Does the Ryan Reform REALLY Threaten to Kill Medicare [as we know it] ?

There has been a great deal of commentary from both the Democrats and the Republicans / Tea Partiers related to Congressman Ryan’s proposals to trim our country’s deficits.  While all of of interest, the Medicare voucher program is to me the most intriguing, as this is an area I deal with daily.  So I thought it might be of interest to attempt to dissect this proposal in the context of the following questions:

1. Does the Ryan plan improve or hinder access to care by our elderly ?

2. Would its’ introduction “end medicare” as we know it ?

Why do we have Medicare?

The signing of the Medicare act (Social Security amendments) on 30 July, 1965 by President Lyndon Johnson was the culmination of work begun by Presidents Roosevelt and Truman (http://www.ssa.gov/history/corning.html accessed 2 June, 2011).  At the time, the single biggest reason for economic dependency in elderly citizens was the high cost of health care.  Organized medicine – my people – decried Medicare as the first step to a creeping socialism that would destroy American medicine; in fact it proved a boon to the income of the country’s physicians.

Envisaged as a plan to care for elderly Americans, Medicare has done a reasonable job.  Its strengths are almost complete coverage, reasonable deductibles, the ability [usually, there are some variations such as the Medicare Advantage plan that limit this] to choose one’s physician, and low overhead.  Weaknesses include / have included limited focus on quality, fee-for-service payment model (which encourages greater utilization), inadequate financing for some services, and limited coverage of rehabilitation services.  Overall, with some tweaking, this good plan becomes a great one.

Reform of Medicare – Precisely What Does this Mean ?

It is reasonably difficult to function in this society at the present time and not have some recognition that we are on a financial trajectory that is worrisome; we already spend 15% to 16% of our GDP on healthcare – this amounts to about $ 2 trillion dollars, roughly half from private sources and the rest from the government.  Further, we have some significant quality problems (see the Problems in Paradise Part 1).  We don’t do a good job of of stopping therapies once started; I think we do not talk about end-of-life care enough with our patients and families.  The time to do this is NOT when one of us is very ill; rather, this discussion should be begun when when we are well, and can do this in small pieces over several time periods / clinic visits.  There is certainly work to be done on the consumption end to make Medicare better and more efficient.

On the resource end, the concern is that if we spend as we are, the Medicare trust fund will run out by 2029 (http://www.hhs.gov/news/press/2010pres/08/20100805d.html), although this figure is an improvement upon the 2017 estimates based analysis that was performed before the passage of the Affordable Care Act of 2010.  The financial position of Medicare will be further improved by increasing the amount of a salary that is subject to Medicare tax, initiating some variant of a means test for Medicare, altering the way services are funded, and using Evidence-Based Medicine a the starting place for what is considered appropriate care.  One could envision that where EBM practices are followed, a malpractice award cap might be implemented if a patient, despite being treated in this manner, suffers harm.

The long and short of this issue is that we have to bend the cost curve, provide high quality care, and ensure that whatever we do spend is for appropriate care provision, rather than, for example, administration (see Problems in Paradise Part 2).

Does Mr. Ryan’s plan do this ?

Medicare Reform

My review of the Ryan proposal suggests that, while it will decrease the costs of care to the Medicare trust – simply by decreasing the amount paid out – it will increase the amount shouldered by each individual citizen on Medicare, again simply based upon the decrease in the amount provided by Medicare, in proportion to this decrease.  Additionally, Mr. Ryan’s proposal will also result in an additional increase in cost due to the significantly higher administrative costs of private insurance as compared to Medicare (Problems in Paradise, Part 2).

In short, the Ryan proposal invokes the magic hand of the market – an ideological position, rather than one based upon sound policy – to decrease costs (http://budget.house.gov/UploadedFiles/PathToProsperityFY2012.pdf page 47 accessed 2 June, 2011) while in actuality it appears that costs will be increased (Figures 1 and 2)

IS There a Problem With Medicare [and our American Health System] ?

So by spending about 700 words pointing out a disagreement with Mr. Ryan’s plan, does this mean that I am suggesting there are no problems with Medicare or the US health system in general ?  Absolutely not.  We clearly have problems – again, please see Problems in Paradise, Parts 1 through 3.

To rein in costs and get control of health expenditures, this is how I would start:

1. Alter the Affordable Care Act to allow for a public option.  The administrative savings alone are worth between $ 290 and $ 320 billion (Woolhandler, et al, N Engl J Med, 2003;349:768)

2. Pay for quality, not the number of “things” done.  Quality in medicine is measurable and ensuring that Evidence Based Medicine is – where possible and where data exist – used will improve quality.  Elements in the Affordable Care Act seek to do just this.

3. Along the lines of item # 2, the fee schedules should be disease-based, rather than fee-for-service.  If physicians and hospitals are paid a (fair) flat fee for the care of a person with, for example, an overwhelming infection, and if we are held to agreed upon quality standards, we will figure out how to care for this person in an efficient manner (Casale AS, et al, Ann Surg 2007;246: 613 – 623, and Steele G Jr, J American College of Surgeons, 2010;210:1 – 5).

4. The effectiveness of therapy must be scientifically evaluated; useless therapies must be rooted out.  This will take significant effort by the National Institutes of Health, the Institute of Medicine, and academic medical centers, but we can do this.

5. I like lawyers.  In fact, one of the wonderful things about our country is that the law tends to be an equalizer.  Never-the-less, there must be malpractice reform.  Every bad outcome is not malpractice and these events cannot be allowed to serve as a lottery.  Harmed individuals must be cared for; impaired or compromised practitioners must be rehabilitated or removed from service.

6. We must begin a national discussion on “how much is enough”.  Death will happen.  we cannot prevent it by charging those who would discuss its’ coming as “Death Panelists”.  The national discussion must begin to address the limitations of medicine and the fact that death will come to us all.

In Summary

Mr. Ryan’s proposal will not help “save” Medicare.  Whether phrased as a voucher plan or one that provides premium-support, it matters little at all.  While the so-called magic of the market certainly seems to work with regard to computers and cars, in an area as technical as medicine, it does not work so well.  Mr. Ryan’s plan would, in my view, end Medicare as we know it.  It would leave our elderly citizens at catastrophic risk.

Doing nothing is also not an option. The suggestions I make above could be part of the / a solution.  Putting different generations in competition with one another for benefits, as Mr. Ryan’s proposal seems to want to do, is also not a solution.  We can neither “simply” cut, nor tax our way out of this problem.  We must reform, which includes both increasing revenue and improving performance.  Americans are a pretty smart and innovative people.  We can do this.

Thoughts ?

About AJ Layon

AJ Layon was, for 28 years, at the University of Florida College of Medicine, in the Division of Critical Care Medicine, in Gainesville, FL. For the past approximately 10 years, until September 2011, he was Professor and Chief of Critical Care Medicine at UF; In September of 2011 he became System Director of Critical Care Medicine in PA. While his interests are primarily related to health care, health care reform, and ethical issues, as a citizen of our United States and our world, he will occasionally opine on issues of our "time and destiny". You are welcome to respond to him at ajlayon@gmail.com.
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