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America’s Medicare Spending Spree

This post about Medicare and the medical greed behind its unsustainable costs – the most retweeted of the MedSmarts blog – was first published on August 1, 2012 but was deleted when the site was hacked in late August. While the election negates the concern about voucherizing Medicare from the Oval Office, the AMA’s recent decision to adopt this rejected policy renews the debate. This prompted me to re-post this with minor revisions reflecting the current state of affairs.

Medicare Costs Driven By Greed

Medicare costs and healthcare spending in general in America has ballooned well beyond anything seen in other developed countries. The following graph illustrates this fact better than mere words (U.S. spending is represented by the top line). 

Medicare and all healthcare costs in America are driven by medical greed

Our political leaders have no clue how to correct this uniquely American phenomenon. So they’re fighting instead over how best to reallocate the financial burden to consumers.

Privatizing Medicare

Republican leaders – and the AMA – seem to favor taking it out on Medicare recipients. These, of course, have the greatest need for medical attention and the least income-producing opportunities to pay for it.

Liberal economist Paul Krugman’s piece last year in The  New York Times (“Patients Are Not Consumers”, 4/20/11) targeted Republican budget proposals to replace Medicare-as-we-know-it with a voucher system – a.k.a. privatizing Medicare.

There are many reasons to oppose privatizing Medicare. Not least of these is the fact that private insurers in America have little experience insuring those over 65 – whose medical risks far exceed those under 65.

Leaving these high-risk patients holding the bag for healthcare spending over an annual subsidy, variously estimated at $8-15,000, while doing nothing to correct the abusive medical practices that drive medical spending well beyond this limit is another compelling reason to deep-six this ill-conceived proposal. 

The plan Krugman was addressing – the Ryan plan named after Congressman Paul Ryan (R – Wisc) – has since been modified in cooperation with Senator Ron Wyden (D – Ore) and is now the basis for the House’s preferred approach to Medicare “reform”. This hybrid approach would allow seniors to remain with Medicare as it is today or opt out in favor of private health insurance with a Medicare stipend or “voucher” to apply to their private insurance premiums.

This is analogous to when corporate America switched from defined benefit retirement plans to defined contribution plans. Instead of paying  for a set of benefits – as Medicare currently does – this plan would substitute a fixed contribution by Medicare toward Medicare recipients’ private health insurance premiums.

Under such a scenario – which was been endorsed by former presidential candidate Mitt Romney – it’s estimated that seniors who opt out of Medicare and can afford an insurance plan similar to current  supplemental insurance plans will spend another $40-340 a month for health insurance compared to their current costs with Medicare. Those who can’t afford that would be liable for all their medical costs above the limited coverage their Medicare vouchers will cover, which could easily reach into the tens of thousands of dollars and more.

This latter group, of course, would be well-advised to remain with traditional Medicare, but some may opt out for ideological or other reasons and be left holding a very large bag of medical bills.

All About the Benjamins

Krugman, however, relies on a different argument.

He suggests that medical decisions are complicated, and often urgent, and that patients are therefore in no position to behave like buyers of consumer goods.

This ignores the fact that an estimated 75% of our healthcare spending is on chronic disease care. This is generally not urgent and viable treatment choices do often exist.

He further laments that,  “The idea that all this is related to money – that doctors are just people selling services to consumers of health care  –  is, well, sickening”.

I’d like to support Krugman’s noble view of the medical profession. And there are, of course, many doctors who still try to practice ethically despite all the pressures and inducements for them to do otherwise.

But my research for Our Healthcare Sucks and MedSmart Patients tells me they’re a dying breed and that Krugman’s at least a generation too late for all this lamenting about the commercialization of healthcare.

That horse has already left the barn. Krugman – like most on both the left and right – utterly fails to acknowledge this fact.

 The Oxymoron of Medical Ethics

This is borne out by his naive assertion:

“That’s why we have medical ethics. That’s why doctors have traditionally been viewed as something special and been expected to behave according to higher standards than average professionals”.

He neglects to mention how miserably a growing proportion of doctors is failing to live up to these expectations. Unfortunately, “medical ethics” is fast becoming an oxymoron in contemporary medicine in much of America.

As thoroughly documented in Our Healthcare Sucks, much of our excessive healthcare spending is directly attributable to deceptive medical practices.

These include unneeded medical interventions that vary dramatically across America. They vary with the number of specialists practicing in a given community with inflated income expectations they’re driven to meet by performing more  surgeries, tests and procedures than patients actually need.

They also include, in many states, physician-owned medical services that encourage them to over-refer patients because of the financial gain they receive. This has been shown in studies to increase costs by up to 7 1/2 times.

The third mainstream medical practice designed to protect doctors’ incomes at patient expense is defensive medicine itself. 94% of doctors surveyed admitted to practicing defensive medicine, including hospitalizing patients solely to protect their doctors from imagined lawsuits.

All of these are inherently unethical and all are motivated by greed, not altruism.

Some of these practices are more subtle than others. Case-in-point: The leading cardiology professional associations produced Clinical Guidelines for the appropriate use of cardiac stenting (PCI) procedures several years ago.

Yet interventional cardiologists still find it necessary to call for stronger professional oversight to correct the rampant misuse of these invasive procedures by profit-obsessed specialists in their midst (“Doing the Right Thing: Appropriate Use of PCI”, theheart.org). One study in The New England Journal of Medicine found that stenting caused heart attacks in 5 – 30% of patients.

Does that sound like these doctors are behaving “according to higher standards than average professionals”?

The scary truth is that healthcare in America has already been reduced to money – with or without Medicare vouchers.

Supplying More Victims…

As these mainstream examples demonstrate,  medical ethics in America have largely been compromised beyond recognition.

Yet many liberals seem to think we’re still living in the fictional world of Marcus Welby, M.D., and our only problem is poor access to medical care.

The evidence from Massachusetts – the only state we have as a prototype for health reform – shows  that fixing poor access to care with mandated health insurance doesn’t reduce healthcare spending. In fact, it accelerates it, as it did in Massachusetts and as common sense would dictate.

Unless the underlying drivers of our excessive medical spending are addressed directly, all increased access to care will do is further fan the flames of medical greed and corruption by supplying more victims to be exploited.

Ideology Isn’t Evidence

Is privatizing Medicare a good idea?

It’s a horrendous idea on many levels.

But the status quo of rampant medical errors and unscrupulous exploitation of unsuspecting  patients by profit-obsessed doctors and hospitals isn’t exactly worth preserving either.

Both ends of the ideological spectrum have it wrong on healthcare because they’re focused on who should pay for our unsustainable medical spending rather than on the spending itself.

No one wants to recognize the 800-pound gorilla in the room – greedy exploitation of uninformed and unsuspecting patient-victims that’s driving our exorbitant medical spending.

A New Patient Paradigm

Until we stop dancing around this gorilla and get him back in his cage, the only answer to this medical  mayhem is what Krugman resists.

Patients have to become smarter medical consumers – not only to make our new reality of greater self-insurance work, but to protect themselves and their families from the “soft fraud” going on in the everyday practice of American medicine.

As for the insurance piece, we’re already well on our way to self-insurance.

Employees and the self-insured are facing not just a doubling of their medical costs over the next ten years or so, but a TRIPLING as cost-shifting ramps into overdrive. This is the only politically palatable “solution” to our unbridled medical spending spree.

The Republican nominee for President even bragged about wanting to give consumers more “incentives” to shop around for their healthcare. That’s code for it costing you more out of your own pocket.

You know we’ve reached some kind of looney-tune crescendo in American politics when a candidate for President campaigns on raising your healthcare costs.

Not that the other side has an ideal solution either.

The ranks of the uninsured may be reduced by healthcare reform. But the ranks of the UNDER-insured are virtually certain to explode as high-deductible insurance plans become the only (barely) affordable option for strapped American families – even those lucky enough to still have employer-based insurance coverage (see “Bearing More of the Burden“).

But because it fails to aggressively contain healthcare spending and get tough on abusive medical practices that exploit patients’ ignorance of their actual medical needs, health reform will make only a dent in our current medical spending trajectory.

Is it better than the free-market alternatives proposed by their opponents? Yes, for they’d make a bad situation even worse by deregulating healthcare altogether and duplicating the worst abuses found in the “Rip-Off States” identified in Our Healthcare Sucks.

But healthcare reform is no panacea – far from it.

Both Sides Have It Wrong

Liberals may not like the idea of patients needing to become better medical  consumers. And conservatives may have the wrong idea about why it’s necessary and what exactly it means.

But relying on either the government or the industry itself to right this ship hasn’t worked to date. Nor is it likely to in the future.

Only smarter and more assertive medical consumers have any chance to avoid being exploited and physically harmed by shoddy and selfish medical practices that are fast becoming the norm in American medicine.

And it has nothing to do with their political ideology.

Weigh in with your own thoughts by commenting below.

This article is provided for informational and educational  purposes only.
It does not constitute medical advice and should not be relied upon as such.

 

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4 Awesome Comments So Far

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  1. Donald Quixote
    August 21, 2013 at 7:05 pm #

    Hmmm, having read a number of articles it really appears to be a social commentary rather than a political one. The problem seems to be the dishonesty and greed that has infiltrated our society. The problem may not be more or less legislation but a push to the grassroots morality that this country was built upon.

  2. Kathrine
    February 1, 2013 at 10:57 am #

    I second that! Great information and well explained. Thank you John. Your research is extremely valuable

  3. Annie
    December 5, 2012 at 6:20 am #

    Very informative post.Rise in health care costs is a great matter of concern. In my opinion privatization of Medicare, will not be good for the society as there are more chances of increasing health care cost.

  4. Annie
    December 5, 2012 at 6:14 am #

    Rise in health care costs is a great matter of concern. In my opinion privatization of Medicare, will not be good for the society as there are more chances of increasing health care cost.

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