Medicare Blog 3: Scouting the Rapids - Part 2

I have started a series of blogs on the Medicare problem facing our country, using the metaphor of navigating whitewater rapids. Last week, I began "scouting the river" by discussing the current course and the generational divide, between workers and their parents and grandparents, that awaits us in the future.

I have a son who is 30. He and his wife are just beginning their household. They have one young daughter and another baby on the way. They are in many ways becoming a typical American household. This is a wonderful thing to see as a parent, but I worry about our national economic future; I worry about our growing generational divide.

Let’s consider what their generation’s economic prospects look like over the next two decades. The typical household is going to see its health-care spending basically double in the next twenty years—from 23 percent to 41 percent of total compensation. At the same time, we are going to nearly double the share of federal spending that goes to pay for Medicare, from 13 percent to more than 23 percent. We are going to do this while the number of working people per Medicare beneficiary is sliced nearly in half, from four to two-and-a-half.

That is clearly not a rosy scenario for growing young households like my son’s. These working families will argue, “My generation did not agree to this arrangement. This is happening at a time when my own health care is unaffordable. I have children who need food and clothes. I’m struggling to make ends meet. Seniors need to either have lower benefits or pay more of the cost themselves.”

In fact, they will insist, “We are the ones with the heavy burden. Government needs to help us more so we can continue to work and enjoy the benefits our parents did.”

But their parents and grandparents will have legitimate worries too. They will argue, “I did my time. I paid into the system. I have a legal entitlement for health care, and the government has a moral obligation to provide it. I know the demographics have changed, but that isn’t my problem.”

In fact, seniors will argue, “Health-care costs are so high, my Medicare premiums, co-pays and deductibles are eating up almost half of my Social Security check. You need to help us more, not less.”

The problem is: both will be right. The problems we see today with Medicare have the power to pit these parents and children against each other in an intergenerational economic struggle where each side will suffer.

Frighteningly, we will see that competition for resources play out much like another economic tension we are already experiencing. Our choices about social investment—in infrastructure, education, national defense—are being reduced as mandatory spending crowds out discretionary spending. In the last two decades, we’ve gone from half of our national spending being discretionary to only 38 percent. In four years, it is projected to be down to less than one-third.

We are seeing mandatory health-care expenses crowd out other government spending—just as we are going to see health-care spending crowd out non-health-care spending in American households.

By now the current has grown so much that we are being sucked down into the hydraulic whirlpool again and again, with little surface time for air. The debris is piling up, and we may not have a way out.

We may not have a river guide like Matt Knot to navigate Medicare, but we can anticipate what is forthcoming and make efforts to change our course. In my next entry, I will share what I have learned from other nations that have scouted the river.

Comments

“The typical household is going to see its health-care spending basically double in the next twenty years—from 23 percent to 41 percent of total compensation. At the same time, we are going to nearly double the share of federal spending that goes to pay for Medicare, from 13 percent to more than 23 percent. We are going to do this while the number of working people per Medicare beneficiary is sliced nearly in half, from four to two-and-a-half.”… Respectfully Sec. Leavitt, all of this will happen if we don’t do anything about it. Twenty years is a long period of time. Twenty years ago Medicare spending was in millions, and now it is in billions. Back in those day x-rays were basic diagnostic tool and now we have CT, PET CT, MRI, just to name few. That shows how much can change in twenty years.

The struggle to balance cost, quality, and access will remain an ongoing focus for the future. Healthcare has become a trillion-dollar-business. In order to make profit, healthcare entities are going to continue to ask to be paid for all services provided, or for as many as possible.

Posted by: C.S. | June 17, 2008 at 07:13 PM

Sec. Leavitt- I am enthusiastic about a proactive approach to increasing the efficiency of our health care system. Physicians and medical practitioners spend ineffective hours filling insurance claims in paper form. This limits their time to be spent on the growing elderly population as well as the young.

Rivers change as the water flow increases and decreases. As we navigate the hydraulics in this dynamically changing "class five river" We need to seek a new path. Electronically filing claims, with a wider range of code sets (beyond the limits of the AMA) to encompass the full spectrum of health practitioners, is a way to effectively use the time of our nations healers. This is also a way to get the money moving quickly through insurance companies and the practitioners. and putting it where it counts - between the practitioner and patient.

Through adopting a wider code set more medical professionals will be able to help more of the public. The health of our nation can only be improved, and have quantifiable and qualitative data available to learn and adapt to the needs of our citizens if we proactivly approach our existing system and have a look "down river" so we can better evaluate our present and future needs, while improving upon the quality of care we presently have.

Many medical practitioners and their therapies and diagnoses are not recognized by our current system. These out of pocket expenses that HSA's do not allow payment to also limit the quality of care our citizens are capable of acquiring.

Posted by: Ethan Hampton | June 18, 2008 at 02:33 PM

Sec. Leavitt, I have few more thoughts to share with you and your readers…
I believe one big problem here is that Medicare seems to be one-size-fits all system. First of all, all physicians are paid the same way, based on their specialty;regardless of how good of a job they do. Hospitals, I believe, are also paid the same way. But, why not develop some sort of rating and grading system. It might encourage some sort of competition, development, encouragement. Also, how many hospital and free standing facilities does a city need? I live in a small city with four hospitals within 20 min range and numerous MRI, x-rays centers. I could literally have an x-ray taken across the street, behind my house, and if I would want to take a walk, go two blocks down the street. I know there is formula that takes into account the number of citizens and some other factors, but for my “common sense” it serves no good. Supposedly it should reduce the cost, but how? Physician is going to invest the same amount of money regardless of your reimbursement allowance. Of course, he’ll ask you to pay him 100%. And if you pay him 80% next time he’ll ask for 120%. And there we go, healthcare fraud/ 60 billion a year…Bottom line, hospital’s reimbursements rate is just as good as the billing department.
I also believe that the billing procedure takes way too long. As I understand it, I put a charge in which goes to my department’s billing office. From there, it goes to the hospital’s billing department. And then, finally, to Medicare. If Medicare denies it, we see auditing personal in the department. Why am I bringing this up? Recently, I had an auditor ask about a charge for a patient that was treated over a year ago. That same patient might not even be among us and we have not even received the reimbursement for the procedure!! Speed up the billing process, make it easy, and reduce the administrative cost. Simple as that…

Posted by: C.S. | June 18, 2008 at 06:46 PM

After watching a special put on by Frontline recently I am more convinced than ever we must go to a single payor health plan. We keep getting market forces thrown at us. Tell me how market forces have kept the cost of healthcare down. All the hospitals around me have big building campaigns going on. The buildings are beautiful, etc. Mr. Leavitt you mention your role in Part D for seniors drug costs. How did you possibly think we could afford this when the drug and insurance companies wrote the plan. Thus, the costs of drugs were not kept down. It is not a generational divide, it is a divide between the drug/insurance company lobbyists buying out our legislators. If you only did what was right for this country and not what is best for corporation's profits there would be no need to discuss generational divide.

Posted by: M. Warren | June 18, 2008 at 08:00 PM

Mr. Leavitt, I believe it is time for a limited experiment. I am a firm believer and user of complimentary and alternative medicine (CAM). Do you take vitamins or supplements? Then part of you believes in CAM.
I would propose the following: 1. Take volunteers with varying ailments, and carefully documenting their condition - even using several different disciplines to do so.
2. Let each disciplne explain their theory and mode of treatment along with the expected length of treatment, expected cost, and expected outcome to include several 'quality of life' determinants.
3. The 'patient' then chooses which he would like to try and submits to that course of treatment.
4. Treatment, cost, and progress is closely documented along with changes in quality of life at predetermined intervals.
5. Make the results widely available on the internet without personally identifying information.

I would open this to as many disciplines as possible and even make a predetermined amount of funding available. This would become a 'Consumers Guide' to sick-care/health-care.
Good luck on keeping it unbiased and non-political.

Posted by: S. Muhn | June 30, 2008 at 05:32 PM