Medicare Blog 7: Committing to the Course and Paddling Hard -Part 2

This will be my last post in the blog series on my comments to the Medicare Trustee's Meeting, held on March 26, 2008. I have used the metaphor of canoeing whitewater rapids to explain the disaster that lies ahead on our current course and how safety depends on repositioning the boat. Yesterday, I explained how important it is to make "value of care" rather than "volume of care" the most rewarded virtue in health care. Today, I will explain how Medicare Parts A and B can be changed to allow competition to drive change and how change can avoid an intergenerational struggle.

Make Medicare Parts A and B, more like Medicare Part D.

In addition to changing the incentives from volume-rewarding to value-rewarding, the Medicare Part D Prescription Drug Program provides a good example of how better transparency and competition can drive change. It has not only ensured that seniors get the drugs they need, it has also demonstrated that seniors can use an organized marketplace to drive quality up and cost down.

Today, 90 percent of those who are eligible have drug coverage; satisfaction rates are high, and the cost is almost 40 percent below the original estimates. While there are several things that have contributed to the drop, a big one is the power of a competitive marketplace. Prices are determined through competition. The cost of the benefit is transparent to consumers and they can choose the benefits that meet their needs.

If the Medicare Part D structure were applied to Medicare Parts A and B, it would revolutionize the entire system. Imagine a physician practice investing resources to monitor and track patients with chronic conditions. They might if the program provided beneficiaries with information on the quality-of-care and their dollar savings if they used more effective providers. It would drive quality up and cost down.

Each generation needs to do its share.

My father and mother are on Medicare. They worked hard all their lives and have done well. My dad likely earns more than my 30-year-old son I told you about earlier. My son is struggling to buy a home, support his family, save for the children’s college fund, and buy his health insurance. Yet, my son has taxes drawn from each pay check to subsidize my parents’ health insurance.

Medicare can be made more efficient by rewarding value and shifting to a Part-D-like competitive model of delivery. However, what remains the most important obstacle is rebalancing the generational obligation.

This is a classic public policy decision that has to be faced. It is unreasonable to think Medicare can be sustained unless this is changed. If we start now, the change can be made over time and with genuine fairness. We can avoid an intergenerational economic struggle from which both sides suffer. Promises to today’s and future beneficiaries to provide coverage of health care must be kept, but not at the expense of future generations.

Medicare is indeed drifting toward disaster, but we know what to do. Matt Knot’s river advice is the key: “Start positioning your boat well ahead of the danger, commit to a course that averts the problem, and paddle hard.”

Every generation of Americans has overcome challenges to secure our nation’s role as the world’s economic leader. I believe solving the health-care puzzle is this generation’s challenge. It will require change.

In a global market there are three ways to approach change. You can fight it and fail; you can accept it and survive; or you can lead it and prosper.

We are the United States of America; let us lead.

Comments

Are the republicans really serious? Do they think the american public is so moronic and forgetful that the don't remember when they ran their shenanigans the previous 8 years? They cry that nobody is negotiating with them on the Medicare bill. Where were they the last 8 years when the republicans would not negotiate with the democrats on anything? Is this the only lame excuse they can come up with for hitting seniors and doctors below the belt? Any of them wonder how much Bush has been promised by the insurance companies for not cutting Medicare Advantege plans? Any body see how eager United Healthcare is to sign up as many seniors as quickly as possible, either by hook or crook into their medicare advantage plans? Do any republicans think it is horrible that those insurance companies are making a nice healthy 40% profit margins?

Posted by: PP | June 28, 2008 at 11:57 PM

Instead of reducing what Medicare is paying doctors the program should renegotiate with the Pharma companies. These companies are charging ridiculous amounts for RX medications and are getting away with it because of the current administration. Seniors are happy? Talk to a few of them who have exhausted coverage in June and have to spend large amounts of money from their fixed incomes just to pay for medication they can't live without. I am certain all the poles are taken in the first or second quarter of the year. If the drugs were reasonably priced there would be no need for the 'donut hole'. The secretary needs to negotiate a much better deal for the American people, at least as good as the people in Canada get. I have worked in healthcare for many years and I know how this racket works, and its been protected for far too long. Gloria Payne, RN

Posted by: Gloria Payne | July 23, 2008 at 03:48 PM