How the U.S. Single-Payer System for Seniors’ Health Compares Internationally
The Commonwealth Fund has published another survey of health care across countries. The Commonwealth Fund’s widely reported surveys, while thorough, are frustrating because they invoke abstractions (for example “universal health insurance coverage“) to explain why the U.S. health system underperforms.
The latest survey should be able to get around this problem because it surveys only people aged 65 years and older in 11 developed countries. Because almost all American seniors are on Medicare — a single-payer, government-run program that is mostly funded by taxpayers — we might expect the Commonwealth Fund to find that the U.S performs about as well as other countries.
No such luck. Kaiser Health News featured the survey’s conclusions about the challenges American seniors have, relative to their peers in other countries, in getting access to care:
Americans older than 65 are more likely to have chronic illnesses and to say they struggle to afford health care — despite qualifying for the federal Medicare program — than are seniors in other industrialized countries, according to a study by the Commonwealth Fund published Wednesday in the journal Health Affairs.
The media often manage to pluck criticisms of U.S. health care out of the Commonwealth Fund surveys that are not quite as straightforward in the reports themselves as they appear in the stories about the reports. This case is no exception.
Let’s look, for example, at the excess of chronic conditions among U.S. seniors. According the survey, 68 percent of American seniors had two or more self-reported chronic conditions (including hypertension or high blood pressure, heart disease, diabetes, lung problems, mental health problems, cancer and joint pain/arthritis). Only 44 percent of Swiss seniors had two or more chronic conditions.
However, the presence of chronic conditions is more of an input into health-system performance, rather than an output. It helps explain why 25 percent of U.S. seniors saw two or more physicians in one year, versus only 8 percent of Swiss, and why 53 percent of U.S. seniors took four or more prescriptions, versus only 29 percent of Swiss. Despite being sicker and seeing more doctors that their Swiss peers, U.S. seniors were less likely to be hospitalized overnight in the previous two years: 29 percent versus 32 percent. That is an indicator of relatively good U.S. performance.
With respect to U.S. seniors’ “struggle” to pay for care, this observation invites more questions than it answers. About 21 percent of U.S. seniors had out-of-pocket medical expenses of at least $2,000 in the previous year. However, 22 percent of Swiss also spent at least $2,000. And yet, 11 percent of U.S. seniors reported that they had problems paying or were unable to pay medical bills, versus only 2 percent of Swiss!
The United States and Switzerland have similar incomes. So, how is it that Swiss seniors are so much more able to spend at least $2,000 on medical expenses than U.S. seniors are? One answer may be that traditional Medicare has no out-of-pocket maximum, and 17 percent of Medicare beneficiaries do not have supplemental coverage that caps their potentially unlimited liability. Swiss patients do not bear this risk.
Also, Swiss patients are not forced to channel almost all their health spending through insurers. In 2006, 30.3 percent of Swiss health spending was controlled directly by patients, versus only 12.8 percent in the United States. So, Swiss of working age are more used to spending directly on health care than their American peers are. Perhaps this prepares them to be more prudent about preparing for potentially significant out-of-pocket costs when they retire.
Another surprising finding is how well-prepared Americans are for end-of-life care, relative to other countries. Although there has been lobbying in the U.S. for Medicare to pay physicians to counsel patients on end-of-life decisions, this does not appear to be a legitimate priority. About 78 percent of U.S. seniors reported that they had discussed the treatment they want if they become ill and cannot make decisions for themselves. About 78 percent of German seniors and 72 percent of Canadian seniors reported such a discussion, but no other nation’s seniors came even close. Similarly, 55 percent of U.S. seniors had a written plan describing such treatment, and 67 percent had named someone with authority to make treatment decisions in case the senior cannot. For Switzerland, only one quarter of seniors had taken these steps.
And yet, despite being relatively well prepared for end-of-life care, American seniors continue to resist Obamacare’s “death panels.” No wonder Obamacrats like MIT’s Jonathan Gruber tear their hair out at the “stupidity of the American voter”!
“Single payer” is often invoked as a mantra to describe an efficient, fair and inexpensive health system. The Commonwealth Fund’s survey shows that such a term is inadequate to the task.
Good morning,
People like “single payer: because it is easy to say. Even Medicare is not a single payer. It is subcontracted to private companies who administer claims regionally, and do so quite differently.
A true single payer program would require a generation of expensive conversion, just when we have to pay for the Baby Geezers’ care. By then the demographic bulge will have passed.
It’s time to reverse health care centralization and return it to communities where innovation can generate a host of best practices that can get us through the next 25 years.
Among those best practices is involving patients in the reduction of their own health care costs, not just by penalizing them with higher co-pays and deductibles, but by positively incentivizing them to actively take care of themselves.
Cheers,
Charlie Bond
Thank you, but I will assert that Medicare is single payer. Contractors paying claims do not really bear risk. In some cases, contractors have used initiative, like when Palmetto had the contract for Region IX and innovated payment for molecular diagnostics.
Other than that, I would not say that different administrative processes overcome the fact that the government sets fees and collects taxes to fund the system.
Some Canadian provincial health plans are run by the department directly, but some are run by private plans, e.g. provincial drug plans. But they are still single payer.
I agree Medicare is a single-payer system. One characteristic of single-payer systems is monopsony power — the power to dictate prices paid to the suppliers of services. Another characteristic is the ability to dictate the services covered. Rationing by waiting is common among single-payer systems. Medicare (and Medicaid) certainly use elements of rationing by waiting.
There are a host of factors that come into play regarding how health care is perceived, financed and delivered. For instance, when you assert that Americans are more willing to engage in discussions of end of life care than those in other countries – that may be due to relatively different prevailing religious beliefs. The Catholic Church’s official position is highly opposed to discussions of end of life care and related aspects of end of life care. In countries where Catholicism is the dominant religion, I would expect lower levels of discussions of end of life care.
Having administered corporate plans using systems in Canada, the UK, and Western Europe (Germany, France, Belgium, Italy, Spain) and SE Asia (Thailand, Singapore, Japan) as well as Mexico – for multinational corporations with significant numbers of expatriate Americans stationed in those countries – I have learned that as a general rule expatriates in developed countries are generally happy with the care and costs of that care they receive in other countries – and those expatriate employees are usually somewhat pleasantly surprised at that. The only exception is when they are in less developed countries or in very remote locations with difficulty accessing quality medical providers – but the same is often apparent here in the US between rural areas and more urbanized areas.
As a general rule, over the years I have learned that medical care is highly variable by geography and heavily influenced by factors such as politics, religion, general health, relative age, and other issues.
We need a combination of locally driven care but there are several conditions/diseases that require national attention and scale. For instance, the recent situations related to Ebola require international and national expertise and capabilities – in the past we have encountered situations like swine flu, avian flu and SARs and all required a good deal of international, national, regional and local coordination.
As in nearly every policy discussion on health care, there is a tendency to oversimplify – on all sides.
My understanding is that the Church is opposed to assisted suicide and euthanasia, not “discussions around end of life care”. Hospice care is often delivered by Catholic nuns.
Although Medicare is often suggested as a model for a single pager system, since Medicare is only one player within a highly inefficient, fragmented financing system, its current version does not serve as a prime example of how a well designed single payer system would function. Medicare acting alone cannot control most of our dysfunctional health care spending.
Medicare does have its problems. That is why single payer supporters advocate for an improved Medicare for all, instead of simply expanding the current Medicare program. In fact, H.R. 676, the single payer bill sponsored by John Conyers and 62 other members of Congress is titled, “Expanded & Improved Medicare For All Act.”
Thus we reserve the term “single payer” for a financing system that includes everyone and is equitably funded through progressive taxes, recognizing that there would be subsections within the delivery system such as VHA, CHCs, IHS, USPHS, etc.
A single payer system is actually a single buyer – a monopsony – purchasing health care through a common pool of public funds, using a combination of global budgets, capitation, and fee-for-service as appropriate for the different sectors of the delivery system. So single payer is a single public financing system which pays for care provided by the existing public and private sectors of the health care delivery system.
Thank you. I think that is fair enough, as a description. However, you assert that monoposony power as you describe is socially beneficial. We insist that government is a poor agent of the consumer, even in a democracy, and the monopsony power will reduce welfare.
We do not rely on the government to exercise monopsony power with respect to our homes or groceries or cars.
(Cue: “Health care is different”!)
Also, Dr. McCanne’s assertion that Medicare is not a true monopsony because it isn’t the only payer — just the only payer for seniors — is a good point. Seniors would undoubtedly fare even worse if there truly was only one payer for all medical services and that single-payer could adjust fees as it wanted. Currently, Medicare has to remain competitive to a small degree or doctors would stop participating in Medicare. If all other payers were outlawed and only Medicare remained, there would be no benchmark with which to gauge Medicare’s performance.
Under a single payer system, rates would be negotiated based on legitimate costs plus fair margins. Payment would be high enough to ensure that the health delivery system would be there when needed, while low enough to ensure value for our taxpayer dollars.
When Canada transitioned from their multi-payer system to a single payer, health professionals and facilities remained adequately compensated, yet their total health expenditures deviated from the path that we continue to follow. They bent the cost curve without significantly underfunding the delivery system.
Regarding queues (a problem, but one which has been overstated), other nations have shown that improved queue management and minor adjustments in capacity would correct the delays that they have for some non-urgent services. The blame lies with the conservative provincial governments that are using queues in an effort to privatize the system. Tommy Douglas would not have tolerated their inaction.
You have unwittingly, in supporting Canada’s version of single payer, illustrated why those of us who flee from this model can’t support; government management of a large system, of just about any kind, is not self-correcting. Problems bloom and are known, but not corrected. Queues are inherent in single payer, and it’s not enough to blame provincial governments and not the national policy-making levels. Under Medicare, as I see as a patient, there is little awareness of how the under-payment of physicians is leading an increasing number to not take any more Medicare patients, or to convert to concierge medicine, not taking any insurance, just patient membership fees.
Also, Medicare policy-makers do not play by the rules that most businesses would. Example is the present auditing program that pays the auditing companies a share of what they discover, having demanded a number of charts from the provider, not with any indication that they have over-billed, but just a random batch. Talk about negative incentives.
The very ignorance that causes members of the public to call for single payer as though it were without flaw means there would be too little knowledge applied to keep the program honest and funded so there would not be constant ratchetting down, as happens now.
The other trouble with a tax-funded program is that there is so much pressure to limit the taxes that those cannot keep up with demand and legitimate costs.
Wanda Jones
San Francisco
I take it you include the current conservative government of Saskatchewan, where Mr. Douglas was premier, and the “cradle of Medicare”?
“[Medicare] does not serve as a prime example of how a well designed single payer system would function”
Fair enough. IMO, Medicare is a prime example of how an American-government-designed single payer scheme actually functions – at least for seniors. That example does not give me a lot of confidence in how an American-government-designed single-payer scheme would function, for all citizens.
So I ask, what countries do you suggest are the prime examples of how a well-designed single-payer schemes would function in the US?
It is a problem that we cannot even agree on definitions and numbers in order to have a decent discussion on Medicare reform.
Definitions: I agree with Charlie Bond but for a slightly different reason: Medicare is not single payer because it is not single payer. Those of us on Medicare deal with from two to five payers, three to six if you count us (no one promoting single payer is proposing the equivalent of the Medicare Part B, C and D premiums)
Numbers: I am not sure exactly where you got the statistic that 17% “of Medicare beneficiaries do not have supplemental coverage that caps their potentially unlimited liability.” Looking at the link you provided I see a sentence that says 83% of those on traditional Medicare have supplemental insurance so I am guessing that’s where you got the 17%. But there are two problems with that:
1. note that that number is 5 years old and only applies to people on traditional Medicare. I don’t believe the number was ever as high as high as that but even if that old number is correct, it only applies to those on traditional Medicare, not those of us on Part C. The current number with no supplement (on A only, or B only, or A/B only) is between 5%-10% and many of that group is still working and getting ESI.
2. But so what, many private supplemental policies (so-called Medigap plans) in that 5%/10%/17% (whichever it is) do not protect you against financial catastrophe either. They only pay the gap in your Medicare coverage and some additional limited per-incident coverage. If you use up your extra limited coverage, you could still face financial ruin even with a Medigap supplement (admittedly such an outcome would be very very rare but that why its called catastrophic coverage)
Thank you. However, different contractors for paying different claims (A, B, DME, ….) does not change the single-payer nature of Medicare.
On the other hand, we have pointed out (somewhere) that private contractors are one reason Medicare is “efficient”. Can you imagine if the Centers for Medicare & Medicare Services tried to process claims itself!
I am not talking about the fact that there are sometimes multiple MACs in some jurisdictions (much less so than years ago). That would increase the number of insurers involved even more. I am talking about the typical Medicare beneficiary dealing with a MAC, a Medigap supplement provider or retiree insurance provider, a Part D provider, possibly a dental provider or vision provider individually or through a former employer, a secondary drug provider through a former employer or union for donut hole protection, and most importantly the senior himself or herself. I understand that you are thoroughly invested in pretending that United States Medicare is single payer because otherwise the rest of your intellectual framework collapses. But it ain’t so.
Thank you, but if that is your level of rigor, I doubt that any single-payer system exists. In Canada, dental is private; prescription drugs are private in most provinces for under-65 year olds; and services like physiotherapy may not be covered even if medically indicated.
That would not be my level of rigor but that of single-payer proponents like the Doctors against Insurance Company organization and the recent candidate for Governor here in Massachusetts, Donald Berwick. I guess what you are saying — which I do not doubt — is that when single payer really supposedly happens (see Vermont), reality sets in and the soup to nuts, cradle to grave promises cannot be met. Which puts the whole thing back to square one.
The current efforts in Vermont cannot be used as a test case for single payer in the United States. Comprehensive federal legislation would be required to free up federal funds in programs such as Medicare and Medicaid, and to eliminate ERISA and other federal regulatory requirements. We will not see single payer in the United States until Congress is ready to pass either a national single payer program or pass enabling legislation to allow state-level single payer systems.
As much as those of us at Physicians for a National Health Program (www.pnhp.org) would like to see that happen, it would be impossible with our current dysfunctional Congress. Those who have been claiming that ACA will lead to single payer can relax now, that is until you start seeing the pitchforks in the streets:
http://www.politico.com/magazine/story/2014/06/the-pitchforks-are-coming-for-us-plutocrats-108014_full.html
John and Friends:
This is a very important and timely issue, as the failures of Obamacare have sensitized much of the public to how the best intentions do not make government control competent and without externalities.
It is past time for a good book cleaning up the bad numbers and worse conclusions in international comparatives.
And a timely contribution would be a compilation of modernization tasks that all healthcare leaders should share, such as a plan for simultaneous adoption of new science, especially genomics and brain function enhancements, including brain-guided prosthetics. These will be very valuable and very expensive. What then? I encourage the main players to consider funding “institutes” in city-regions as the first adoption sites, sos that the rare number of competent practitioners do not become spread too thin.
Wanda Jones
San Francisco
Have you seen Dr. Scott Atlas’ book on international comparisons of health care, “In Excellent Health”?
Have you seen Dr. Scott Atlas’ book on international comparisons of health care, “In Excellent Health”?
Hold on a minute – what % of the American seniors they sampled had traditional Medicare vs. Medicare Advantage plans, some of which may require higher deductibles or considerable co-pays? From a quick perusal of the Health Affairs article, I can’t tell.
Also, you say “We do not rely on the government to exercise monopsony power with respect to our homes or groceries or cars.” I agree, and it shouldn’t. My point is that healthcare is not a typical commodity that obeys (or should obey) the usual laws of market-based economics.
I do not believe the OECD research makes that distinction but you seem to be misunderstanding public Part C Medicare Advantage benefits and how those benefits would affect the results.
1. Public capitated-fee Medicare Advantage health plan subscribers — unlike many traditional fee for service Medicare subscribers (typically A/B/D with a private supplemental plan bought individually)– have annual out of pocket (OOP) spending limits so the OOP costs for the Part C beneficiaries would be lower on average, not higher.
2. Also Part C beneficiaries have many covered services that traditional fee for service Medicare subscribers do not have. That would also lower the group’s OOP average.
3. Probably most important in terms of average OOP costs (but not the major advantage of Part C plans–see item 1 above) is the fact that Part C premiums are much lower on average than for private retiree and individually purchased Medigap supplements. This of course substantially lowers OOP costs.
Dennis you are correct. In each of your three examples, Medicare Advantage plans provide a superior benefit or lesser cost, or both, to their enrolled populations.
btw, according to statute any Medicare Advantage plan must:
1. Provide benefits which are at least the actuarial equivalent of Original Medicare (Parts A and B), and
2. Reimburse providers at least at the level of Original Medicare.
This means Medicare Advantage plans cannot make money by stiffing either the beneficiaries or the providers. The plans earn their margins only by managing medical care more effectively than Original Medicare. Apparently, that has not been all that hard to do.
Quite right. However, neither does it compare Quebec seniors to Alberta seniors in Canada. There is some level of generality that one has to accept in an international comparison.
Health care does obey the laws of economics. Why is DC stuffed with lobbyists asking for more money for Medicare, Obamacare, Medicaid, if it was not subject to economics, especially the profit motive?
John,
My point on healthcare economics is this: purchasing healthcare services is not fundamentally the same as buying a new car or TV. In that sense, healthcare does not obey the usual laws of price-sensitive supply and demand. Think of it this way, as one example: why do people go to the ER for a non- emergency? Answer: because ER care is free, at the point of service (and they know that). Some of these folks have no intention of ever paying, so for them, the demand curve is perfectly inelastic.
Thank you, that is a real limit of the article, IMHO.
Note to Devon:
Medicare has many faults, but I do not think that rationing or waiting lists is one of them.
Waiting time for operations for seniors in the USA is equal to the shortest in the world, at least according to my reading.
That is in large part because America allows multiple hospitals in each state, sometimes in each city, to buy or lease expensive technology and to recruit or hire any surgeons they can find.
By contrast, Canada and some European nations try to centralize procedures, and this can lead to waiting lists although it lowers the overall cost of their system.
see the attached about short waiting periods for Americans
http://online.wsj.com/articles/SB10001424052748704130904574644230678102274
The Commonwealth Fund has a long history of looking for ways to bash the U.S. health care system. Linda Gorman wrote an interesting post a few years ago that could be cut and pasted into a response to Commonwealth for almost any of their annual reports.
I recall one year Commonwealth conceded that the U.S. did rank high in timeliness but lower on all other contrived metrics. For instance, in 2004 here is what Commonwealth had to say…
The 2006 survey rated the U.S. 1st in effectiveness but average in “timeliness” and dead last on “patient safety, Patient-centeredness, efficiency and equity.”
Medicare is not a pure single payer program. However, left wing advocates are fiercely loyal to Medicare, even as they say they want single payer.
Why is this?
a. Medicare has low premiums. Part A is free to seniors, and Part B costs about $110 per month. The premiums go up very slowly.
b. Medicare has low deductibles. Even without a supplement or MA plan, the deductibles are lower than almost any private plan under age 65.
c. Medicare protects its beneficiary against almost all forms of balance billing or out of network price gouging.
That is what the left wing wants. (me too) If these features can be achieved, most of us will approve any number of payers.
“Medicare is not a pure single payer program.”
Well, Bob, I don’t understand. Are you saying CMS is more than one payer? If that’s not what you’re saying, who are the other payers? And what do you regard as a pure single payer program?
Just guessing but I assume what Bob Hertz is saying is that the beneficiary is also a payer. In a pure single payer system, the beneficiary pays nothing.
(Of course this whole discussion leaves out that the average Medicare beneficiary deals with three or four payers because Medicare is such bad insurance.)
Dennis, yeah maybe. On the other hand, a plan with effectively no eligibility restrictions, entry restrictions, payment limitations, or point of service copays might better be described as a welfare plan rather than an insurance plan.
So I’d still like to know from Bob Hertz what he means.
Your remark about three or four payers is on the mark – it’s part of what makes when Medicare Advantage much simpler than Medicare.
Bob, you say that “Medicare has low premiums. Part A is free to seniors, and Part B costs about $110 per month”
I say, not exactly.
The numbers you cite are the net individual premiums after federal subsidy. But Medicare’s total annual cost averages out to about $10,000 per individual, or $20,000 for a typical Medicare couple. That’s not my idea of a low-cost plan.
Of course, after federal subsidy each senior’s net annual cost is only about $1,260 or roughly 12%-13% of the total annual cost. The rest of the cost is subsidized by the feds – which is to say, paid by the public as taxes. Peter, meet Paul.
The preceding info reflects the standard, unsubsidized 2014 monthly premiums of $426 for Part A and $420 for Part B. If you wish, you can call Medicare and confirm these premiums, just as I did.
“Medicare has low deductibles.”
But not low cost-sharing.
Any particular deductible or co-pay may be described as “low” but the sheer number of Medicare deductibles and copays is “high”. As a result, the total financial burden on the senior can be quite heavy; worse, the more serious the medical condition, the heavier the burden is likely to become.
The 2014 Part A deductible is $1,216 per hospital admission. The Part B deductible is an additional $147 per year. And then for inpatient expenses, after the first 60 days of confinement, the patient must pay an additional $304 per DAY; after 90 days confinement, the additional payment jumps to $608 per DAY; and after 150 days of confinement, Medicare hospital coverage ends, and the patient is responsible for ALL hospital charges from then on. I’d bet most seniors do not understand this.
And there’s more. Part B pays 80% of expenses that Medicare “recognizes” as covered expenses; the senior must pay the remaining 20%. But there is NO LIMIT to the amount of those 20%-type expenses that the senior would have to pay. Here again, Medicare does not offer seniors real protection against a catastrophic medical event. (Also, fwiw, Medicare does not cover any medical care outside the US. When seniors travel outside the US, they must arrange medical insurance at their own expense. It’s not cheap.)
Seniors can purchase, at their own expense, a private Medigap policy that covers all these gaps in Medicare coverage. Because the gaps in Medicare are significant, the Medigap policy premiums are not cheap, either. And for the same reason, it is highly advisable to purchase a Medigap policy. Or switch to a Medicare Advantage plan.
You also mention “balance billing or out of network price gouging.”
I’m guessing you are referring to Medicare Advantage plans. The enrollment in Medicare Advantage is significant – nearly 33% of all Medicare-eligible seniors are enrolled in a Medicare Advantage plan. (That would be almost 15 million seniors.) The reason for the popularity of Medicare Advantage is its better coverage vs Medicare, its simplicity vs Medicare, and it’s equal or modestly higher net cost vs. Medicare. So Medicare Advantage is preferred by many, and yet not preferred by others. People are choosing what they prefer – isn’t choice a great thing? Balance billing and out of network charges can easily be avoided in Medicare Advantage by obtaining care from network providers. That’s an advantage if your physician and local hospital are participating providers. It’s not an advantage if they don’t participate – in which case, stay in Medicare. Again, having choices is a great thing.
PS – ACA mandates unlimited annual and lifetime private insurance coverage for catastrophic medical expenses suffered by pre-Medicare individuals. Yet seniors enrolled in Medicare have no such protection without buying a separate policy for it. Ironic, isn’t it?
Good points but your analysis of Medicare’s financing and benefit structure needs a little more investigation (perhaps you are not Medicare age?):
1. Medicare’s current premium support is not a matter of “Peter meet Paul;” it is a matter of “left pocket meet right pocket.” Remember that today’s new full-term Medicare beneficiary prepaid his or her premiums through 50 years of payroll and income taxes. (That’s not the case for beneficiaries born before 1945; that group, particularly those born before 1930 got a very sweet deal–intentionally. The pros and cons of this demographic split were widely discussed during the 1964-1965 Medicare debate.)
2. I am not sure what kind of insurance you have had in the past that makes you think Medicare’s co-pays, co-insurance and deductibles are low. They are certainly not low as compared to typical employer sponsored insurance. And — as you say — when you factor in the lack of catastrophic coverage and the lack of annual out of pocket spend limit, Medicare is really bad insurance comparatively
3. The balance billing rules apply to all Medicare beneficiaries but effectively apply more to those on traditional Medicare more than public Part C Medicare Advantage because the former is fee-based and the latter is capitated
“today’s new full-term Medicare beneficiary prepaid his or her premiums through 50 years of payroll and income taxes.”
Dennis, I paid Medicare and income taxes throughout my working life, but I never believed that I had “prepaid” anything. It’s my understanding the Feds spend what comes in and more, borrowing to finance deficits; the Feds do not actually set anything aside except as on paper. I agree with you that in my usage Peter and Paul are the same person, perhaps separated only by time.
“you think Medicare’s co-pays, co-insurance and deductibles are low”
Actually Dennis I was quoting Bob Hertz on that one who described Medicare deductibles as low. And my point is, that even if one accepts that description (which I don’t, exactly) the greater problem for seniors is the sheer number of different deductibles and copy’s whose cumulative weight is very significant. Thus the coverage gaps, thus the inadequacy of Medicare alone, thus the need to have supplemental or different coverage to fill in this gaps.
I’ve been enrolled
John Fembup
I could understand you thinking of Medicare financing the way you do given how the money flows through Federal accounts. But — as I said — that was not the way it was sold to us in 1964-1965 (which is why I asked if you are on Medicare yet). The proposition was
a.) good deal for those born before 1945 funded by general revenue and a small Part B premiums ($2 a month at the start I think), especially of course those born before 1900, the first recipients, who never made a payroll contribution unless they worked past 65)
b) a standard insurance proposition for those born after 1945, who would be prepaying for their full working lives (because they were just entering the workforce). This was before the disabled under 65 were added to the pool in the 1970s and money for the poor under 65 was taken from the pool in 2010
“today’s new full-term Medicare beneficiary prepaid his or her premiums through 50 years of payroll and income taxes.”
Dennis, yes I paid Medicare and income taxes throughout my working life, but I never believed that I had “prepaid” anything. That’s because it’s painfully obvious that the Feds spend everyone’s taxes as they come in – and more. So I’ve always believed the Feds never actually set anything aside for me (or anyone else) except a paper IOU which current taxpayers must make good on. Is that not true?
I do agree with you that in my usage Peter and Paul are the same, perhaps separated only by time. Anyway that was my intent, But I wasn’t all that clear.
“you think Medicare’s co-pays, co-insurance and deductibles are low”
Actually Dennis It was Bob Hertz who described Medicare deductibles as low. My point is, that even if one accepts that description (which I don’t, exactly) the greater problem for seniors is the sheer number of different deductibles and copays whose cumulative weight is very significant. Thus the coverage gaps, thus the inadequacy of Medicare alone, thus the need to have supplemental or different coverage to fill in the gaps.
I enrolled in my former employer’s Medicare Advantage plan when I retired about 4 years ago. It’s not an HMO, but a PPO and it’s my understanding network providers are reimbursed on a negotiated fee-for-service schedule.
Oops. I think my comment is pretty good – but not nearly good enough to post twice.
Sorry, all.
John
Sorry but I did not see that you answered my question about your Medicare status in the second of the two similar comments.
Because your Medicare supplement is private through your former employer it possibly — even most likely — differs from the public Part C Medicare Advantage program in terms of capitation vs. fee for service financing structure and in many other ways (including that it is highly likely that the much publicized October 15-December 7 “open enrollment” time frame is meaningless to you. Your “open enrollment” dates are whenever your former employers says they are.)
Or your Medicare Advantage plan could be part of a weird adjunct to the Part C law whereby the Trust Funds give some money to some private employers to pay for some of their retirees’ policies. This adjunct is one of the most expensive parts of Part C according to MedPAC (expensive as in the constant left-wing refrain that “private Medicare Advantage” costs 14% more than Medicare)–see NOTE. If so, your plan is capitated just like truly public Part C. It does not matter if it is a PPO or an HMO.
(NOTE: MedPAC is lobbying Congress, which created it, to take away the extra kickers that employers get for this small part of Part C.)
I think your comment is very good – and accurate with respect to Medicare financing.
A good exchange, thanks to John and Dennis.
First let me elaborate on my original point.
Germany is assuredly not a single payer system– there are over 200 insurers of one kind or another.
But Germany has relatively low premiums (after you have paid in about 14% in social insurance taxes), low deductibles (about $2000 was the max deductible last I read), low drug prices due to strict regulation, national fee schedules so there are no out-of-network price gougings, and very little balance billing of any kind.
That is what left wingers want for America. They gravitate towards the cause of ‘single payer’ because they do not see the private insurance industry ever accomplishing these goals.
Medicare is closer to German health care than any other system in America. Thus the advocacy of ‘Medicare for all.’
I do not contend that this would all work for America. But I think I am correct on the motivations here.
Side note on Medicare’s provisions:
Last year I joined Medicare. I had been on an individual plan that charged me $600 a month for a $5,000 deductible. I hated it but at age 64 and self employed it was all I could get. The insurance company would basically make me pay $7200 in premiums plus $5,000 before it ever paid a nickel on my behalf.
In Medicare I have an MA plan for which I pay $41 a month plus the plan B premium. If I go in the hospital, my deductible is $500. In MN virtually every doctor and hospital is in the Blue Cross network, and I rarely travel. I had an echocardiogram last month and my co-pay was $23.
There are probably some mitigating factors here, but to me Medicare is insurance heaven.
Maybe we should admit that “single payer” is a term with less meaning than I thought in my title?
I should add that the “mitigating” factor is that the taxpayers are paying for most of your Medicare, whereas you paid for your own private plan. How long had you had a private plan?
I will not go off on a paragraphs long explanation but if you read the Congressional and journalistic record around Medicare’s passage, Bob did pay for and is paying for his Medicare. His parents did not and his grandparents really did not but that was well understood at the time
Another way of saying it is that Steurle is wrong
I should have written “Steurle is wrong… in my opinion” (you should consider adding an editing feature to you commenting engine–thanks)
We could, but we prefer to force commenters to think through comments thoroughly before hitting “return”! (I have embarrassed myself a couple of times!)
I was in a good corporate plan until I joined a very small business at age 60.
So for five years I paid very dearly for insurance.
In my post above, I was reacting to comments by Jphn and Dennis that Medicare deductibles and co pays were relatively high.
That might have been true ten years ago. But today, Medicare is far more generous than most individual or small group plans.
I know a lot of health insurance agents from my years in the insurance biz. To a man, they are delighted to go on Medicare.
Bob
I believe what you are saying is that private employer sponsored insurance has become less beneficial over the years in terms of co-pays, deductibles. Is that your intent?
I assume that’s what you mean because Medicare has not changed in the last decade in those respects with the exception of no co-pays on a few not very useful (one of which is possibly “harmful”) screening tests, no co-pays on mammograms (which are also possibly “harmful” I’m told), and no co-pays on a medical-history-dependent number of colonoscopies (unless they find a polyp, in which case there is a co-pay).
This might save the average non-QMB/SMB Medicare beneficiary an average of $25-$50 annualized. That does not trump Medicare’s lack of catastrophic coverage (that is, Part A has lifetime limits) and lack of an annual out of pocket spend limit. I would guess all ESI improved over time to include both of those features and we know all Obamacare-enabled insurance includes them.
(By “harmful,” I refer to research that says the number of false positives from certain tests lead to further tests that cause problems that outweigh the aggregate benefits of the initial testing. That subject deserves a separate discussion sometime.)
Bob, those agents you know who are “delighted” with Medicare . . . Do any of them also purchase a Medigap policy?
Which reminds me-you state above that i have an MA plan”. Am I correct in assuming you are enrolled in a Medicare Advantage plan, not original Medicare?
Thx.
Note to John — Minnesota has a terrific Medicare Advantage plan. It is under some kind of Medicare waiver and may go away in a few years, I am told.
Blue Cross calls it a “cost plan.”
Note to Dennis — We are both correct. Medicare has lower deductibles than any one, i.e. $150 for plan B, but Medicare has that unlimited 20% exposure also.
Since the cost of covering the 20% exposure is so low, less than $150 a month for most persons in my state, I consider the overall Medicare package is more generous than the vast majority of individual and small group plans.
Thanks Bob, I’m sure there are fine Medicare Advantage options in Minnesota. But I’m not sure you answered my questions; here they are again:
1. those agents you know who are “delighted” with Medicare . . . Do any of them also purchase a Medigap policy? [or for that matter, have any enrolled in Medicare Advantage rather than original Medicare?]
2. Which reminds me-you state above that “I have an MA plan”. Am I correct in assuming you are enrolled in a Medicare Advantage plan, not Medicare?
Thx
PS – I still think you are overly focusing on the Part B deductible. There is significant cost-sharing in Part A as well. And if you should incur high or catastrophic medical expenses, your Medicare cost-sharing burden becomes quite onerous. Unless of course, you have purchased supplemental coverage, either Medigap or Medicare Advantage. Either way, I hope that you are, and will remain, in good health.
John, I respectfully maintain that Medicare cost sharing is still very moderate compared to what people under 65 usually face in the individual and small group markets.
1. Part A of Medicare has the one deductible, and then no cost sharing that I know of until one has been in the hospital for 60 days or more.
I would think that the number of elderly who are in a true hospital for over 60 days is very tiny.
By 60 days they would usually be in a skilled nursing facility or full nursing home. That is another financial problem of course, but not the fault of Medicare part A.
2. Part B of Medicare has 20% coinsurance on anything.
But I believe this is 20% of the Medicare fee schedule.
I read the Medicare fee schedule a few years ago. Almost no procedures had a fee assigned over $20,000. Thus the maximum hit to the patient would be $4000.
Not fun, but again the persons under age 65 face a $4000 hit all the time!
Comments welcome. Medicare rules are complex and I may have misinterpreted some items.
Bob, you have still not answered my questions; here they are again:
1. those agents you know who are “delighted” with Medicare . . . Do any of them also purchase a Medigap policy? [or for that matter, have any enrolled in Medicare Advantage rather than original Medicare?]
2. Which reminds me-you state above that “I have an MA plan”. Am I correct in assuming you are enrolled in a Medicare Advantage plan, not Medicare?
Thx
I think they all have Medicare Advantage plans. The exception would be those who travel a lot, and go with a Plan F supplement.
I am in Medicare Advantage. I guess I consider that as being in Medicare.
“I am in Medicare Advantage. I guess I consider that as being in Medicare.”
Thank you. Well, that certainly helps explain your feeling that Medicare deductibles are low.
Bob, Medicare Advantage plans are actually private insurance plans, administered by private companies, and tightly regulated under Part C of Medicare. In that regard they are very much like Medigap policies, which are also private insurance plans, also administered by private companies, and also tightly regulated under a different part of the Medicare law.
Your preference for Medicare Advantage is quite understandable and is shared by almost 33% of all Medicare-eligible seniors, including the agents you mentioned. And that’s because when you choose Medicare Advantage, you get much better benefits than Medicare but pay only a little more than the Part B premium (or maybe you still pay the same premium, as I do).
But I think when you advocate for Medicare (“low premiums” “low deductibles” “no balance billing or out-of-network price gouging”) you should be more careful to disclose that you do not participate in Medicare yourself; instead, you have chosen the superior benefits of Medicare Advantage coverage.
Medicare Advantage is Medicare. If I had the option of moving from a plan I pay myself, versus one paid for by taxpayers, I suppose I would choose the latter.
My original comment on this post was “it’s a problem that we cannot even agree on definitions and numbers in order to have a decent discussion on Medicare reform.” I admit what I am about to say is wonkery but the incorrect use of some Medicare terms in John Fembump’s reply to Bob Hertz is an example of what I am concerned about.
1. Bob participates in Medicare. Medicare Advantage is Part of Medicare, Part with an upper case “P.” Bob cannot select a Part C health plan without first signing up for and — typically — paying for Medicare Parts A and B (this A/B first rule applies to private Medigap plans as well). Bob is on Medicare, period.
2. Medicare Advantage is not “private insurance.” When the US Census Bureau counts people’s insurance status (ACHS and other places) it — correctly — counts people on Medicare Advantage as having public insurance.
3. Medicare Advantage IS administered by private insurance companies. But so are Medicare Parts A and B and D and private Medigap plans and Obamacare plans and many Medicaid programs and almost all self-insured employer sponsored insurance. So what?
4. The hang up on private vs. public preached by politicians of both stripes and people in the Doctors against Insurance Companies lobby is meaningless. The major difference between almost all people on Part A/B/C plans and people on Part A/B/D/Medigap plans is that the former are covered by a networked-provider plan with a complicated capitated payment formula that includes risk adjustments and the latter can be treated by any provider that accepts Medicare and are covered on a fee for service basis.
5. The capitated approach is considered so superior to FFS by the wonks that it has been incorporated into Obamacare and even many FFS A/B/D/Medigap beneficiaries are being moved into capitated ACOs without their knowledge (and without the “penalty” of being in a provider network).
6. Medicare reform proposals that suggest this approach be normalized across all Parts of Medicare are derisively called voucher programs by the same people that espouse subsidies/premium support (that is, the same thing) for Obamacare, Medicaid and Medicare ACOs
Until the words private, public, voucher and so forth are removed from the discussion, there will be no progress. I do not care. I am 70 and it is unlikely that the system will change for me and most likely that I will break even on the 50 years plus of payroll and income taxes paid into the Trust Funds. However, everyone born after 1970 or so gets a real raw deal if the system’s financing is not reformed again (as we did in the 1990s)
Dennis, I really get a kick out of your comments, because you are so clearly knowledgeable. In this particular exchange, my intent was simply to reel Bob in a bit, because he seems to be praising original Medicare when he is actually enrolled in Medicare Advantage – which has much better benefits than original Medicare.
Ironically, I find myself reeled in a bit. And not for the first time . . . Thanks, Dennis, btw.
Regardless, I’m sure you agree that original Medicare and Medicare Advantage are not the same. Bob did not initially disclose that he was enrolled in Medicare Advantage, so people could mistakenly assume he was talking about “original Medicare” when he was actually talking about Medicare Advantage.
John, as I said, I’m coming at the discussion from an entirely different perspective (my comments are about the definitions of the terms people use and — where relevant — the statistics) than the discussion between you and Bob. I just used his and your comments as an example.
But since you asked, I would rather see the distinction made between traditional fee for service Medicare and networked capitated-fee Medicare and leave the word Original out of it. Everyone on Medicare — whether FFS or capitated — is on Original Medicare. Unfortunately the Medicare bureaucracy itself confuses people on this issue so it’s a losing proposition for me to try to change that terminology.
“I would rather see the distinction made between traditional fee for service Medicare and networked capitated-fee Medicare and leave the word Original out of it.”
‘sfunny, I remember recommending almost that exact distinction for private plans at a management meeting back in the 1980’s, in the insurance company where I worked. It was shot down by the marketing cognoscenti who insisted on having a different name for every “product.”
John, here is why I do not consider Medicare Advantage to be private insurance.
I believe that the vast bulk of the payments come to the insurers from the government.
I know that the carriers have elaborate risk adjustment formulas to limit their losses.
It is no accident that the insurers make more money on Medicare Advantage than they do on major medical insurance for under 65’s.
In other words, this is a private looking package of a government program.
German insurance federations operate the same way.
Not a bad thing, necessarily, but not a risk-bearing form of private insurance either.
Bob, my point is, when you initially praised “Medicare” (“low premiums” “low deductibles” “no balance billing or out-of-network price gouging”) you were not being clear whether you meant original Medicare or Medicare Advantage. I’m sure you know they are not the same.
We now understand you are enrolled in Medicare Advantage yourself, and in fact were praising your experience with Medicare Advantage. Your initial comment now makes sense because Medicare Advantage is much better coverage than original Medicare. MA requires much less cost-sharing vs original Medicare with only a modest (or zero) difference in premiums. That’s why I also enrolled in Medicare Advantage.
In summary Medicare Advantage is adequate stand-alone insurance. Original Medicare is not. Otherwise you, and I, and the several other agents you mentioned, and the nearly 33% of all seniors, would not be signing up for MA.
I think we’re done here.
Part C Medicare Advantage plans are private plans. They are not part of Part A and Part B programs, nor Part D. A patient enrolled in a private Medicare Advantage plan is prohibited from using Part A and Part B. If a person goes outside of the plan network, he cannot ask the Part A or Part B providers to bill the traditional/original/FFS Medicare program. The private Medicare Advantage plan might authorize care outside of its network, but that care would still be covered by the private plan and not the traditional program. If the Medicare Advantage program includes drug coverage, then the enrollee is prohibited from using a Part D drug plan. If he attempts to do so, he is disenrolled from the Medicare Advantage program and reassigned to the traditional Medicare program.
The private plans are private. Many of them are plans marketed by investor-owned insurers, UnitedHealth being the largest. That hardly meets the definition of a government insurance program. They are risk bearing plans, though the government does use risk adjustment to reduce the risk to the plans. But it is this risk adjustment that the private insurers have abused by coding their patients with just a touch of illness as if they had much more complicated problems. Thus the taxpayers are being cheated by these private insurers. A comment from a recent study of Medicare Advantage coding intensity: “The increase in relative MA scores appears to largely reflect changes in diagnostic coding, not real increases in the morbidity of MA enrollees.”
http://www.cms.gov/mmrr/Downloads/MMRR2014_004_02_a06.pdf
They are crooks. They are being paid more for their patients than are providers in the traditional Medicare program providing comparable levels of care.
The Medicare Advantage plans cost the beneficiaries less primarily because of the lower cost sharing requirements. But the insurers are using only about one-third of their overpayments to reduce cost sharing, whereas they keep the rest for profits and especially for their considerably higher administrative costs (i.e., administrative waste). If the same level of spending occurred in the traditional Medicare program, the deductibles and coinsurance could be greatly reduced or eliminated, and a catastrophic cap could be applied, if even needed. That would be an even better program than the Medicare Advantage plans because patients would still have free choice of physicians and hospitals without being limited by a provider network and prior authorization procedures for out-of-network care.
The Medicare plus Choice program – later Medicare Advantage – was established as a scheme to privatize Medicare. Medicare plus Choice did not work so they converted it to Medicare Advantage and deliberately overpaid the private plans to give them an unfair advantage in the market. Although ACA is reducing the overpayments, the Obama administration has been using accounting gimmicks to continue to overpay them. It is not only the taxpayer who is being cheated. Part B premiums are higher in the traditional program since overpayments to the Medicare Advantage plans come from the Part B premiums plus general funds. Beneficiaries in the traditional program are helping to pay for the cost sharing reductions in the Medicare Advantage plans. That is blatantly unfair.
Were should dump Part C and fix Parts A, B and D.
The above comment by the Doctors against Insurance Company lobby is its typical one-sided and years-old misrepresentation of all portions of Medicare, done because the lobbyist group, perhaps accidentally, locked itself years ago into the bad proposition that everyone should have Medicare. It is a bad proposition because Medicare Parts A and Part B by themselves are very bad insurance, with no catastrophic coverage or annual out of pocket spend limits to protect one on the high side and many other shortcomings on the low side. (What the Doctors against Insurance Companies lobby really wants — if you read its substantive proposal — is that everyone should have Medicaid. But that’s a losing political message on many levels.)
As for the specifics of the above screed:
— Part C is Part of Medicare. The word Part – with an upper case P — in the title means it is public. When the U.S. Census Bureau counts people’s insurance status, it – correctly — counts those with Part C as being on public insurance. Part C Medicare health plans are administered by private insurers just as Medicare Part A, Medicare Part B, Medicare DME, Medicare Part D, Obamacare, some Medicaid, and many other beneficiaries’ plans are administered. To even mention the private vs. public nature of the administration is desperate rhetoric by the Doctors against Insurance Companies lobby.
— Part C plans are mostly but not totally networked plans. So of course – mostly — you cannot go to a provider that is not part of the network. I can only assume that is the major concern of the Doctors against Insurance Companies lobby. Apparently it costs these doctors millions of dollars to check Medicare cards. But the networked aspect of Part C Medicare has nothing to do with Part C or with Medicare. That is the way networked plans work.
— The networked plan idea is so well thought of by wonks, and fee for service insurance is so disliked by wonks, that – to the best of my knowledge – all Obamacare plans are networked plans. And many fee for service Original Medicare Part A and Part B beneficiaries have been put into networks – called Accountable Care Organizations because of the bad rap HMOs got 30 years ago – without their knowledge (but, unlike Part C beneficiaries, they can go out of the ACO without penalty)
I do agree that it is unfair that a person on capitated-fee Medicare gets a slightly higher share of the Medicare trust fund money than a person on fee for service Medicare. This slightly higher share is an average of all 15,000,000 people on Part C driven primarily by special needs Medicare Advantage plan beneficiaries and beneficiaries of Medicare Advantage plans chosen for the beneficiary by former employers or unions. The higher share is only very slightly related to the average non-special-needs Medicare beneficiary choosing a Part C plan as an individual. If you are in a classic Part C HMO, the difference is trivial. Still I agree it is unfair. The law says we should not be treating one class different than the other but the Obama administration has consistently broken that part (and many other parts) of the law. So, sue ‘em!
The information above about how someone moves from Part C to Part D or vice versa is just plain wrong but I doubt if anyone would be reading this blog for SHIP advice.
“it is this risk adjustment that the private insurers have abused by coding their patients with just a touch of illness as if they had much more complicated problems. Thus the taxpayers are being cheated by these private insurers.”
Don help me understand this. Are you talking about diagnostic coding? I thought the physician diagnoses the patient and assigns the ICD code. Yes? No? In Medicare Advantage when do insurers code their patients? Do you know if insurers also use ICD, or some other scheme? How does it happen that an insurer’s patient coding takes precedence over the physician’s coding? Would not the physician’s own diagnostic coding appear on the patient’s claim or encounter record? (And, btw, I also don’t quite understand how insurance companies have patients. Is that a peculiarity of Medicare Advantage?)
For an explanation of how the HCC risk adjustment process has led to excessive payments to MA plans, you should read the reference I listed above, plus the NBER working paper below. I defer to them.
Richard Kronick and W. Pete Welch, Measuring Coding Intensity in the Medicare Advantage Program, MMRR 2014: Volume 4, Number 2
http://www.cms.gov/mmrr/Downloads/MMRR2014_004_02_a06.pdf
Jason Brown, Mark Duggan, Ilyana Kuziemko, William Woolston,How does Risk Selection Respond to Risk Adjustment? Evidence from the Medicare Advantage Program, NBER Working Paper No. 16977, April 2011
http://www.nber.org/papers/w16977
Don, I did not realize I was asking such difficult questions. Can’t you answer them?
Dr. McCanne is making good and accurate points. Medicare Advantage is not perfect. However, it has improved over the years, and NCPA has made recommendations to improve it further.
Parts A and B, however, are irredeemable.
He’s talking about a very flawed series of articles by some left-wing group called Center for Integrity. But the poster is linking to and cherry picking from a CMS document that does say in one sentence in a 16 page report
“The increase in relative MA scores appears to largely reflect changes in diagnostic coding, not real increases in the morbidity of MA enrollees.”
What the poster does not tell you but you will find out if you read the 16 pages is that these problems caused by a 2003 law were known from the year after they were fully implemented (2007) and almost immediately corrected. As the CMS report says
“Medicare has taken significant steps to mitigate the effects of coding intensity in MA, including implementing a 3.4% coding intensity adjustment in 2010 and revising the risk adjustment model in 2013 and 2014.”
As the CMS report explains the difference could be because capitated-fee beneficiaries are less healthy than FFS beneficiaries. This is possible because capitated fee beneficiaries are disproportionately poorer and more from the minority community than FFS beneficiaries and these two demographics are often less healthy.
But the Center for Integrity and Doctors against Insurance Companies lobby is leaving more out of the story than is explained in the CMS report. On the same subject, the OIG and GAO have guessed
— The problem may just as likely be caused by doctors undercoding FFS beneficiaries (since — unlike with capitated fee plans they have no incentive to code correctly, whereas on capitated fee plans, it is a federal requirement that they code correctly)
— Whether the issue is FFS undercoding or capitated fee overcoding or sicker beneficiaries or a bad law, we’re talking less than a billion dollars a year here. I believe any waste is waste but in the world of Medicare fraud, waste and abuse, less than a billion dollars is way down the list