Editorial

Who Is Destroying Medicare?

A friend in her 80s underwent multiple scans and tests and doctor appointments during the last few years of her life. She suffered with arthritic pain, severe headaches, and COPD. Twice, excruciating pain from a dislocated hip required expensive ambulance trips to the hospital. Medicare, the US federal health insurance program for people over 65, took care of thousands and thousands of dollars in medical fees and medication as she and her daughter searched for ways to improve her life quality. My friend could afford to pay the premiums for Medicare Plan B and D as well as her copayments, but she would not have been able to pay the full costs for all the treatment that she received. Because of Medicare, she and her daughter never had to worry about unpaid medical bills.

In 2010, 44.3 million people were enrolled in the Medicare program.¹ As the Baby Boom generation (those born 1946–1964) moves toward retirement, that number will expand rapidly until 2030. Legislators and federal bureaucrats view escalating usage of this popular program with alarm. No one wants to admit that Medicare in its present form is – and always has been – economically unsustainable.

Medicare gained approval in 1965 after decades of political battles and negotiations with the health-care industries. It passed into law only because Medicare supporters agreed to forego cost controls, according to Wilbur Cohen.² Cohen worked for the Department of Health, Education, and Welfare during the 1960s. The House Ways and Means Committee expected recipients’ doctor visits to cost less than $1.3 billion during the first year. The actual cost was $4.6 billion. Hospital costs also exploded. The Medicare agency projected hospital coverage for 1975 to cost about $4.2 billion. In reality, the costs soared to $15.6 billion. “The estimates were off,” Peter Suderman states in his essay “Medicare Whac-A-Mole,” “because they didn’t account for the increase in demand spurred by the programs’ offer of essentially unlimited benefits.”³ People could suddenly afford far more services and interventions because the federal government was paying the bill. When people have unlimited health insurance, they use it. When the funds come out of a person’s private bank account, cost-benefit takes priority.

Several administrations over the past 35 years have sought ways to control Medicare costs. President Carter wanted to limit reimbursements to hospitals, but the American Hospital Association successfully lobbied Congress to kill the plan, saying that hospitals would curb costs themselves. They didn’t. Hospital costs rose 13% in 1980 and another 18% in 1981.⁴ President Reagan signed a law instituting patient diagnostic codes with fixed reimbursement fees. The length of expensive hospital stays declined, but outpatient and nursing home costs increased. In 1985, Congress began looking at physician price controls that eventually led to the 1992 law signed by George H.W. Bush. The 1997 Balanced Budget Act, signed by President Clinton, tied physician reimbursement payments to US economic growth. If the economy declined (something unforeseen at the time), Medicare reimbursements to doctors would also decrease. Despite the recession and slowed economy, Congress has voted against every reimbursement cut since the first and only cut in 2002, making this attempt to stem costs ineffectual. The Medicare Prescription Drug Improvement and Modernization Act, signed by George W. Bush in 2003, improved access to pharmaceuticals yet forbids Medicare from negotiating for lower drug prices. The Patient Protection and Affordable Care Act, signed by President Obama in 2010, is the latest attempt to slow medical costs.

If past history holds true, people will continue to find ways around cost-containing strategies no matter how well-intended or how detailed the Medicare law becomes. Contrary to our most fervent desires, the government’s coffers do have a limit. Unlike individual people, the federal government can borrow and print vast amounts of money. At some point, however, the country will pay the piper with devalued currency, economic instability, and/or high inflation. In the meantime, all payees are willing to milk as much as they can from the federal cash cow; and patients are willing enablers because of a deep-rooted belief that “more care is better.” Any talk about cost controls or about rationing care to restrict Medicare funding for expensive tests and procedures incites fury.

If Medicare is to survive, the “more is better” myth has to be overcome. Unfortunately, it is in the best interests of the many arms of the medical industry to keep that myth alive; profits grow when patients buy. Access to more medical care, however, does not translate to greater longevity. In fact, more intervention leads to increased mortality, according to a 2012 prospective cohort study of 51,946 adults, conducted by Joshua J. Fenton, MD, MPH, and colleagues at the University of California, Davis: “In a nationally representative sample, higher patient satisfaction was associated with less emergency department use but with greater inpatient use, higher over-all health care and prescription drug expenditures, and increased mortality [adjusted hazard ratio, 1.26; 95% CI, 1.05-1.53].”⁵

Now, one might think that these satisfied patients, who received more care, were sicker. Surprisingly, the satisfied patients tended to view themselves as having excellent health. In fact, their physical and mental health status was better than the status of those less satisfied with their medical care. So why did this group of healthier people have a higher mortality rate? The research points to overtreatment; patients were satisfied because their doctors acceded to their requests for tests, prescriptions, and treatments that they did not need.

“Practicing physicians have learned – from reimbursement systems, the medical liability environment, and clinical performance scorekeepers – that they will be rewarded for excess and penalized if they risk not doing enough,” Dr. Brenda E. Sirovich states in her invited commentary. “More aggressive practice, therefore, improves not only patients’ perceived outcomes, but also those of physicians (reimbursement, performance ratings, protection against lawsuits), and the positive feedback loop of health care utilization is fueled at two ends.”⁶

Don Berwick, MD, MPP, former Centers for Medicare and Medicaid Services administrator, says: “This is an urgent time to find ways to reduce health care costs without harming people at all – and it’s clearly possible. There are improvements in care that I am absolutely certain, not from my administration experience, but from my 30 years before, reduce expenses and improve care. … I don’t think the media has gotten into the more-is-better myth enough.”⁷

From the beginning, Medicare has been far more expensive than anticipated; and, if Dr. Berwick is correct, it is far more expensive than it needs to be. Personal interests and individual gain have stymied true reform. The medical industry lobbies Congress and consumers to increase profits. People, swayed by their own fears and by propaganda from insurers, pharmaceutical companies, and others, hold fast to the belief that more is better. Politicians lack the courage, foresight, and statesmanship to work together to make the hard decisions. Who is destroying Medicare? We all are.

Jule Klotter

Notes

1. Wood DB. Census Report: More Americans relying on Medicare, Medicaid. Christian Science Monitor. September 13, 2011. Available at www.csmonitor.com/USA/0913/Census-report-More-Americans-relying-on-Medicare-Medicaid-VIDEO. Accessed March 5, 2012.

2. Suderman P. Medicare Whac-A-Mole. Reason Magazine. December 13, 2011. Available at http://reason.com/archives/2011/12/13/medicare-whac-a-mole. Accessed January 6, 2012.

3. Ibid.

4. Ibid.

5. Fenton JJ, Jerant AF, Bertakis KD, Franks P. The cost of satisfaction. Arch Intern Med. February 14, 2012. Available at www.archinternmed.com. Accessed February 14, 2012.

6. Sirovich BE. How to feed and grow your health care system. Arch Intern Med. February 14, 2012. Available at www.archinternmed.com. Accessed February 14, 2012.

7. Association of Health Care Journalists. Parting thoughts: Berwick shares views on media coverage of health care and reform [online article]. February 9, 2012. Available at www.healthjournalism.org/resources-articles-details.php?id=205. Accessed February 10, 2012.