Friday, July 31, 2015

Medicare Reaches 50 - And There Is No Such Thing As "Mediscare"!

Seniors marching on behalf of Medicare in the early 1960s. At that time, adult children had to declare mortgages, assets etc. to pay any extra money for medical care for their elder parents the state wouldn’t cover. Many seniors,  rather than burdening their charges, simply died alone.

"Mediscare" is the word conservatives use to mock the Democratic strategy of warning seniors what would happen if the Reepos alter it, i.e. according to "free market" value such as issuing vouchers.

Is it all really harem, scarem? Don't believe it for a nanosecond!

Yesterday, the 30th of July, marked the 50th anniversary of the government health benefit program called Medicare. While predictions of its demise have been with us almost since it's inception, all have been proven to be false or overblown. The one thing that has remained constant, however, is the conservative elites' belief it is "socialism" in disguise and needs to be dismantled - replaced by a "free market" solution.

In the December 19, 1960 issue of LIFE magazine, President -elect John Fitzgerald Kennedy referred to a few of the modest requests he would make in his new administration. Modest, because he recognized he had won the popular vote by the barest sliver of a majority- a mere 113,000 votes.

 His ‘requests’ included (p. 31):

-          a higher minimum wage

-          urban renewal

-          Old age medical care operating under Social Security

The last would evolve and become known as "Medicare" which is the system JFK originally foresaw and which is operating today as an ancillary benefit to Social Security. JFK understood that as powerful a benefit as Social Security was, it fell short if seniors' health issues were not attended to. The pre-Medicare era was indeed nasty, brutish and saw most elderly either dying in an impecunious state, or simply alone.....of some disease or infection. This is why JFK felt the issue of elderly medical care as an assured benefit could no longer be excluded.

Over the decades numerous attempts have been proposed to kill it or replace it, but all have been stymied as poll after poll has shown popular support for the program. Indeed, it is so popular that "Medicare for all" has been proposed as an alternative, e.g. to the too center-right formula of Obamacare - where citizens still have to cough up for increasingly higher premiums.  But since all the usual conservative tactics have basically been exhausted, the only one left is to brand any defense of Medicare as "Mediscare". But if seniors probe the underbelly of what's alternatively offered, they should be scared!

Most recently, Sally C. Pipes in her WSJ op-ed from yesterday (p. 11) has advanced the thesis that "Medicare spending is unsustainable" and so a new model must replace it. What is this new model she advances that she claims will provide greater access to medical care and lower costs? She sets out the following aspects:

- The eligibility age to get it ought to be increased to 67 because today life expectancy is 79 - up from 70 in 1965  - and those extra years "put additional strain" on the system.

-The postponement to 67 isn't enough and Medicare also needs to be "converted from an open-ended entitlement to a system of means-tested vouchers."

How would these vouchers work? According to Pipes:

"The government would give every senior a voucher based on health status, income and age. Seniors in better health and those who are wealthy would receive smaller vouchers. Sicker or needier seniors would receive larger onesSeniors would then choose from among privately administered health plans the one that best suited their needs and budget."

 What are the cutoff thresholds? She doesn't say. But, based on past gov't standards we can be sure if it's a Republican congress and President issuing them, they will be stringent to say the least. Probably the "neediest" will have incomes of $13,000- 14,000 a year or less. This would leave open what happens to a middling income couple - say with $50,000/year - who is also initially healthy at time of issuance - but then the husband develops prostate cancer and the wife breast cancer. It could happen! Then what?

Well, she says seniors can "choose" from among private insurance plans for needs and budget, but how would that work out? Really? Let me provide some perspective - including based on her desire to increase the eligibility age to 67.

At the age of 66 - one year short of Pipes' eligibility cutoff- I was diagnosed with stage T1c prostate cancer in six cores, Gleason scores of 3+3, to 3+4.  I elected high dose rate brachytherapy treatment and that bill tabulation, for those who might be interested, came to $42, 776 . This encompassed a breakdown of different contributors, from (epidural) anesthesia ($4,124) to radiology services ($16,768) to recovery room ($2, 090) to operating room services ($14,994).   The bill, after Medicare Part B kicked in, came down to $1,299 of which most was paid by my Medicare Supplement Plan (F).

It doesn't take a genius to see that had I been left with that bill at 66 - and no Medicare to depend on - with Obamacare still years from being formalized - I'd likely have gone bankrupt. By extension, many millions of other 65 and 66 years olds would too under Pipes' plan.

My other alternative, of course, would have been to skip any immediate treatments and hence, do nothing. In that case, the cancer would plausibly have metastasized until - by the time I finally did qualify for Medicare  - the costs of treating advanced prostate cancer would've been drastically more.

Pipes also claims that according to her proposal (ibid.):

"Insurers would have to compete for beneficiaries' business and providers would have to compete to get on the most popular plans".

But one has to wonder what fantasy world she inhabits. Compete for sickly (or soon to be) old folks? You have to be kidding me!

NO private health insurance companies are going to want to compete for senior health care! They only do it now because the Medicare Advantage plans are paid more for their services than the government pays in standard Medicare. Hence, contributing to the standard program’s insolvency (by an excess $12 billion a year according to the GAO).

Let us assume an elderly woman requires hip replacement surgery at an on-paper cost of $30,000. Today, Medicare - standard Medicare, will pay 80% of that or $24,000, leaving her with $6,000 to pay on her own. A goodly amount, but not insuperable. In premium support at the maximum level, however, the woman would use ALL her allotment for one operation and still have $15,000 left to pay, and no more "premium support" voucher for any other needs that may arise.

Worse, why compete for a pool of citizens which is basically going to be sickly most of the time? This is self-evident. Even now health insurance companies factor in the medical loss ratio (the ratio of unhealthy subscribers to the healthy ones that support them via fees, costs) as the most important in getting continued profits. That means they already know that any private plans for seniors on the open market would have vast medical loss ratios meaning the proportion of insurers' profits would be next to nil. Thus, seniors will clearly be shut out, translating to a no win situation for them. (No Medicare, and no private insurer to take them)

As Economics Professor Fiona Scott Morton aptly put it several years ago in referring to any such "voucher" plan, it is merely a demand shedding plan. As she puts it:

 “there’s no evidence many companies will be rushing in to provide health coverage to ailing boomers with competition that ought to lower any premiums"


She added:

"The Republican voucher plan is not solving the problem. It’s solving the problem of the cost of government health care. You have people who can’t afford it and they’ll just die. Economists call that demand shedding”.

Thus the “Medicare revolution” proffered by Pipes and earlier Paul Ryan is NOT to engender market competition to "lower health premiums for seniors", but to shed market demand (by seniors) so they'll be unable to enter or access any private health care, period. And since no government help or insurance will be available (other than other than a meager voucher to try and purchase private insurance in an open market with seniors the only and largest risk pool) the senior will have no choice but to die.)

Thus, we effectively have a "death policy" and there's no gaming it with euphemisms or trying to put any lipstick on this pig.

Apart from that, we know purchasing health care isn’t like buying a car, or i-pad or TV. The elements of objective and cool rational choice aren’t available mainly because the time when people most need health care is when their lives may be on the line: after a serious auto accident or fall, or appendicitis, or contracting pneumonia. Then, they simply need care and cost may not factor into it given that we know costs vary across large geographical regions, see e.g.

As shown in that blog post, there is a way to control medical costs, but it doesn't depend on "premium support". It requires a provider network than mandates FIXED pricing for each procedure irrespective of what insurance vehicle one has....or doesn't. In this way, the delivery of care is rendered uniform without wild variations in costs, and in addition, costs can be controlled - especially as unnecessary procedures.

Other ways Medicare's costs can be controlled to ensure it's sustainable into the future include:

1) Allowing Medicare to bargain for the lowest cost prescription drug costs like the VA does.

2) Transferring those currently on "Medicare Advantage" (based on more expensive private plans for which standard beneficiaries must subsidize) to standard, gov't run Medicare.

3) Implement new computer software to detect fraud, e.g. that can distinguish fake M.D. addresses - given by those trying to bilk the system - from actual ones of genuine providers.

The problem with all conservative solutions is that they're based on an exaggerated assumption that ascribes more power to the majority of people than they actually possess. Hence, the conservos can insist with a straight face (cf. WSJ, July 25-26, p. C2 )that "limited government allows individuals to take responsibility for themselves and their families and communities".

Yes, in an ideal world of limited corporate influence, that might be so. But not when corporate power and money can purchase political influence that undermines democracy and inveighs against the will  of the people as well as the general welfare. Then, "limited government" becomes exactly what the corporatocracy wants, a government too weak to protect the interests of its citizens against the array of private power. As FDR once put it:

"The liberty of a democracy is not safe if the people tolerated the growth of private power to a point where it becomes stronger than the democratic state itself. That in its essence is fascism: ownership of government by an individual, by a group, or any controlling private power.”

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