Medicare Blog 5: Positioning the Boat and Avoiding Disaster

Last night, I posted a brief entry about my conversation with Ted Kennedy, and today I am returning to my series on Medicare. In this series of blog posts, I am using the metaphor of navigating whitewater rapids to describe the dilemma of the Medicare problem facing our nation. I concluded my post yesterday by stating that if we are to avoid the disaster of Medicare insolvency by 2019, we needed to change our course in a way that will affect the entire health care sector.

There is a very close relationship between Medicare and the balance of the U.S. health sector. Medicare is such a powerful payer; the rest of the sector has based their billing and reimbursement mechanisms on Medicare.

I believe the key to health-care reform in our nation is Medicare reform. Successfully changing Medicare will trigger the rest of the health care sector to follow. That would be better news if changing Medicare were not so politically and bureaucratically complicated.

Since I am speaking in my capacity as a Trustee of the Social Security and Medicare Trust Funds today, it is important to acknowledge that this job is about sounding the alarm. I hope I have made clear to you just how alarmed I am and how alarmed we should all be. There is serious danger here.

It troubles me that this matter is not receiving more attention in the Presidential candidates’ discussions. The next President will have to deal with this in significant part. In fact, if they don’t deal with it, our opportunity to apply Matt Knot’s strategy of repositioning early and paddling hard is lost.

So, given the strong possibility this won’t get fixed in the next 266 days, I would like to add some general advice on the creation of a political construct for action and a general strategy to solve the problem. I want to add, these are not being presented as Administration policies or proposals. I take complete responsibility for them as a Trustee simply laying out my thoughts.

In our country we maintain special facilities called “Level Four Laboratories” for handling lethal biologic agents. It would be unreasonable to expect anyone to handle lethal bio-agents without special protection.

To members of Congress, fixing entitlements like Medicare is lethal. Persuading them to accept the inherent risks will require a system of special political protection. Without it, Congress is unlikely to ever deal directly with Medicare’s problems.

In an era where Election Day marks the beginning of the next campaign season, the degree of bipartisan statesmanship needed to solve the entitlement problem will be hard to come by. It will require what I call a partisan eclipse — a brief moment of time when political planets align to create an opportunity.

Partisan eclipses are often brought on by a crisis or national emergency. They can also happen in the vortex of a political storm. There are moments during certain election cycles when both parties feel mutually at risk of being the minority party.

During the final weeks of the 2006 election for example, it was not clear whether either party would win control of both Houses of Congress. Both parties were competitive but neither had the benefit of certainty. While the situation presented intense partisanship on most issues, it also represented a rare moment of opportunity for leadership.

What if leaders of both parties in Congress had met privately and acknowledged that while they could not agree on how to fix Medicare, they could agree that the approaching Medicare insolvency had to be dealt with. Both would likely be motivated by an understanding that it was in their party’s long-term interest because solving such a problem would be especially costly in political terms to the party in power at the time the dilemma matures.

I grew up in a family of six boys. My mother would often resolve disputes over the remaining portion of a dessert by requiring one brother to cut the pie and the other to choose the first piece. The equilibrium of uncertainty created an elegant self-enforcing fairness.

What if Congressional leaders used this political equilibrium of uncertainty to define a process not for themselves, but for a Congress and President to be elected years in the future? What if that legislative process they agreed on was so scrupulously fair and bi-partisan that either party would be willing to proceed even if they were not in the majority? A partisan eclipse will occur in the future and it should be used to provide political protection and a viable path forward at a future date.

The legislation resulting from the partisan eclipse must incorporate another practical principle: separate commitment-making from pain-taking. The bill should establish measurable trigger points for action. For example, if Medicare currently constitutes 3.2% of GDP, when the government actuary declares Medicare expenditures to it to have exceeded 4% of the GDP, a special decision-making process would be triggered.

The special process could resemble the one Congress has used successfully for military base closure. A special bipartisan committee was established to assemble a proposal. The proposed plan is submitted to the President for review. Within a time certain, the President is required to approve or disapprove the entire plan. Once the President approved a plan, it was submitted to Congress, where they could not amend the proposal, but were forced to vote the proposal up or down within a specific time frame. It worked.

It would be critical that the law enabling this special process also include one other provision. If either the Congress or the President fails to act, a series of default provisions must be triggered which solve the problem. Without A default trigger, Congress will not act. Senators Judd Gregg (R-NH) and Kent Conrad (D-SD) have offered bi-partisan legislation creating a special legislative process.

Finally, there is a group of budget estimating tools referred to as scoring conventions that are used universally across the federal government. Many of the tools Congress will need to reform Medicare will involve significant behavioral changes and require investments that the current scoring conventions would count solely as expenditures. In an age when the power of investment and productivity are the keys to success; the federal scoring conventions overvalue the status quo while undervaluing the investments that could transform it. Many have called for these to be modernized. I add my voice to that chorus.

We are beginning to understand how to reposition Medicare to avoid the dangerous rapids of insolvency, but we must commit to the course and paddle hard if we are to achieve a Medicare System that can be sustained through the 21st Century. Tomorrow, I will conclude this blog series by outlining the characteristics of a system that can be supported through future generations.

Comments

Secretary Leavitt,
I am concerned that nothing is said in your blog about the cost of health care to the patient and his/her insurance company. The increase in prices for medications and medical supplies far outdoes the rest of inflation; that is why it is taking more and more of the GDP to pay for it.
I feel strongly that there ought to be some cost controls instituted in some way on medical supplies and medications in order to control the cost of health care. I understand that under capitalism prices are allowed to rise as high as they can, but THAT is what is killing the insurance companies!
Sincerely,
Peggy J Mathis, RN, FNP-BC, MSN
CDR,US Public Health Service

Posted by: Peggy J Mathis, CDR, USPHS | June 20, 2008 at 08:39 PM

Dear Secretary Leavitt;

I am a regular reader of your blog prior to my writing my own blog several times a week. www.healthtrain.blogspot.com

This last blog is a great one. So good that I am going to copy and paste it to send to my specialty academy and other leaders in medicine.

It certainly goes to the core of why congress never seems to get it correct. Perhaps democracy does not work well in some areas, and what we need is a 'Czar' for national healthcare.

If I were to apply for such a position, I would desire much input from the 'grassroots' doctors dealing with CMS, HMOs,patients, hospitals,payors, etc. We all know that you as the head of HHS can advise congress, inform physicians, and patients about where CMS is going.

I know that most physicians are not 'greedy' We have learned to live with much less financially, now to the point where it will seriously diminish lack of access to senior citizens.

From my limited experience there is a total disconnect between government programs, on the state and /or federal programs. These are two difficult healthcare worlds. It's every man for himself....which flies in the face of our Republic.

Ted Kennedy with all his challenges in life has not become a cynic....I strongly admire him although I do not agree with all his politics. He and his family have inspired many Americans to become involved in politics and the leadership of our great nation.
You sir are a patriot of the first order.
I am now semi-retired but still need to work because I was unable to save for retirement in the past 15 years due to my own disability and shrinking reimbursements.
I wish I could find a position which would reimburse me in my area of promoting health information technology , HIE, and EMR.

I believe CMS needs to open direct channels of policy planning with providers. We all deal with intermediaries, which is one sided and misleading. CMS needs to cut 'our overhead' It is often stated that CMS overhead is 2%. Largely because providers do much of the work....and have most of the expense (it is said 14% of providers overhead has to do with getting paid by payors, medicare, HMOSs. etc.

Medicare will have much more credibility with providers if some attention is given to this side of the equation instead of merely cutting reimbursements. How about tax credits for charity care? Tax credits for write offs and adjustments.

The idea of CMS acting as an agent for the IRS to collect unpaid taxes from providers goes beyond common sense. It will sink the system and shut down many providers who are good physicians.

Posted by: Gary Levin | June 22, 2008 at 01:06 PM

Secretary Leavitt:

Your mother's pie was divided and distributed with an attitude of fairness. The mindset of many Medicare beneficiaries is that they are spending other peoples money. The medicare pie would last longer if the mindset involved some personal responsibility and personal investment. As a practicing physician, if I do not participate with Medicare, I am currently prohibited from providing medical care for a Medicare patient and presenting him with a bill for my services and a HCFA 1500 form for him to file with his insurance provider, in this case Medicare. If he files the claim, he will not be repaid. This should be changed, allowing a portion of the responsiblity for health care costs to be with the patient. This would have a profound influence on the patient as he makes decisions for healthcare. This influence just isn't considered when the bill will be paid with other people's money. It appears to me that we all should be accountable with the Medicare pie before it is gone.

Roger Tall, M.D.
Urologist
Idaho Falls, ID

P.S. I have written this because my son attends your ward in Virginia and says that you read your blog.

Posted by: Roger Tall | July 16, 2008 at 09:51 AM