The ACP Advocate Blog

by Bob Doherty

Thursday, December 10, 2009

Poor Grandma!

The news that Senate Democrats may have reached a tentative deal on a substitute for the public option has lead to another round of rhetoric about what will happen to poor old Grandma.

The proposal reportedly includes a new national network of private health insurers administered by the federal government and a Medicare buy-in for people 55 to 65 who don't have employer coverage. Details about the proposal are few, and key Senators are reserving judgment until the Congressional Budget Office comes back with a new estimate of its impact on the budget.

Still, the lack of details hasn't stopped people from staking out a strong position against the proposal, and especially against the Medicare buy-in. As reported in The Hill blog, Senator Chuck Grassley (R-IO), the ranking Republican on the Senate Finance Committee, opposes the Medicare buy-in because "The last thing you want to think about when the Titanic is sinking [is to] put grandma and more of your family on the boat." (Medicare is taking on the role of the Titanic, I presume.) Last week, Senate critics repeatedly made a similar argument that Grandma would suffer as a result of proposed Medicare cuts in the bill. (Given the average age of U.S. Senators, I would think that their own grandmas would be well over 100 years old, but that is another matter.)

The ACP has not yet taken a position on the public option compromise and the Medicare buy-in, because we would like to see the details before deciding. It is a complicated issue, and accordingly, deserves a thorough understanding of what is being proposed. But I would suggest that there is fundamental illogic to a key argument being made by critics. The argument goes like this:

Medicare is going broke. Therefore, cutting Medicare is wrong because it takes money from a program already facing bankruptcy. Therefore, adding people 55-65 to the program will further accelerate Medicare's demise.

The first statement is true - Medicare Part A is estimated to run out of money by 2012.

The second statement makes no sense. The Medicare cuts (which for the most come from reductions in the rate of payment increases to non-physician providers) in the Senate bill will mean that almost a half a trillion fewer dollars will flow out of the program over the next decade, delaying by years the date when the trust fund will run out of money. As any family knows, if you currently are spending more than you are taking in, and then you start to spend less, your money lasts longer.

The third statement might be true, but then again, it might not. Allowing some people 55 to 65 to buy into Medicare, out of their own premium dollars, would have no impact on the solvency of the rest of the program, if the premiums collected are high enough to cover the costs for this age group and the funds are segregated from the rest of Medicare. If people aged 55 to 65 have lower annual health care costs than those 65 and older, and if their contributions are intermingled with the rest of Medicare, they could actually help the solvency of the rest of Medicare, since it would spread risk more broadly among a healthier beneficiary population. If the Medicare buy-in attracts a sicker group of 55 to 65 year olds and the premiums collected from them are too low, it could hurt the solvency of the rest of the program by drawing funds out of the other trust funds to make up the shortfall.

Beyond the issue of whether the buy-in will help or hurt Medicare's solvency, there is a real concern about the impact on physicians and hospitals of having more patients paid under the discounted Medicare rates. Even here, though, much would depend on whether the buy-in would be open only to people 55-65 who don't have health insurance coverage through an employer or retiree plan, or to all people 55 and older. If the former, the number of people added to Medicare would be relatively modest, and doctors and hospitals would at least be sure of getting Medicare rates for care that they may now be providing on an uncompensated and charitable basis. If the latter, it likely would have a big adverse impact on the bottom line.

I am not suggesting that the current Medicare buy-in proposal is one that the ACP should support, but it deserves a serious analysis - not a knee-jerk response - once we know the actual details. I do know that the argument that taking money out of Medicare will accelerate its insolvency, as the Senate and House bills would do to help pay for health reform, makes no sense, since it will do the opposite and extend the life of the trust fund. It remains to be seen if allowing some people 55-65 to buy Medicare coverage will help or hurt Medicare's fiscal outlook, and what it will do to the "bottom-line" for physicians and hospitals.

Today's questions: What effect do you think the Medicare cuts in the health reform bills will have on Grandma? What about a Medicare buy-in for people 55 to 65?

8 Comments :

Blogger Steve Lucas said...

Two issues come to mind, with corresponding stories. Last Sunday I was called by a 91 year old lady frantic to go to her doctor Monday afternoon. I agreed t take her. We arrived to be met at the parking lot by a person checking to make sure we were in the right place.

Going to the front door we were met by two people, one retrieved a wheelchair, the other parked my truck. In for the appointment, on time, back down, and once again there were two people to get the truck and help with the wheelchair.

I asked her about her appointment, she has multiple medical problems, and just received a new pacemaker. This was a surgeon, but the one who had done cancer surgery a number of years ago, and she went in to his office to get her mammogram results.

We have simply built too much cost into our medical delivery system, and fee for service promotes the over use of assets.

The second issue is many people with 30+ years with a company are being pushed out. While they may have a retirement plan, they may not have insurance. We have seen post on this very blog about the issues of trying to get insurance with a pre-existing condition.

My wife stays in her position, in part, due to the insurance coverage for both of us. She is our insurance provider and I doubt we could get affordable insurance on the open market.

While Medicare may not be the perfect answer to this problem, this problem does exist. The hospitals are complaining, in part, due to the loss of revenue as those 55 – 65 are at the early stages of ageing problems, while at the peak of their earning potential. Co-pays are not an issue.

We must control cost, but we also must find solutions to very real and very debilitating problems on a personal level.

Steve Lucas

December 10, 2009 at 1:49 PM  
Blogger Harrison said...

The Republican party has moved into a very difficult position, and so some of their comments don't make sense. Senator Grassley is a good example. He is a well meaning senator, and he can be very clear headed. But he has two very different elections obstacles and constituencies to deal with. He has to make statements on the right wing extreme to dissuade a primary challenge in Iowa. A primary challenge would be hard for him because he has been in Washington too long and worked as a colleague too long with liberal leaning senators and coalitions, and the Iowa Republican party is very much right leaning.
But if he gets past that, he faces a general Iowa electorate that is not right leaning at all, and in fact often votes pretty far to the liberal side of politics.

So relative to Medicare, he has to find reasons to oppose expansion not so much because he does oppose it, but because he cannot be seen tied to the Democrats.

There are few Republican senators who do not have similar concerns.

Health care is unfortunately the issue that is caught up with this political battle.
It isn't a battle unique to health care.
The contradictions are going to be coming from both sides.
But the Republicans are going to look worse because they are out of power and run a high risk of being perceived as narrow minded and obstructionist.

The ACP is right to reserve comments until there is something clear upon which to comment.
We need to be able to genuinely work with both sides of the political spectrum.

It is good for us to strike up and maintain a dialogue with the Republicans, outlining our positions.
I think they want to understand the issue and they want to do what is right.
We need to look beyond their public comments, because those are often made for a specific audience.

Harrison

December 10, 2009 at 2:30 PM  
Blogger Jay Larson MD said...

In regards to the Medicare cuts, it really depends on where the cutting will occur.

If the cuts are reduced reimbursements for over utilized serves, then Grandma will be fine.

If the cuts are reduced reimbursements for office visits, then Grandma will be in trouble.

Any further reduction of reimbursement for cognitive skills would hurt general internists, infectious disease specialists, and endocrinologists. These cognitive specialties will not be able to take care of Medicare patients. They would have to either close their practice to Medicare or just leave practice.

The main concern about Medicare for 55-65 year olds is the low Medicare reimbursement for office visits and it would have the same effect as above.

On the flip side, when my wife retires and we have no health insurance, I would be signing up with Medicare when I turn 55.

December 10, 2009 at 3:54 PM  
Blogger Rich Neubauer MD said...

The quick, negative, knee-jerk reactions to the Medicare expansion proposal from a number of organized medicine groups including most prominently the AMA seems very unfortunate to me. I think the ACP stance of taking a wait and see approach right now is better considered.

As you point out so well, this is an incredibly complicated set of proposals. A first step is going to be CBO evaluation which should be interesting. The context of this current proposal is the political scenario of Senate democrats trying to find some way of getting a bill out of the Senate that can receive the requisite 60 votes so that a health care reform bill can proceed at all via the legislative process.

For physicians, even those firmly in the belief that we need health care reform, we are now entering a phase that tests our resolve. Knowing from the outset that there will be things both to like and dislike about what emerges from the reform effort, what should be our position on items such as an expansion of the Medicare program as is being proposed?

The unfortunate reality of the Medicare program as it currently exists is that it underpays physicians, especially those in primary care, to the point where it does not even cover the actual expense of providing care in many if not most instances. This is true both in private practices and in academics. Physicians have no good way to make up for this shortfall other than by limiting their Medicare practice, or by “churning” large numbers of patients through their practice. ACP continues to advocate for answers, but in the meantime as physicians individually examine the impact on their practice of new proposals such as that coming out of the Senate, they may see only pain and suffering heaped onto their already difficult situations.

We sorely need health care reform. I’m glad to see ACP hold off on taking an immediate stand on the current Senate proposal while more information emerges.

December 10, 2009 at 5:14 PM  
Blogger PCP said...

This is back door Single payer system. Medicare already serves as the keel for the health care insurance system. Reimbursements are often set by private payers as a percentage addition to Medicare rates. If Medicare is expanded then we will see Medicare rates racheted down quicker and private insurers will be only too happy to follow. For an Internist, the above 55 crowd is pretty much the entire practice. This would be disaster.
A lot of people age 55-65 work mainly for medical insurance benefits. They will quickly retire and quickly join medicare.

The flip side is that you will also see a lot of Physicians retire at 55. A working career of just 20 yrs. With de facto single payer, protocol driven care, entitled patients, declining incomes, increasing taxes and generally much more hassle, it will simply not be worth it.

We will be ever more desperately in the hands of power hungry politicians, and have to dance to their whim and fancy each year when Medicare rates are set. We will have lost our professional status, our right to collective self determination as a profession. We will lose much, but our patients will lose even more. We would have effectively sold our professional soul for nothing. This drift to single payer must be opposed. If the Democrats have differences amongst themselves, they much not make Physicians scapegoats since we are generally the softest targets, witness SGR in 1997).

December 10, 2009 at 8:42 PM  
Blogger Axe to Grind said...

Grandama is going under the bus- period. What all of you do not see is that docs are next....in spite of what has been said by the ACP or by HReid. The current reforms especially with all the promises made to special interests are untenable. Wake up.

December 11, 2009 at 4:13 PM  
Blogger Axe to Grind said...

The current bill will lead to massive reduction in medical services purely due to cost overruns. Go to the VA system and observe how services have been rationed and/or eliminated. The ACP really has sold us out in supporting HReid and Obama. After this bill passes, remember that I told you that HReid et al will show you the cold shoulder. This bill should be stopped now.

December 11, 2009 at 5:04 PM  
Blogger Bill Fox said...

I am very concerned about a Medicare buy-in for those aged 55-65, even if it is limited to individuals without employer sponsored insurance.

Most people (and all doctors) agree that the current Medicare system is broken. Therefore, expanding a broken system seems at its core to make little sense. Because Medicare underpays physicians, I would be worried that an expanded Medicare system would make it more difficult for physicians, especially primary care physicians, to keep their practices open. I am also concerned that more physicians in private practice would stop accepting new Medicare patients if such a proposal passed, and this would threaten access to care.

The ACP has taken the position that it would be against a government run option if such an option were tied to the Medicare payment system. This position makes sense. However, a Medicare buy-in for those 55-65 would essentially be just that.

The ACP has also stated that in order to support a government run option, the plan would need to be subsidized entirely through premiums collected and not through the US treasury. This is good fiscal policy. However, the idea of expanding Medicare to those 55-65 runs counter to this argument. Medicare is not fully subsidized through premiums collected. (Just consider physician payment increases and where the money to cover that might come from.)

Finally, for those who are against a single payer system, such an expansion of the Medicare system smacks of the first step toward that end.

It makes more sense to follow the lead of the House: a government run option, limited to certain individuals, that is not tied to Medicare rates, does not require mandatory participation by physicians, and which is subsidized solely through premiums collected.

December 13, 2009 at 4:27 PM  

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About the Author

Bob Doherty is Senior Vice President, American College of Physicians Government Affairs and Public Policy; Author of the ACP Advocate Blog

Email Bob Doherty: TheACPAdvocateblog@acponline.org.

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