I’m trying to keep this short, so I’ll just link to this article and give you a summary of what it says:
http://www.newyorker.com/reporting/2009/06/01/090601fa_fact_gawande

In McAllen TX we spent $15,000 per person on Medicare patients. In El Paso we spent $7,500. Dr. Gawande looked at the statistics for both counties and didn’t understand why. They were pretty much identical. So he went to McAllen.

At first Doctors there blamed it on lawyers, until Gawande asked them how many lawsuits had been filed recently. Almost zero. Then he found out the numerous extra sources of revenue McAllen’s medical community has available to it. Many Doctors don’t refer patients to the best hospital, they refer them to the one that pays the highest kickback. Many more order thousands of unnecessary tests every year, use their personal labs to carry out the tests, and bill Medicare for every one.

As for Medicare Advantage there is simply no way to defend that program as national policy. 86% of that money does not go to health treatment.

But you can’t get either without 60 votes in the Senate. Every state has a few rich Doctors, touted as “pillars of their community,” who use the McAllen strategy. They have a lot of patients, and none of those people want to see their Doctor get screwed. If Obama had only proposed this stuff the next dang day Doctors would be on Glenn Beck, with patients, spreading FUD about the consequences of this proposal. Limbaugh probably wouldn’t have them on, but he’d support them because they seem to be legitimate businessman.

This means 39 Republicans in the Senate are opposed to it. Period. Since the conservative position is opposition Nelson, Lincoln, and Landrieu have to either oppose it or demand major concessions. The Left is convinced that covering everyone is a moral imperative, so they’ll heat to any left wing Senator who sticks up for a proposal that doesn’t cover everyone. Congratulations you just lost in Committee.

I never said this was ideal. I never said this was the end. I said it was start. And given the people we elected, to a government we set up, it’s pretty much the only start that we can make.

See my second comment: “Cutting might save [Medicare] if (a) we save the money so that Medicare doesn’t go bankrupt as soon, or (b) we reallocate that money within Medicare in ways that make more sense. ”

Cutting medicare in order to fund other new government programs will neither help save Medicare nor does it reduce government spending.

The Feds report that upwards of a third of Medicare beneficiaries have trouble finding a primary care physician — now! Locating the right specialists for whatever ails you can be harder. Enrolling in a MA program — by definition, a managed care program — eliminates such worries, as you gain access to a physician and hospital network.

A large number of primary care docs already decline to accept NEW Medicare patients. I.e, they treat Medicare patients, but effectively limit the number by continuing to treat existing patients when the turn 65 and go on Medicare, replacing those who have died off — while the bulk of a doc’s patients are in the higher-paying private insurance category. So you need to make sure you’ve got the right doc you want when you’re approaching 65.

Specialists are a bigger issue. Go to the websites of any major not-for-profit teaching hospital were all the first-rate docs are to be found — those who do cardiac surgery, hip replacements, advanced cancer care, etc. You’ll find lists of affiliated physicians, usually with inof on what insurance they accept. For example, some two-thirds of those at New York’s Columbia-Presbyterian Hospital do not accept Medicare! This internet gismo is great for enabling us pajama-clad folks to dig out such gems of info. Try it yourself at a hospital near you! Then see if you think that reducing reimbursements to docs and hospitals will have no effect on access by Medicare patients.

Some will yes. Policy like this takes effect on the margins. Providers already feeling the squeeze will feel it even more and will decide it isn’t worth it. Or, an even harder number to measure but maybe even more important: new providers will start out not accepting Medicare.

Are you assuming that the providers are just pocketing that inflation + 1% every year as profit? The reason that providers have to raise prices is because their costs are going up. If inflation + 1% is not enough to cover it, then their profits are less, not more.

John Burke did bring it up, and described how such a cut will end up hurting seniors, not just insurance companies. Regardless of whether you think Medicare Advantage is a good or wasteful program, there’s no question that cutting it will cause some seniors to lose their current coverage or see premiums go up, contrary to the President’s rhetoric. I looked at the numbers in more detail here: http://sovereignmind.wordpress.com/2009/08/29/i-think-we-all-know-where-its-coming-from/

Yes, but cutting medicare in order to fund some other government program doesn’t decrease the chance that the country goes bankrupt. I just don’t get your argument. I don’t see how cutting medicare to fund separate programs that have nothing to do with medicare is going to help save medicare.

“These cuts probably won’t hurt quality, and will probably make the entire system slightly more sustainable.”

That directly conflicts with the conclusion of the CMS report, which says that it will hurt quality and make the system unsustainable by paying doctors far too little.

“You’re not gonna get 60 votes for simple Medicare reforms without significant political sweeteners.”

The current proposal isn’t “Medicare reform”. It takes money out of Medicare to fund other stuff. If the proposal was actually doing something to help save medicare, I would see your point that we’d probably have to settle for an imperfect bill to do it.

I can see where you have one point: in theory, if the current proposal succeeds at controlling costs throughout health care delivery, then yes, that will have an positive impact on Medicare. However, looking at the bill it seems to me that the focus is not on reducing cost, but instead is on shifting the costs around. The main “cost control” that I see in the bill is really just a “price control” which doesn’t get at the root cause of the cost problem. Therefore, we’re just forcing providers to provide the same level of expensive care, but accept lesser payments for it. That leads to the problems described in the CMS report. But, whether this bill will actually do something to control costs is a debatable point, so if that’s the point your making then OK.

All important issues — but the fundamental one (to me anyway) is this: assuming that the cuts are real and are made good, is it right to roll back current levels of care or access to care for seniors in order to pay half the cost of extending insurance to others?

What in the phrase “controlling cost growth” makes you think that seniors will stop receiving any care at all?

Do you really think a Doctor providing care will actually stop that care if the government only lets him raise prices by inflation + 1% every year?

Cause if you do you I really want to sell you some Medical Services for a mere $5. ‘Cause in like three years I’ll be a Billionaire.

In the extremely long term Medicare is supposed to cost 20% of GDP.

In the nearer term it’s anticipated it will cost 10% of GDP by 2040.

We’ve known these would be problems for decades. In the Reagan years they were dealt with by accumulating a surplus and putting it into a fund. By bankruptcy wonks mean that the actuarial tables say that current income won’t pay for the program, and that fund will be gone.

@blackoutyears:
It’s highly unlikely that this will be repealed if it passes. The dems were going on and on about getting rid of No Child Left Behind, and scrapping Medicare Part D. But they didn’t even try. Right now they’re actually trying to reform Medicare Part D.

The reason is simple: repeals are just as hard as enacting the legislation in the first place. In other words your GOP would need a solid 60-vote majority in the Senate to do it; and in the unlikely event they get that a lot of their 60 votes are gonna be boring moderates. Moderates like Olympia Snowe who actually like the general outline of the program, but have problems with certain parts of it.

Politicians don’t like being known as the guy fighting yesterday’s battles. A complete switch to GOP control would probably result in a bunch of Amendments to this plan, but anyone who thinks they’ll get rid of it is hopelessly naive.

That’s a critically important point. It goes back to when FDR proposed Social Security and worried that the Supreme Court might hold an insurance system run by the government unconstitutional, while voters might object to a tax. The solution was ambiguity, which has survived to today and been extended to Medicare. Both programs are, in reality, transfer payments, funded in whole or part by a tax. That there exist specific “funds” fro each in the federal Treasury is an accounting fiction, and there is no more reason that Medicare (or SS) has to break even on the tax than the rest of federal expenditures must break even with federal revenues. Thus, the “bankruptcy” of either is rhetorical.

Of course, this ongoing fiction makes everyone feel better and roots both programs in a popular sense that “I paid for this insurance, so I’m entitled to its benefits.” On balance, that’s a good thing politically and socially — but it need not trump every consideration every time.

More generally, a lot of the comments have focused on such matters as whether or not the proposed cuts are necessary to secure the Medicare program, whether there is room for improving efficiency in Medicare and whether Congress will really follow through with the cuts or just use them to cast reform as deficit neutral.. All important issues — but the fundamental one (to me anyway) is this: assuming that the cuts are real and are made good, is it right to roll back current levels of care or access to care for seniors in order to pay half the cost of extending insurance to others? And it it consistent with the professed principles of the Democratic Party?

At least not since the Republican congress and President Clinton joined hands and reformed welfare (after two vetos, the President finally joined in, but better late than never).

BTW – payroll taxes more than pay for current Social Security and Medicare payments. Isn’t the “impending bankruptcy” simply when the actuarial tables show that the payroll taxes will no longer be diverted to the general fund, and will be unable to cover all the expenses?

A non-ironic call for GOP cavalry. Yes, clearly only the GOP is smart enough and well-enough organized to save us now.

Great discussion otherwise.

Right. But you were saying we need to cut $500 billion from Medicare in order to help save it.

I seem to have been unclear.
Cuts to Medicare are inevitable. Otherwise the country goes bankrupt. Ergo any senior who justifies opposing this proposal on the basis that he’s protecting Medicare is delusional.

These cuts probably won’t hurt quality, and will probably make the entire system slightly more sustainable. That buys us a few years before we have to choose between firing the army and pulling the plug on grandma.

Cutting might save it if (a) we save the money so that Medicare doesn’t go bankrupt as soon, or (b) we reallocate that money within Medicare in ways that make more sense.

If we lived in a Parliamentary system with a majority government this would be an excellent point. But we don’t. We live in a system with an elaborate system of checks and balances, that are specifically designed to make changing things virtually impossible.

You’re not gonna get 60 votes for simple Medicare reforms without significant political sweeteners. They piss off people who vote (seniors), without making anybody but a handful of extremely dorkish wonks (me and you) happy. You can probably get to 60 if you bribe liberals with more coverage for poor people, bribe moderates with lots of lip service to a market everyone knows has failed, bitch about the hated insurance companies a lot, and blindly obey the Catholic Church’s dictates on abortion.

There’s a reason Bush didn’t try to fix the problem. He knew it was there — “Entitlement Reform” would be easy except for Medicare. And there’s a reason Clinton tried to fix the entire system in ’94, failed, and settled for those stupid automatic payment cuts.

Right. But you were saying we need to cut $500 billion from Medicare in order to help save it. But cutting isn’t going to save it if we just end up spending that money somewhere else. Cutting might save it if (a) we save the money so that Medicare doesn’t go bankrupt as soon, or (b) we reallocate that money within Medicare in ways that make more sense. This bill does neither, and so the choice you are presenting between cutting Medicare and letting it fail doesn’t accurate reflect the choice that we have in this proposal.

Nick, one of the excuses often given for Congress proposing health care insurance reform is the idea that the insurance companies, who average only about 4% in net profit, spend far too much on administrative expenses. How do we know they spend too much? Well, look at Medicare … it only spends a few cents on the dollar in administrative costs.

There’s a difference between administrative costs and profits. Some insurers have administrative costs in the 30% range. That counts CEO pay, salesman, marketing, etc. The best privately-run plans are more like 15%. Medicare is 4%. Add 3% for tough anti-fraud measures, and a body that tries to make sure Doctors don’t go too crazy with over treatment and you’re still way cheaper than private insurance.

kk,

IMO, it’s not very realistic to expect care to be provided to medicare folks at lower and lower costs.

They won’t be because of the bills we’re discussing. That’s my point. In theory the bill will reduce cost increases by several methods, which will mean that overall cost growth of inflation + 1% will be fine. I freely admit that these numbers are not certainties. But I also point out that if we don’t try something like this soon we’re all screwed anyway.

These two cost-control mechanisms depend on one dynamic: that right now anybody in the health care industry can jack up prices without competitive consequences.

There’s a reason care costs more in crappy hospitals than in good hospitals, and it’s that crappy hospitals don’t bother to keep costs low because insurers will pay. And insurers will pay because most Americans think of their insurance as a fringe benefit, not 20% of their salary. An insurer that says no to the crappy hospital is screwed because customers expect to be treated anywhere. An insurer that says yes and quietly jacks up premiums makes a killing because of their larger network. Meanwhile the average American gets no raise every year because insurance premiums suck up the money.

The public option is one. As a non-profit that competes on the exchange it can keep insurers honest. It will also be quite a bit harder for providers to game. Right now they just send whatever price increase they want to the insurance company, and the companies agree because they can just raise premiums. A little competition from the pblic option could force insurers to break that cycle.

The Excise tax in the Senate bill is a second reason costs will stay lower. People won’t like paying the tax, so insurers may try to keep their plans under the limit. Note that if this doesn’t work more plans get taxed, so there’s more money to pay increased costs.

There will be a provider paycut, unless a separate bill is passed, of 21%. An automatic cut that was agreed to back when Clinton and Gingrich were in office. That cut will never happen due to politics, but arguably getting rid of it is irrelevant to the current policy. Which means that it’s in a separate bill, scored separately. It’s not like a successful GOP filibuster of health reform will save that $200 Billion.

Mike said;

Yes, which means if we’re going to make cuts in Medicare, the savings should be applied back to Medicare in order to help make it viable, not used to fund other health care initiatives that have nothing to do with Medicare.

If you apply it back to Medicare it’s not a cut. You’re still spending that $500 Billion on Medicare.

True, but as kranky kritter points out the reason for those increases in reimbursement was the keep up with the increased cost of providing health care. If we cap those price increases the gap between the Medicare reimbursement rate and the private insurance reimbursement rate will rise even faster, which will cause more providers to decide not to accept Medicare entirely, which is what the CMS predicts in their report.

Nick: “A second thing to keep in mind is that major cuts will happen or MediCare goes bankrupt in 2019. And I think most seniors prefer cuts to losing it entirely in 2019.”

Yes, which means if we’re going to make cuts in Medicare, the savings should be applied back to Medicare in order to help make it viable, not used to fund other health care initiatives that have nothing to do with Medicare.

But the debate is all for naught anyway. There’s no way the reimbursement cuts are going to stay cut after the bill is passed.

I know health care reform is important to a lot of people (including me). It is so important to some that they are willing to drive up the deficit to get it. I understand that. I respect that position. What I don’t respect is lying and saying that this bill is deficit-neutral when in fact it is not.

Let’s look at what the CBO has to say on the matter (via http://gregmankiw.blogspot.com/2009/11/assuming-can-opener.html):

“The bill would put into effect (or leave in effect) a number of procedures that might be difficult to maintain over a long period of time. It would leave in place the 21 percent reduction in the payment rates for physicians currently scheduled for 2010. At the same time, the bill includes a number of provisions that would constrain payment rates for other providers of Medicare services. In particular, increases in payment rates for many providers would be held below the rate of inflation (in expectation of ongoing productivity improvements in the delivery of health care). Based on the extrapolation described above, CBO expects that Medicare spending under the bill would increase at an average annual rate of roughly 6 percent during the next two decades—well below the roughly 8 percent annual growth rate of the past two decades, despite a growing number of Medicare beneficiaries as the baby-boom generation retires.”

That’s CBO-speak for “Our numbers have as much of a chance of holding up as pigs will fly. But we are forbidden from considering the chance that pigs won’t fly.”

IMO, it’s not very realistic to expect care to be provided to medicare folks at lower and lower costs. Most reimbursement rates are not generous now. Especially in places like nursing homes, Many hospitals are crawling with staff. Not that there’s anything wrong with that. With closures of smaller regional hospitals, remaining super-regional ones are busy places.

But nursing homes and places like that are pretty fricken leaned out already, to the point where the care is little better than warehousing. And I just can’t believe the idea that the folks working on reform are ignorant of this. So I am sort of forced into at least seriously entertaining the hypothesis that the cuts are part of a plan to make the costs of reform look lower than they will really be.

When my state. massachusetts instituted med reform while Romney was governor, they did the same thing…they said the plan was paid for based on serious estimates. Then of course it turned out that Rose E Scenario did the estimates. More people enrolled than expected, and the per-person cost was higher than budgeted. Oopsie. What a shocker!

Even more importantly, the CMS report finds that the House bill reduces Medicare payments to hospitals and nursing homes over time based on productivity targets. The idea is that by paying institutions less money, they will be forced to become more productive. But it’s doubtful that many institutions can hit those targets, forcing them to withdraw from Medicare.

As for chasing “fraud and abuse,” the states, with federal funding, have been doing that for 30 years. By and large, it has put some abusers in the dock, served as a deterrent, and recovered some money. It’s extremely unlikely that significant aditional sums can be saved in this fashion.