By PAUL KRUGMAN
New York Times, July 24, 2011

At the time of writing, President Obama’s hoped-for “Grand Bargain” with Republicans is apparently dead. And I say good riddance. I’m no more eager than other rational people (a category that fails to include many Congressional Republicans) to see what happens if the debt limit isn’t raised. But what the president was offering to the G.O.P., especially on Medicare, was a very bad deal for America.

Specifically, according to many reports, the president offered both means-testing of Medicare benefits and a rise in the age of Medicare eligibility. The first would be bad policy; the second would be terrible policy. And it would almost surely be terrible politics, too.

The crucial thing to remember, when we talk about Medicare, is that our goal isn’t, or at least shouldn’t be, defined in terms of some arbitrary number. Our goal should be, instead, to give Americans the health care they need at a price the country can afford. And throwing Americans in their mid-60s off Medicare moves us away from that goal, not toward it.

For Medicare, with all its flaws, works better than private insurance. It has less bureaucracy and, hence, lower administrative costs than private insurers. It has been more successful in controlling costs. While Medicare expenses per beneficiary have soared over the past 40 years, they’ve risen significantly less than private insurance premiums. And since Medicare-type systems in other advanced countries have much lower costs than the uniquely privatized U.S. system, there’s good reason to believe that Medicare reform can do a lot to control costs in the future.

In that case, you may ask, why didn’t the 2010 health care reform simply extend Medicare to cover everyone? The answer, of course, is political realism. Most health reformers I know would have supported Medicare for all if they had considered it politically feasible. But given the power of the insurance lobby and the knee-jerk opposition of many politicians to any expansion of government, they settled for what they thought they could actually get: near-universal coverage through a system of regulation and subsidies.

It is, however, one thing to accept a second-best system insuring those who currently lack coverage. Throwing millions of Americans off Medicare and pushing them into the arms of private insurers is another story.

Also, did I mention that Republicans are doing all they can to undermine health care reform — they even tried to undermine it as part of the debt negotiations — and may eventually succeed? If they do, many of those losing Medicare coverage would find themselves unable to replace it.

So raising the Medicare age is a terrible idea. Means-testing — reducing benefits for wealthier Americans — isn’t equally bad, but it’s still poor policy.

It’s true that Medicare expenses could be reduced by requiring high-income Americans to pay higher premiums, higher co-payments, etc. But why not simply raise taxes on high incomes instead? This would have the great virtue of not adding another layer of bureaucracy by requiring that Medicare establish financial status before paying medical bills.

But, you may say, raising taxes would reduce incentives to work and create wealth. Well, so would means-testing: As conservative economists love to point out in other contexts — for example, when criticizing programs like food stamps — benefits that fall as your income rises in effect raise your marginal tax rate. It doesn’t matter whether the government raises your taxes by $1,000 when your income rises or cuts your benefits by the same amount; either way, it reduces the fraction of your additional earnings that you get to keep.

So what’s the difference between means-testing Medicare and raising taxes? Well, the truly rich would prefer means-testing, since they would end up sacrificing no more than the merely well-off. But everyone else should prefer a tax-based solution.

So why is the president embracing these bad policy ideas? In a forthcoming article in The New York Review of Books, the veteran journalist Elizabeth Drew suggests that members of the White House political team saw the 2010 election as a referendum on government spending and that they believe that cutting spending is the way to win next year.

If so, I would respectfully suggest that they are out of their minds. Remember death panels? The G.O.P.’s most potent political weapon last year — the weapon that caused a large swing in the votes of older Americans — was the claim that Mr. Obama was cutting Medicare. Why give Republicans a chance to do it all over again?

Of course, it’s possible that the reason the president is offering to undermine Medicare is that he genuinely believes that this would be a good idea. And that possibility, I have to say, is what really scares me.

http://www.nytimes.com/2011/07/25/opinion/25krugman.html

By David Moynahan, M.D.
Letters, Tallahassee Democrat, July 14, 2011

Re “Progressives have debt-reduction ideas, too” (Eugene Robinson, July 11).

I was heartened to see yet another article in support of single-payer health care. All the railing against “Obamacare” is just a distraction from our currently failing health care system, and “Obamacare” is hardly any better than the old system.

Those advocates of “Leave My Healthcare Alone” aren’t admitting to themselves that as “their” plan keeps getting more expensive or offering fewer benefits, they too might get squeezed out. Every day, more employers are opting out of providing health care, adding to the number of uninsured Americans. The uninsured seek only the most expensive health care (emergency room or catastrophic) for which they can’t pay, and the hospitals add those losses to their costs for everyone else.

So those with insurance pay for everyone else already. Single-payer systems around the world provide better (yes, better, by every measurable outcome) health care for half the cost. We need to wake up and demand true health care reform. Advocates of the status quo are like a ship’s passengers who demand that the captain stay on course and that the band keep playing instead of repairing a bad leak in the sinking USS Health Care.

David Moynahan, M.D., practices family medicine in Crawfordsville, Fla.

By Robert Reich
Robert Reich’s blog, July 22, 2011

Not only is Social Security on the chopping block in order to respond to Republican extortion. So is Medicare.

But Medicare isn’t the nation’s budgetary problems. It’s the solution. The real problem is the soaring costs of health care that lie beneath Medicare. They’re costs all of us are bearing in the form of soaring premiums, co-payments, and deductibles.

Medicare offers a means of reducing these costs — if Washington would let it.

Let me explain.

Americans spend more on health care per person than any other advanced nation and get less for our money. Yearly public and private healthcare spending is $7,538 per person. That’s almost two and a half times the average of other advanced nations.

Yet the typical American lives 77.9 years – less than the average 79.4 years in other advanced nations. And we have the highest rate of infant mortality of all advanced nations.

Medical costs are soaring because our health-care system is totally screwed up. Doctors and hospitals have every incentive to spend on unnecessary tests, drugs, and procedures.

You have lower back pain? Almost 95 percent of such cases are best relieved through physical therapy. But doctors and hospitals routinely do expensive MRI’s, and then refer patients to orthopedic surgeons who often do even more costly surgery. Why? There’s not much money in physical therapy.

Your diabetes, asthma, or heart condition is acting up? If you go to the hospital, 20 percent of the time you’re back there within a month. You wouldn’t be nearly as likely to return if a nurse visited you at home to make sure you were taking your medications. This is common practice in other advanced countries. So why don’t nurses do home visits to Americans with acute conditions? Hospitals aren’t paid for it.

America spends $30 billion a year fixing medical errors – the worst rate among advanced countries. Why? Among other reasons because we keep patient records on computers that can’t share the data. Patient records are continuously re-written on pieces of paper, and then re-entered into different computers. That spells error.

Meanwhile, administrative costs eat up 15 to 30 percent of all healthcare spending in the United States. That’s twice the rate of most other advanced nations. Where does this money go? Mainly into collecting money: Doctors collect from hospitals and insurers, hospitals collect from insurers, insurers collect from companies or from policy holders.

A major occupational category at most hospitals is “billing clerk.” A third of nursing hours are devoted to documenting what’s happened so insurers have proof.

Trying to slow the rise in Medicare costs doesn’t deal with any of this. It will just limit the amounts seniors can spend, which means less care. As a practical matter it means more political battles, as seniors – whose clout will grow as boomers are added to the ranks – demand the limits be increased. (If you thought the demagoguery over “death panels” was bad, you ain’t seen nothin’ yet.)

Paul Ryan’s plan – to give seniors vouchers they can cash in with private for-profit insurers — would be even worse. It would funnel money into the hands of for-profit insurers, whose administrative costs are far higher than Medicare.

So what’s the answer? For starters, allow anyone at any age to join Medicare. Medicare’s administrative costs are in the range of 3 percent. That’s well below the 5 to 10 percent costs borne by large companies that self-insure. It’s even further below the administrative costs of companies in the small-group market (amounting to 25 to 27 percent of premiums). And it’s way, way lower than the administrative costs of individual insurance (40 percent). It’s even far below the 11 percent costs of private plans under Medicare Advantage, the current private-insurance option under Medicare.

In addition, allow Medicare – and its poor cousin Medicaid – to use their huge bargaining leverage to negotiate lower rates with hospitals, doctors, and pharmaceutical companies. This would help move health care from a fee-for-the-most-costly-service system into one designed to get the highest-quality outcomes most cheaply.

Estimates of how much would be saved by extending Medicare to cover the entire population range from $58 billion to $400 billion a year. More Americans would get quality health care, and the long-term budget crisis would be sharply reduced.

Let me say it again: Medicare isn’t the problem. It’s the solution.

[This is drawn from a post I did in April, also before current imbroglio.]

http://robertreich.org/post/7941066493

By Robert B. Doherty, ACP’s Senior VP in Washington, DC
From the July/August ACP Internist

Physicians have been paid according to the number of visits or procedures they bill for a very long time, almost half a century for Medicare. Fee-for-service might have made sense originally, when everything was done on an episodic, acute care basis, but medicine has changed, and the payment system needs to change with it.

Today, we know that the best thing for the patient is to help prevent illnesses or complications that require more invasive tests or surgical procedures or hospital admissions.

Good medical care requires coordination among teams of health professionals and family caregivers, not just the interaction between the individual doctor and patient. Some of the most valuable things doctors do happen outside of the office visit, such as making arrangements over the phone with other clinicians or family caregivers. And the cognitive services provided by primary care physicians are at least as valuable to patients as doing a procedure, and outcomes and quality matter more to patients than how many procedures their doctor orders.

Yet doctors and patients are stuck with an out-of-date system that fails to pay for the things that we now know are essential to good medical care. Is it any wonder, then, that we get what we do pay for: rushed, inefficient, high-volume, invasive, and fragmented care that undervalues primary and preventive care, and is highly dissatisfying to doctors and their patients alike?

Despite all the flaws with fee-for-service, the medical profession has steadfastly clung to it. Year after year, physician membership organizations have devoted most of their attention to trying to change it at the margins: getting new CPT codes adopted, persuading Medicare to increase the relative value units, and of course, fighting the perennial battle to halt cuts to the sustainable growth rate (SGR) formula. Despite physicians’ concerns about the current system, they have been skeptical about proposals to replace it. There is increasing evidence, though, that fee-for-service, like a play gone stale that has been on Broadway way too long, is about to end its half-century run.

“Unless we begin the process of developing a long-term solution, we will once again be faced with the unwanted choice of extending a fundamentally broken payment system or jeopardizing access to care for Medicare beneficiaries,” wrote Rep. Henry A. Waxman, ranking Democrat on the House Energy and Commerce Committee, in a March 28 letter to ACP and about 50 other physician membership organizations. “We cannot let either happen.”

The letter went on to request that the physician organizations provide the committee with specific ideas “on how to reform the physician payment system and move to a system that reduces spending, pays providers fairly, and pays for services according to their value to the beneficiary.”

The idea of paying for services according to their value to the beneficiary would be a fundamental departure from the current Medicare system. Fee-for-service is agnostic about value to the patient, because it only concerns itself with the number of procedures and visits generated, and the work and costs involved in delivering the services (the relative values), not how valuable they are to the patient. By comparison, value-based payments would mean paying physicians, at least in part, for achieving measurable improvements in the outcomes and efficiency of care provided.

Most proposals for value-based payments also change the unit of payment from a procedure code to a bundle of services, discreet episodes of care, or risk-adjusted payments per patient per month (capitation), with the opportunity to earn more or less depending on how well the physician or health care organization delivers care effectively and efficiently. Some proposals would maintain an element of fee-for-service with value-based payments layered on top.

Not only Congress has decided that the current payment system should be on its way out. ACP, the American Medical Association, the American College of Surgeons, the American Academy of Family Physicians, and the American Osteopathic Association responded to the Energy and Commerce Committee’s request by offering proposals to transition to new models aligned with value.

Although the details of their proposals varied, all called for a period of at least five years of stable payments with the annual updates guaranteed by statute instead of being set by the SGR. During this time, a variety of alternatives would be pilot-tested on a voluntary basis. Physicians who agreed to participate in the pilots could earn more for achieving better outcomes. Then, after the five-year period of stability and innovation, the models that were most effective in the pilots would be broadly adopted by Medicare. Physicians then would be given a clear timetable, another four or five years, to transition to the new models so that by the end of the decade, most practices would be paid, at least in part, on value to patients, not volume of services.

ACP recognizes that there will be many challenges in transitioning to new value-based payments, but the alternative is trying to defend a broken payment system that does not meet the needs of patients, the people who pay the bills (taxpayers and employers), and physicians themselves.

Copyright © 2011 by the American College of Physicians

http://www.acpinternist.org/archives/2011/07/washington.htm