Two of my favorite health care bloggers – Joe Paduda and Maggie Mahar – each had excellent articles in this week’s Health Wonk Review, both discussing the recent Medicare Trustees annual report. Both take the position that the doom and gloom media sentiments about the report are overblown, and that the report doesn’t really justify sweeping changes to the Medicare system.
Maggie’s article reminds readers that media articles have been predicting the financial insolvency of Medicare for decades, with bankruptcy predicted to occur as early as 1976 (obviously none of the predictions have come true so far). She also notes that much of the dire warnings come from twisted semantics: There’s a difference between using up surplus funds and running out of money. There is also a difference between being unable to pay any bills at all and being unable to pay some bills. Although it’s true that Medicare will be unable to pay some of its bills starting in the next decade or two, it will still be able to meet 90% of its financial obligations, and continue to do so throughout much of this century. And the PPACA has given Medicare some extra wiggle room, as various aspects of the reform legislation will generate nearly $1 trillion for Medicare over the next ten years.
Joe Paduda also writes about how the Trustees are NOT saying that Medicare is going to run out of money in 2024. Yes, the program will be facing financial hardships, and will likely not have enough money to pay all of its predicted hospital bills. And while this is a problem that needs to be addressed, it’s definitely not the same thing as saying that Medicare is going to be completely out of money in 13 years.
As is the case with any major report concerning health care these days, the information contained in the Trustees’ report will likely be twisted somewhat and used for political gain. And it’s worth looking to see if those who are crowing about how the report signals impending disaster for Medicare might stand to gain from sweeping reforms, including the privatization of Medicare.
Our health care costs absolutely need to be curtailed, and government health care systems like Medicare and Medicaid need to increase revenues and decrease spending in order to be on track for long-term sustainability. There is still plenty of waste in our health care system, and I’d like to see MLR-style guidelines enacted across the entire health care industry, rather than just for health insurers. The cost of pharmaceuticals needs to be addressed, and having Medicare set drug prices based on the cost to develop/produce the drug plus a pre-determined administrative allowance (which would include company profits, much as the MLR rules do for health insurers) might be a good place to start. We could also critically examine our constant use of newer and better technology to see if it’s actually contributing to statistically better outcomes, or just driving up costs.
One way or another, we need to seek solutions that will enable Medicare to pay the 10% shortfall that is currently predicted for a decade from now. That can be accomplished by cutting costs, increasing revenues, or both. But we don’t need to start from scratch and overhaul the entire system, especially with the improvements that the PPACA has already created.