Goldhill: Medicare Is the Problem, Not the Solution

In 10 years, the number of CT and MRI scans per beneficiary more than doubled; hip replacements increased by 36 percent between 1997 and 2007. One out of three Medicare beneficiaries now has at least one surgery in the year of his or her death; even 20 percent of 90-year-olds do! The average 75-year-old is on five prescription drugs. Here’s a fact you rarely hear about Medicare: Annual spending just on those in excellent or very good health was an astonishing $5,437 per person in 2008.

View entire editorial in the Washington Post.

Comments (16)

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  1. Studebaker says:

    This is crazy! But, in economic terms, once medical care for seniors is guaranteed by a third-party, providers (over time) begin more aggressive interventions. What was once thought of as padding the bill becomes the conventional wisdom or prevailing attitude.

  2. Anthony Hall says:

    These numbers all that alarming. We all know there is massive overspending and overpriced procedures that are even oftentimes unnecessary.

  3. Roger Heat says:

    Annual spending just on those in excellent or very good health was an astonishing $5,437 per person in 2008.

    2008…not exactly the most up-to-date data thrown out there.

  4. Jamison says:

    “those in excellent or very good health was an astonishing $5,437 per person in 2008.”

    – This is a ton of money to be giving people who are in “good health”.

  5. Allison says:

    Classic example of what happens when you give them a finger and they take the whole hand. What perhaps began as a viable, suitable program, turned into a free money/care giver, that’s probably not even aware of who’s receiving what. If this is not a total waste of health care dollars, then I don’t know what is.

  6. Patel says:

    Well, I think it is fair to say that most people value their health and their quality of life, and so, they are willing to spend money on it. Why should it be a surprise that take-care of one-self is expensive? You are essentially investing in yourself that $5,500. Why should this be a cause for alarm? How much do you value your health? And how much are your willing to spend for good health? These are just some of the questions we should as ourselves.

  7. Kumar says:

    The value of my life is priceless, as should be yours. If I can, I am willing to pay a high amount on my health, this notion is better explored in Dr. Goodman’s book, Priceless.

  8. Hazen Zilla says:

    Some part of me wants to hope that maybe we are just getting better at identifying and providing care but clearly something is out of wack. Great century to be in the health care industry though!

  9. Christian Boozer says:

    This is what happens when you add an intermediary into the system. If you disconnect both of the ends, the incentive to care more about cost disappears.

  10. Linda Gorman says:

    This kind of breathless article leaves me cold even though I agree that Medicare is a big part of the problem.

    What about examining the possibility that the increased spending is the reason why people on Medicare report good health? Perhaps the number of hip replacements has contributed to the significant declines in chronic disability in the elderly that have been observed in the US since 1980 or so? Declines that have reduced Medicare spending relative to the previous trend?

    A 70 or 80 or 90 year old walking around with an artificial hip or knee is a lot better off than one confined to a wheelchair. Avoiding heart attacks with statin therapy, and stroke and kidney failure with blood pressure medications reduces disability as well.

    And, for the penny pinchers out there, disabled people are generally more expensive than people who can cope with most of the ADLs.

    For comparison, healthy people in their late 50s, early 60s with a QHDP can pay $5,500 or more a year for private health insurance.

  11. Jack says:

    Federal healthcare annual per capita averages for Indians is about $2,000. Prisoners get decent care for cheaper, and the VA costs much more.

  12. Hoover says:

    Is an increase in diagnostics a bad thing?

  13. Linda Gorman says:

    The Indian Health Service spending is not comparable. It receives an annual appropriation and is not a coverage program. The spending figure is per user.

    A lot of people who are eligible for it have private or public coverage and are dual users. This means that the IHS spending quote does not include all health spending.

    Many of those eligible for VA also use Medicare and Medicaid. Finally, a number of people would disagree about the quality and cost of health care in prison.

  14. Bob Hertz says:

    The number quoted of $5,437 for those in good health did not feel right when I first read it last night. I am a serious student of Medicare financing.

    I then went to the entire editorial, which had a link to an excellent MedPac paper on federal health spending.

    According to page 23 of the Med Pac study, total Medicare spending came to $10,188 per beneficiary. 21.9 per cent of that spending was on persons who reported themselves in good health.

    Without using a calculator, I come up with $2,200 of spending per healthy beneficiary — NOT $5,400.

    This does not make the future of Medicare any less problematic. The number of working age persons per beneficiary is shrinking, plus more and more of those working age persons will be earning low wages.

    So we must have Medicare reform. But even if healthy persons faced a high deductible and cut their office visits and lab tests in half, we still have the financing and demographic problems.

    Bob Hertz, The Health Care Crusade

  15. Gabriel Odom says:

    “A 70 or 80 or 90 year old walking around with an artificial hip or knee is a lot better off than one confined to a wheelchair.”

    Linda, by and large, a significant minority of THA (total hip arthroplasty) patients are obese. These patients are more sedentary than their non-obese counterparts. While I mostly agree with your statement, we cannot assume that just because a patient undergoes a THA procedure implies that they will choose to be more physically active. In fact, the opposite is often the case. Unfortunately, these discussions dance wildly in the realm of normative economics, as we make grand statements statements on what ought to be.

  16. Linda Gorman says:

    A significant minority of THA patients are obese? I guess it depends on what one believes a significant minority is.

    Cram et al., JAMA, April 20, 2011, looked at an observational cohort of 1,453,493 Medicare Part A beneficiaries who underwent primary total hip arthroplasty and 348,596 who underwent revision total hip arthroplasty from 1991 to 2008.

    Obesity rates for Medicare patients receiving hip arthroplasty in their sample increased from 1.4 percent in 1991 to 4.7 percent in 2007-2008.

    As for weight loss, a small study in Orthopedics (2010, Koehler et al.) suggests that about 20 percent of the population with THA had clinically significant weight loss.

    Finally, the benefits of not being in a wheel chair, regardless of weight, are fairly straightforward. For starters, one doesn’t need to modify one’s home or buy the chair, check on accessibility everywhere one plans to go, or have a special vehicle for transport.