As I approach my 50th birthday, I worry about Medicare not being there for me when I become eligible. I have some inside knowledge about Medicare. My parents and in-laws are patients on Medicare. As a doctor, I am a provider for Medicare, and as a public health educator I am a consultant for a Medicare quality improvement organization.
Everyone, including the leaders of both Democratic and Republican parties, agrees that Medicare costs, which make up 12 percent of the federal budget and are more than the entire national budget of Australia, must be reined in.
However, there is a core difference between the Republican and Democratic plans. One party feels it should be patients, the Medicare beneficiaries, who should be responsible for the cost cutting, while the other party feels it should be the providers, which includes the hospitals, doctors and insurers. Let me explain.
The Republican plan laid out by Paul Ryan in "The Path to Prosperity" states, "The open-ended blank-check nature of the Medicare subsidy drives healthcare inflation at an astonishing pace." As the health care costs have risen the government has picked up the tab.
Since its inception nearly 50 years ago, Medicare has been there for seniors without significant limits on coverage or financial burden. In fact, additional benefits were added in 2003 under the Bush administration for prescription drugs.
Medicare's privilege can also be seen as a handout. Medicare's generous benefits have allowed patients to demand more care without taking responsibility for the cost and it encourages providers, the doctors and hospitals to dispense more care without paying attention to the expense. For example, it is common to have patients in their late 80s with dementia and kidney failure in the intensive care unit on a ventilator. Why? Because the family "wants everything done" and because providers are reimbursed for doing more.
Unfortunately, often times this care is excessive and wasteful. By some estimates nearly 30 percent of our health care expenditure is unnecessary, and can be reduced without any detriment to quality of care.
With the Romney/Ryan plan, the Republicans put the task of reining in Medicare costs on patients. For those of us under 55 years old, under the Romney/Ryan plan government would provide vouchers for purchasing Medicare, and if the expenditure exceeded the designated care, then the seniors would be responsible for the bill. By the estimate of the Congressional Budget Office it may cost on average each Medicare beneficiary as much as $6,400 extra a year by 2022.
The voucher program, in essence, would cap Medicare costs outlay and get the government off the hook if health care costs accelerated out of control. This is good for the government, yet seniors run the risk of having to make difficult financial decisions such as paying for their health or their home. Some may even avoid preventive care and some with chronic diseases like cancer and heart disease may go bankrupt. Although people howl about "government rationing," this too would be a type of rationing -- by income. Those with the means could pay for their medical care, while those with less money have to do without care.
In large part, the Republican plan is not cost-cutting but cost-shifting. The Republican plan puts personal responsibility on individuals. This may be good, because with more responsibility, patients may be less likely to overuse health services and push for reduction in cost of care. When a doctor orders a test, they will be more likely to question its value and potential benefit. Also the Republican plan with privatization may breed competition among Medicare insurance exchanges to decrease costs.
However, there is no guarantee that privatizing and competition will reduce the cost of health care. The Medicare Advantage plan, which offers private insurance to 11 million beneficiaries, costs 17 percent more per beneficiary than the standard Medicare fee for service, though recently premiums have gone down by 7 percent.
The Obama plan, which is part of the new health care law, takes a different approach. It places the burden of reducing the cost of Medicare on providers, mostly the hospitals, doctors and insurers. First, it cuts $716 billion dollars over 10 years from hospitals, Medicare Advantage programs and others. (For the record, despite Republican charges that the administration "robbed" $716 billion from Medicare to pay for "Obamacare," Rep. Ryan used that same $716 billion in savings in his own budget.)
In many ways, this Democratic approach arm-twists hospitals, doctors and insurers to build more efficient systems for delivering health care. For example, instead of receiving payments for each service, doctors and hospitals would receive bundled payments for each beneficiary. Also, hospitals would be penalized for poor quality and readmission. In addition, accountable care organizations, which provide better continuity of care with control on costs, would be encouraged. Accountable care organizations are voluntary groups of health care providers who come together to coordinate care for their Medicare patients.
If the initial cuts are not sufficient, then the Democratic plan would set up an independent board to review and recommend additional cuts. Americans despise the idea of a board making decisions about their health benefits, yet such a board would be no different that an insurance company board which would decide what coverage to offer with a cost of a voucher. In fact, such a board would be fairer in looking out for the interests of the Medicare beneficiary than a for-profit insurance company board.
So as one important issue in this election, Americans, especially baby boomers like me, have to choose which approach they feel comfortable with. A fair question to ask is this: Today, would you be willing to trade in my present employer-based insurance plan for a voucher plan?
I believe the true solution may lie a bit in the middle -- patients, including Medicare beneficiaries, need to take greater personal responsibility for the cost of health care by demanding less unnecessary care, and caps may accomplish this. Providers need to build efficient care systems or compromise their profits and salary. With skin in the game for both patients and providers, we will not only cut expenditure for Medicare but all of health care.
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