Despite the Supreme Court’s repeated attempts to prop it up, Obamacare is collapsing. This is obvious not merely to the majority of Americans who have always disapproved of the law, but also to an increasing number of progressives. Consequently, we are once again hearing calls for single-payer health care. Most advocates of this system, including Hillary Clinton’s main competitor for the 2016 Democrat presidential nomination, favor Medicare-for-All. They want, in other words, to put all Americans on the government program that covers the elderly and disabled. An excellent antidote for this simplistic solution is David Hogberg’s new book, Medicare’s Victims: How the U.S. Government’s Largest Health Care Program Harms Patients and Impairs Physicians. (National Center for Public Policy Research, 336 pages, $14.99 paper; $6.99 Kindle)
Hogberg, a Senior Fellow at the National Center for Public Policy Research, explodes the myth that Medicare coverage is consonant with cost effectiveness, high quality care, and satisfied patients. He combines the stories of beneficiaries harmed by the program with an analysis of its perverse incentives and unsustainable costs. Hogberg also proposes reforms based on the principle that “beneficiaries should exercise ultimate control over how Medicare funds are spent.” In fact, he advocates giving the money directly to the patients. This will seem radical to some, though it is based on a model with which most Americans are familiar and comfortable. But to see why such an approach is needed, it’s crucial to understand how much real harm is inflicted by Medicare.
To fully grasp this, it’s important to remember that retirees are not the only people covered by Medicare. About 18 percent of its 53 million beneficiaries get on the program via Social Security Disability Insurance (SSDI), and the worst obstacle these patients face is that hallmark of government health programs everywhere—a purgatorial waiting period. A disabled patient must wait two years for Medicare coverage after qualifying for SSDI. Many wait far longer. One of the examples Hogberg provides is a patient who was forced to wait four years despite having been diagnosed with a debilitating form of cancer called Ewing’s Sarcoma: “While he qualified for SSDI in 1998, for reasons that no one can seem to explain, it wasn’t until 2002 that he qualified for Medicare Part-B.”
Hogberg also provides some disturbing statistics concerning the consequences of such wait times. At any given point, for example, “between 1.2 and 1.8 million disabled people are enduring the two-year waiting period.” And, considering the kinds of disabilities with which most of these patients suffer, it’s inevitable that some don’t survive the wait: “One estimate found that about 16,000 people die annually while on the Medicare waiting period.” He hastens to add that much of the research in this area is incomplete, and thus leaves important questions unanswered. Still, it’s pretty clear that even patients lucky enough to survive the waiting period are frequently unable to get much needed care, and an even larger number are forced to delay seeking treatment.
And what about the seniors who constitute the vast majority of Medicare beneficiaries? Surely, considering the enthusiasm with which single-payer advocates push Medicare-for-All, seniors fare better than the disabled. In fact, seniors endure countless hardships pursuant to the regulatory and reimbursement snarl in which they and their doctors find themselves immured by Medicare. It is in the care of seniors that the bureaucrats most brazenly substitute their judgment for that of health care professionals. The magnitude of this travesty is difficult to appreciate unless one has witnessed, as I have, a doctor violently slam down the phone after being told by Medicare that a septuagenarian suffering with congestive heart failure fails to “meet criteria” for an inpatient admission.
The perversity with which Medicare applies these criteria beggars belief. One of the stories Hogberg relates is that of a dialysis patient who had suffered kidney failure after a bout with cancer. He suddenly grew ill one morning and was rushed to a nearby ER where the doctors were informed in minute detail of his health status: “Frank needed dialysis, but under Medicare’s rules, he couldn’t receive it at a hospital unless he was an inpatient.” Like the patient noted above, he failed to “meet criteria.” Thus, he and his doctors were forced to wait until his condition deteriorated far enough to satisfy Medicare. At length he had a seizure, whereupon he was finally admitted and received dialysis: “Frank briefly recovered, but the damage was done.” Within a few months he died.
Not all of Medicare’s caprices result in death. Sometimes they merely ruin the patient financially. Hogberg also tells the story of a woman who was stuck with an $11,000 bill from a skilled nursing facility because Medicare refused to pay. The program ostensibly covers such services but only after the patient has been transferred from an acute care hospital where she has spent at least three days as an inpatient. This patient had spent the requisite amount of time in the hospital before being transferred, but Medicare ruled that she had only been in “observation” status. So, despite spending three days in a bed in an acute care hospital before going to the skilled nursing facility, Medicare left her with a huge bill because—according to its criteria—she had not been an inpatient.
The financial damage wrought by Medicare isn’t limited to patients, of course. It is also taking a huge and ever growing bite out of the federal budget. Hogberg explains why the program is unsustainable if permitted to remain on its current fiscal trajectory: “Each year the Medicare Trustees estimate the program’s shortfall over the next 75 years.… In the 2014 Medicare Trustees report, the estimated shortfall was $28.5 trillion.” He goes on to point out that, to cover such a shortfall, every man, woman, and child in the nation would have to put up $89,300. Instead of responding intelligently to this situation, however, the government has imposed a series of what Hogberg describes as “soviet style” price controls on the amount doctors can be paid by Medicare.
None of these schemes has worked, of course. The most recent to be repealed was the much-reviled Sustainable Growth Rate (SGR) formula, but it has been replaced with an equally unworkable bureaucratic brainstorm: the Merit-Based Incentive Payment System (MIPS). SGR caused doctors to cut back on the number of Medicare patients they treated, creating a primary care shortage for seniors. The new scheme ostensibly pays doctors based on their effectiveness. It’s unlikely to control costs or improve quality, but it will harm the most vulnerable Medicare beneficiaries. Hogberg puts it thus: “MIPS will incentivize physicians to avoid the sickest patients… the easiest way to have patients who score well on quality… is to treat patients who are only moderately ill.”
MIPS is just a warmed over component of Obamacare, and it is likely to be just as dysfunctional as every other facet of that Rube Goldberg contraption. But the point of Medicare’s Victims isn’t to attack Obamacare. Its purpose is to demonstrate that Medicare is by no means a paragon of government-run health care, much less a cure-all for the ills of our medical delivery system. Hogberg does not, however, despair of reforming the program. This brings us back to his proposal to give Medicare’s beneficiaries control over how the money is spent. Is it crazy to give Medicare funds directly to patients? Well, as Hogberg points out, this is precisely how Social Security works: “Beneficiaries receive their checks… each month and then have complete discretion over how to spend it.”
Hogberg would do away with Medicare parts A and B and replace them with “a Basic Account and a Major Medical Account.… The amount in these accounts will be renewed every year.” The idea is that beneficiaries should purchase health care the same way they buy other goods and services. The plan is obviously far too detailed to fully flesh out in this space, and any reform of Medicare has profound political implications, but Hogberg’s ideas are eminently sensible. Medicare’s Victims hits the shelves today. It’s well worth a read for anyone with a desire to understand how Medicare actually works.
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