argue, would save the government tens of billions of dollars a year. So it’s worth noting another detail about the case of Janice S., which we examined earlier. Had she felt those chest pains and gone to the Stamford Hospital emergency room a month later, she would have been on Medicare, because she would have just celebrated her 65th birthday.
If covered by Medicare, Janice S.’s $21,000 bill would have been deeply discounted and, as is standard, Medicare would have picked up 80% of the reduced cost. The bottom line is that Janice S. would probably have ended up paying $500 to $600 for her 20% share of her heart-attack scare. And she would have paid only a fraction of that — maybe $100 — if, like most Medicare beneficiaries, she had paid for supplemental insurance to cover most of that 20%.
In fact, those numbers would seem to argue for lowering the Medicare age, not raising it — and not just from Janice S.’s standpoint but also from the taxpayers’ side of the equation. That’s not a liberal argument for protecting entitlements while the deficit balloons. It’s just a matter of hardheaded arithmetic.
As currently constituted, Obamacare is going to require people like Janice S. to get private insurance coverage and will subsidize those who can’t afford it. But the cost of that private insurance — and therefore those subsidies — will be much higher than if the same people were enrolled in Medicare at an earlier age. That’s because Medicare buys health care services at much lower rates than any insurance company. Thus the best way both to lower the deficit and to help save money for people like Janice S. would seem to be to bring her and other near seniors into the Medicare system before they reach 65.
Meanwhile, adding younger people like Janice S. would lower the overall cost per beneficiary to Medicare and help cut its deficit still more, because younger members are likelier to be healthier.
If that logic applies to 64-year-olds, then it would seem to apply even more readily to healthier 40-year-olds or 18-year-olds. This is the single-payer approach favored by liberals and used by most developed countries.
Yet while Medicare may not be a realistic systemwide model for reform, the way Medicare works does demonstrate, by comparison, how the overall health care market doesn’t work.
Unless you are protected by Medicare, the health care market is not a market at all. It’s a crapshoot. People fare differently according to circumstances they can neither control nor predict. They may have no insurance. They may have insurance, but their employer chooses their insurance plan and it may have a payout limit or not cover a drug or treatment they need. They may or may not be old enough to be on Medicare or, given the different standards of the 50 states, be poor enough to be on Medicaid. If they’re not protected by Medicare or they’re protected only partly by private insurance with high co-pays, they have little visibility into pricing, let alone control of it. They have little choice of hospitals or the services they are billed for, even if they somehow know the prices before they get billed for the services. They have no idea what their bills mean, and those who maintain the chargemasters couldn’t explain them if they wanted to. How much of the bills they end up paying may depend on the generosity of the hospital or on whether they happen to get the help of a billing advocate. They have no choice of the drugs that they have to buy or the lab tests or CT scans that they have to get, and they would not know what to do if they did have a choice. They are powerless buyers in a seller’s market where the only sure thing is the profit of the sellers.
Indeed, the only player in the system that seems to have to balance countervailing interests the way market players in a real market usually do is Medicare. It has to answer to Congress and the taxpayers for wasting money, and it has to answer to portions of the same groups for trying to hold on to money it shouldn’t. Hospitals, drug companies and other suppliers, even the insurance companies, don’t have those worries.
By Don McCanne, M.D.
Steven Brill’s TIME article, “Bitter Pill: Why Medical Bills Are Killing Us,” seems to be awakening those who have, until now, accepted the very high prices of health care as an inevitability for having a technologically advanced health care system here in the United States.
In his 36 page article – which will surely be required reading in many health policy courses – Brill makes it clear that we no longer need to take the “bitter pill” of medical bills that are killing us. Clearly, Medicare already has several tools to control costs and has the potential for further improving value in the nation’s health care purchasing.
At the end of his article, Brill seems to be advancing a non sequitur when he writes, “The real issue isn’t whether we have a single payer or multiple payers. It’s whether whoever pays has a fair chance in a fair market… We don’t have to scrap our system and aren’t likely to.” This certainly does not follow from what he had to say as the central theme of his article.
He then recommends some tired or inadequate remedies that would have very little impact on the problems that we face in health care. What is ironic is that he has built a tremendous case for the logical solution – an improved Medicare for all – and then he seems to dismiss it. You cannot read his article and escape the conclusion that a single payer national health program is an absolute imperative, that is, if we really do want affordable care for everyone.
Download this article (the full 36 pages is available for free at the link above), and share it with others. But put a Post-it note on it that states: WARNING! For the health of our nation, ignore the section at the end titled “Changing Our Choices” (that’s the tired remedies section), but concentrate on what an improved Medicare system could do for all of us.