While Medicare and Medicaid are bankrupting federal and state governments because of deep structural flaws, our Congress refuses to address these flaws and to learn from its past mistakes.
Editor's Note: Welcome to Medical Economics' blog section which features contributions from members of the medical community. These blogs are an opportunity for bloggers to engage with readers about a topic that is top of mind, whether it is practice management, experiences with patients, the industry, medicine in general, or healthcare reform. The series continues with this blog by Ken Fisher, MD, who is an internist/nephrologist in Kalamazoo, Michigan, a teacher, author ("Understanding Healthcare: A Historical Perpsective") and co-founder of Michigan Chapter Free Market Medicine Association. The views expressed in these blogs are those of their respective contributors and do not represent the views of Medical Economics or UBM Medica.
Dr. FisherWhile Medicare and Medicaid are bankrupting federal and state governments because of deep structural flaws, our Congress refuses to address these flaws and to learn from its past mistakes.
Medicare and Medicaid have problems that far exceed those of social security. Although besieged by demographic issues, social security pays out a fixed amount per person according to a known formula. Medicare and Medicaid, on the other hand, have no fixed payouts and can reach phenomenal amounts.
Additionally, as medical advances occur, especially those extending lifespan, costs continue to soar. Also, each recipient has no personal advantage in conserving resources, but rather is spending everybody else’s monies.
Because each individual’s taxes into Medicare are not deposited into an individual’s account, but rather spent immediately, these funds do not grow over time. These factors result in each Medicare recipient spending about three times more during a lifetime than was contributed during working years.
In 2015, Congress passed the Medicare Access and Chip Reauthorization Act (MACRA) ending the totally failed SGR, but based it on a fantasy. The fantasy being that through computer information, rather than the individual involved, Congress will assess the quality of care delivered to Medicare and Medicaid patients, and thus, will pay for quality rather than volume.
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Medicine is perhaps the most individualistic effort in any society. What may be appropriate for some patients depending on comorbidities and other factors may be completely inappropriate for others. Instead of patients making the decision that makes sense for them at a particular time in their lives with a trusted physician, Congress via computer algorithms will make that decision and make artificial payments accordingly. It appears Congress does not understand the magnitude of the task they are seeking to accomplish.
There are approximately 55 million U.S. Medicare patients, averaging about five doctor visits per year. There are now approximately 70,000 CPT codes that may or may not precisely define the patients’ problem. Thus 55x106 x 5 x 70x103 = >19 TRILLION encounters to be evaluated by computer for quality/year.
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For Medicaid, there are now approximately 60 million patients with about five physician contacts per year. Thus, 60 x 106 x 5 x 70 x 103 = 21 trillion computer evaluations for quality. We are then asking computer algorithms to analyze quality for approximately 40 trillion patient-doctor encounters per year, all with imprecise information, an obvious impossibility.
Because of the disruption of care with excessive physician time dedicated to computer reporting rather than time with patients, the overwhelming need for more bureaucracy, thereby increasing costs and the absurdity of computer quality assessment, this plan would make good comedy for Saturday Night Live.
Determining quality, although seriously flawed, is the fundamental concept behind MACRA, but there are many other subsidiary components that will further the explosion of the bureaucracy, disrupt patient care and in the end, increase costs.
How to fix this vexing problem? Try an American solution: CHOICE. For those Medicare recipients who wish to do so, annually deposit an annuitized, adjusted amount (approximately $6,000-$10,000) into an expanded health savings account (HSA) that can pay for routine care, a direct care contract and a high deductible health plan (HDHP) for big-ticket items. For these expensive items, patients would pay 1% of the cost from their HSA. For monies left over at year’s end, up to 50% would be carried over in the account if appropriate screening and vaccinations took place, then next year’s Medicare contribution would include a deduction representing the other 50%, thus a savings for the federal government.
The HDHP could be bought nationally and fees would include extra payments for a nationally available catastrophic fund. For others not willing to participate, they would remain on standard Medicare.
For Medicaid recipients, those who wish would receive a deposit into a personal HSA for similar services funded by a block grant from the federal government supplemented if necessary by state funds. Experience with this type of plan in this country has shown better care at far less cost. For the remainder of the uninsured, a similar deposit into their expanded HSA as a refundable tax credit would be made. To eventually relieve the federal government from the burden of Medicare, beginning at a certain age, say around 30, those working could, if desired, have their Medicare payroll withholdings deposited in a special personal health account, made up of 50% government bonds, 50% stock funds, to be used actuarially when reaching retirement age.
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Employees could choose to have their health insurance benefit (which is pre-tax) paid directly into their expanded HSA (which can fund direct care & HDHP for big ticket items) for themselves and each family member. I predict that within a generation, most Americans would have chosen their own patient-directed care, with price transparency and true market forces resulting in healthcare costs in our nation decreasing to consume around 12-13% of GDP rather than the present almost 20% of GDP. Thus, resources would be freed to improve pre-K through 12 education along with improving infrastructure and other critical needs.
Congress MUST deal with the fundamental flaws in Medicare/Medicaid to make them more effective at far less cost, and not repeatedly attempt ever-increasing bureaucratic solutions that inevitably fail.
Give employees choice, maintain present health insurance OR have employers make yearly deposits pre-tax into individual family member’s HSA accounts. Individualize Medicaid and the uninsured (federal deposits) via expanded HSA accounts.
We are the third most populous nation and the most diverse in the world-we need an American approach to healthcare, not a copy from other nations.