[from Joel] I wonder if you folks who are retired have had the same experience as I did. When I reached age 65, I became eligible for Medicare. My private health care insurance told me that I had to apply for Medicare or lose my coverage with them. They then became my secondary provider after Medicare. The meaning of this was that after collecting the insurance premium for about forty healthy years, my insurer was able to transfer the responsibility for my expensive years to the government. This seems like fiscal insanity for the government. No wonder Medicare is going bankrupt! It would seem that it was designed to go bankrupt. Does anyone remember why LBJ did this? Medicare should be secondary instead of primary, or primary for those who have no insurance. -Joel
Monday, August 24, 2009
Medicare
[from Joel] I wonder if you folks who are retired have had the same experience as I did. When I reached age 65, I became eligible for Medicare. My private health care insurance told me that I had to apply for Medicare or lose my coverage with them. They then became my secondary provider after Medicare. The meaning of this was that after collecting the insurance premium for about forty healthy years, my insurer was able to transfer the responsibility for my expensive years to the government. This seems like fiscal insanity for the government. No wonder Medicare is going bankrupt! It would seem that it was designed to go bankrupt. Does anyone remember why LBJ did this? Medicare should be secondary instead of primary, or primary for those who have no insurance. -Joel
There is NO reason for Medicare to be primary, Joel - it's just government policy :^)
ReplyDeleteMy wife and I were also covered by private health insurance via our employer during our healthy working years. During that period, our premiums were zero but we had a maximum out of pocket of around $2000, but our average out of pocket was much less than that.
Towards the end of our working years, in the mid 1990's, our employer capped their contribution to health insurance at around $3,500 and we started paying a share of the premiums.
Our share increased each year until I went on Medicare and it dropped a bit, then increased again until my wife went on Medicare then increased again. We are now both on Medicare and our employer is paying around $3,500 and we now pay around $6,000 in premiums, plus out of pocket of a couple thousand, for a total of almost $12,000 a year.
If Medicare was secondary to our private medical insurance, our premiums would be much, much higher. Our younger friends who are still working for the same company, and retirees who are not yet 65, are paying even higher premiums.
The average Medicare beneficiary will receive around $200,000 in benefits between age 65 and death, which is around $15,000 to $20,000 per year. Of course, some of us will be healthy or die early and collect much less. Others, who can be kept alive with intensive medical care for decades, despite chronic or terminal illnesses, will collect much, much more.
The whole point of End of Life counselling (and QALY and CER) is to convince (or require) the chronically or terminally ill to accept palliative treatment. As medical technology becomes ever more effective at extending life, at ever-increasing costs, we have to do something or total medical costs will grow beyond limit.
Medical care is now around a sixth of the US economy. If it grows to a third, which it will within a decade or so unless we act soon, we will be increasingly non-competitive in the global marketplace. Read Why We Must Ration Health Care, NY Times Magazine, July 15, 2009 and weep!
Ira Glickstein
Thanks Ira. I don't understand why you would pay more if your private plan became secondary. Doesn't a secondary insurer just pick up the difference if Medicare doesn't pay for some reason? -Joel
ReplyDeleteJoel, I wrote "If Medicare was secondary to our private medical insurance, our premiums would be much, much higher. Our younger friends who are still working for the same company, and retirees who are not yet 65, are paying even higher premiums."
ReplyDeleteIn other words, if our private insurance was PRIMARY and Medicare was SECONDARY, our PRIVATE plan premiums would be much, much higher. That is because the insurance company would have to pay for most of our medical bills and Medicare only for a lesser amount.
Right now, our private plan premium is about $6,000 and my employer is paying about $3,500, for a total of $9,500 to our private insurer per year for coverage of the two of us. If that $9,500 is actuarily correct (that is, if our private insurance company is paying out benefits of about $9,500 minus reasonable operating expenses and profits to the average person in our cohort) and that is only secondary coverage, then the average cost to Medicare primary insurance for a couple in our cohort is several times that amount.
Ira Glickstein
John S asks, “What is the philosophical difference? It is the difference between health as the responsibility of the individual (“If you could afford it you got it if not you didn’t.”) and “a form of socialized healthcare that is, admittedly at the outset inadequate and too expensive.”
ReplyDelete“Time and again over the past century, there have been attempts to make the health care system more effective and efficient, the only real success being the passage of Medicare and Medicaid in 1965. Since then, various stakeholders have managed to block any efforts at restructuring that have threatened their profits.” Levine in NEJM.
Levine agrees with many doctors I know: “To reduce administrative costs and simplify the system . . . a single-payer system . . . is mandatory. Of course, this concept is anathema to free-marketeers and does not currently have much public resonance — largely because Americans have been misled by negative advertising and denigration of the single-payer approach by politicians and others who label it “socialized medicine” and government interference in medical care.”
Ideological arguments like these will not solve this type of complex problem. Health care has too many special interests to be cost effective without a Medicare type of system. This is no more socialism than the Federal Reserve or NIH.
According to a news program today there is concern that radiation from excessive medical testing could be causing more harm than good. These types of tests have increased four-fold over the past couple decades.
ReplyDeleteWhy? The answer to that question explains, at least to me, why the idea of a "single-payer" system, like Medicare, as suggested in Howard's comment, has unwelcome side-effects.
Food is certainly more basic than medical care. Say we had a single-payer system for food! A person can eat only so much, so, if a single-payer funded all food, the total amount eaten would not increase that much. BUT, I'LL BET THERE WOULD BE MUCH MORE STEAK AND LOBSTER THAN HAMBURGER AND FISH STICKS!
If the "single-payer" pays the supplier of a product or service to benefit the ultimate consumer there is no limit to how extravagantly money will be spent.
Over the past few decades a combination of private and public insurance has funded an ever-increasing portion of health care. For those of us with coverage, only a small percentage comes directly out of our personal pockets. That, and outrageous malpractice payouts, has doctors doing tests that are medically unnecessary but useful in defending malpractice claims. "We did everything we could."
Of course, for those of us who are working (or retired from) paying jobs, ALL of the money spent on our medical care ultimately comes (or came) out of our pockets - but only after it is homogenized with everyone else's contribution by the "single-payer".
Ira Glickstein
Ira,
ReplyDeleteAt least read Levine's article. His point is that single-payer is the only way to control "side-effects" that you are complaining about.
Everyone agrees that our present hodge-podge of private insurance programs is not working and is out of control.
OK Howard, I read Levine's piece in the NEJM you linked to. I agree with much of it (though probably in some cases for reasons different from Levine's). (His verbatim text is in italics.)
ReplyDeleteIRA AGREES WITH THE FOLLOWING:
It has been clear for some time that the primary hurdle to enacting health care reform is figuring out how to pay for it. Virtually all Republicans and some Democrats have been unwilling to sign on to increasing taxes on high-income Americans as a partial answer. The idea of taxing the most generous health insurance benefits has met with resistance as well. The use of electronic health records and an emphasis on prevention and early treatment of illnesses have been ballyhooed as ways to generate savings to help pay for reform, but there is no solid evidence that these measures will reduce spending anytime soon, although they might improve care. Unfortunately, legislators are ignoring the option of funding reform by harvesting available savings from within the health care system itself. I believe Congress must go back to the drawing board. Given the state of the economy and the continuing rapid growth in health care expenditures, lawmakers need the political will to devise a plan that will control accelerating costs and be budget-neutral — and to disregard the expected backlash from stakeholders (organized medicine, the insurance companies, the pharmaceutical industry, and the trial lawyers) and an uninformed public. ...
Some drivers of health care costs (such as demographic changes) cannot be controlled; others (such as unhealthy lifestyles) are difficult to attack. However, great savings could be achievable in two areas: administrative costs and unnecessary care. ... {Right on! That is why I favor outcome-based reimbursement, QALY and CER. In other words, rationing. Admin costs can be reduced with secure universal digitization of medical records. But, I do not believe a single-payer government plan will reduce admin costs.}
Unnecessary care is believed to be responsible for as much as 30% ... This problem results largely from the perverse incentives built into the health care system ... The need for these services is determined by the very physicians who then arrange for or perform the procedures. This is not the way a high-quality health care system should work. ... Even if all physicians were highly ethical and ordered only tests and treatments they deemed truly important, it would take saints not to have their judgment skewed in favor of ... financial rewards. Defensive medicine also generates unnecessary care, ...
NOTE: Blogger limits postings to 4,096 characters so my DISAGREEMENTS are in a subsequent comment.
Ira Glickstein
This is the second part of my reply to Howard. Text in italics is verbatim from the Levine NEJM item Howard linked to.
ReplyDeleteIRA DISAGREES WITH THE FOLLOWING:
...there have been attempts to make the health care system more effective and efficient, the only real success being the passage of Medicare and Medicaid in 1965.... {Although I personally appreciate Medicare as a way to transfer money to my account from younger people currently paying taxes on their earned incomes, I do not think it has made the medical system either more effective or efficient. Indeed, it is the primary reason for runaway cost increases. If "someone else" is paying, most people will choose lobster and steak over fish sticks and hamburger. Doctors and hospitals will do more expensive procedures that may or may not be worth their higher costs.}
The current crisis presents a similar opportunity to provide high-quality health care coverage to all Americans while bringing spending back in line. ... To reduce administrative costs and simplify the system, I believe that a single-payer system that provides universal coverage is mandatory. {Yeah, never let a good crisis go to waste! Yeah, government programs save money and always come in at or below estimates. NOT!}
The dollars lost to fraud are ... 3% ... {I think fraud, broadly defined, is well over 10%.}
It is amazing Levine does not mention the main way to control health care costs, currently used, admittedly with limited success, by both the government Medicare program and private insurers: Namely RATIONING, by delaying approvals until patients get so ill they can't be saved or they die.
Levine does not mention anything like QALY or CER which would be rationing, yes, but much more logical and fair to both patients and the public that has to pay.
(And, as always, the really rich will be able to buy extra insurance and/or pay al a carte for care not deemed cost-effective for those in the public system, the way well-to-do Canadians and Brits come to the US or other countries to get care faster or above and beyond what is allowed by their NHS.)
Ira Glickstein