Medicare Archives - the patient investor

September 13, 2016

Rising debt—not a crisis, but a serious problem | Brookings

Testimony by Alice M. Rivlin, Senior Fellow – Economic Studies, Center for Health Policy, before the Joint Economic Committee of the United States Congress on September 8, 2016:

…..our national debt is high in relation to the size of our economy and will likely rise faster than the economy can grow over the next several decades if budget policies are not changed. Debt held by public is about 74 percent of GDP and likely to rise to about 87 percent in ten years and to keep rising after that.

This rising debt burden is a particularly hard problem for our political system to handle because it is not a crisis. Nothing terrible will happen if we take no action this year or next. Investors here and around the world will continue to lend us all the money we need at low interest rates with touching confidence that they are buying the safest securities money can buy. Rather, the prospect of a rising debt burden is a serious problem that demands sensible management beginning now and continuing for the foreseeable future.

What makes reducing the debt burden so challenging is that we need to tackle two aspects of the debt burden at the same time. We need policies that help grow the GDP faster and slow the growth of debt simultaneously. To grow faster we need a substantial sustained increase in public and private investment aimed at accelerating the growth of productivity and incomes in ways that benefit average workers and provide opportunities for those stuck in low wage jobs. At the same time we need to adjust our tax and entitlement programs to reverse the growth in the ratio of debt to GDP. Winning broad public understanding and support of basic elements of this agenda will require the leadership of the both parties to work together, which would be difficult even in a less polarized atmosphere. The big uncertainty is whether our deeply broken political system is still up to the challenge.

…..There are three necessary elements of a long-run debt reduction plan:

Putting the Social Security program on sustainable track for the long run with some combination higher revenues and reductions in benefits for higher earners.

Gradually adjusting Medicare and Medicaid so that federal health spending is not rising faster than the economy is growing….

Adjusting our complex, inefficient tax system so that we raise more revenue in a more progressive and growth-friendly way and encourage the shift from fossil fuels to sustainable energy sources…..

Source: Rising debt—not a crisis, but a serious problem to be managed | Brookings Institution

September 23, 2013

Saving Medicare: The Case for Market-Based Health Reform

In a paper to Catholic Health Conference Australia, Jeremy Sammut highlights the need for revision of Australia’s national health care system.

….health spending already consumes a third of the NSW budget….. and if health spending continues to grow at current rates, health will consume the entire NSW budget in 20 years time.

Providing free services encourages over-use and, with limited budgets, restricts access to essential services for the most needy. Sammut suggests a shift to self-funding for minor expenditure, with state assistance for chronic or catastrophic needs.

As the increasingly unaffordable United States private health system demonstrates, it is impossible to insure people for all health services without over-use causing a cost and premium spiral. In a private system, moral hazard creates un-affordability; in a free public insurance system like Medicare it causes arbitrary and unethical rationing.

Public and private health systems are both plagued by the problem of ‘first dollar insurance’ – the expectation among consumers that private or public insurance should entitle them to receive treatment entirely paid for by a third-party payer no matter how small the cost or condition.

By contrast, a soundly constructed insurance system should not insure people for all services. Instead, individuals should be required to self insure for minor health needs and expenses. Third party insurance should be reserved to enable people to share exceptional risk involving major health problems, and thus should only cover a minimum package of high-cost treatments for complex chronic and catastrophic conditions. And personal responsibility, consumer sovereignty, and price signals should also feature by using front-end deductibles and copayments to control costs and deter unnecessary use of marginal and discretionary services and trivial claims.

What we also need is for public and private hospitals to compete on an equal footing for the taxpayer’s health care dollar. This system has been successfully implemented in the Lombardy region of Italy, with excellent results. Margherita Stancati at WSJ online reports:

Lombardy, by contrast, has increased its quality standards, set its own reimbursement rates and, most important, put public and private hospitals on an equal footing by making each equally eligible for public funds. If a hospital meets the quality standards and charges the accepted reimbursement rate, it qualifies. Patients are free to choose between state-run and publicly funded private hospitals at no extra cost. Their co-pay is the same in either case. As a result, public and many private hospitals in Lombardy compete directly for patients and funds.

…..Around 30% of hospital care in Lombardy is private now — more than anywhere else in Italy. And service in both the private and public sector has improved.

Read Jeremy Sammut’s presentation at Saving Medicare: The Case for Market-Based Health Reform | Jeremy Sammut.

June 3, 2013

The U.S. Health Care System Doesn’t Need Price Controls. It Needs Price Signals | Reason.com

Peter Suderman discusses two articles which attack the high cost of health care in the USA:

Both pieces offer essentially the same thesis: The U.S. spends too much on health care because the prices Americans pay for health care services are too high. And both implicitly nod toward more aggressive regulation of medical prices as a solution.

…..most Americans don’t actually know much of anything at all about the prices they pay for health services. That’s because Americans don’t pay those prices themselves. Instead, they pay subsidized premiums for insurance provided through their employers, or they pay taxes and get Medicare or Medicaid……

What that means is that, in an important sense, the “prices” for health care services in America are not really prices at all. A better way to label them might be reimbursements—planned by Medicare bureaucrats and powerful physician advisory groups, negotiated by insurers who keep a watchful eye on the prices that Medicare charges, and only very occasionally paid by individuals, few of whom are shopping based on price and service quality…..

This is the real problem with health care pricing in the U.S.: not the lack of sufficiently aggressive price controls, but the lack of meaningful price signals.

The US spends about two-and-a-half times the OECD average for healthcare, while life expectancy at 79.7 years is lower than the OECD average of 79.8 years, according to PBS News Hour.

The Lombardy region of Italy offers the best health care solution I have come across, using price signals to control cost and quality of service in both state and private medical facilities.

Margherita Stancati at WSJ online writes:

Like other European countries, Italy offers universal health-care coverage backed by the state. Italians can go to a public hospital, for example, without involving an insurance company. The patients are charged a small co-pay, but most of the bill is paid by the government. As a result, the great majority of Italians don’t bother to buy private health insurance unless they want to seek treatment from private doctors or hospitals, which are relatively few.

Offering guaranteed reimbursements to public hospitals, though, took away the hospitals’ incentive to improve service or rein in costs. Inefficiencies were rampant as a result, and the quality of Italy’s public health care suffered for years. Months-long waiting lists became the norm for nonemergency procedures—even heart surgery—in most of the country.

Big changes came in 1997, when Italy’s national government decentralized the country’s health-care system, giving the regions control over the public money that goes to hospitals within their own borders…..

In much of the country, regions have continued to use the standards of care and reimbursement rates recommended by Rome. Some also give preferential treatment to public hospitals, making it more difficult for private hospitals to qualify for public funds.

Lombardy, by contrast, has increased its quality standards, set its own reimbursement rates and, most important, put public and private hospitals on an equal footing by making each equally eligible for public funds. If a hospital meets the quality standards and charges the accepted reimbursement rate, it qualifies. Patients are free to choose between state-run and publicly funded private hospitals at no extra cost. Their co-pay is the same in either case. As a result, public and many private hospitals in Lombardy compete directly for patients and funds.

…..Around 30% of hospital care in Lombardy is private now—more than anywhere else in Italy. And service in both the private and public sector has improved.

September 22, 2012

More than 67 million Americans dependent on government

Interesting charts from The Heritage Foundation: The 2012 Index of Dependence on Government
By William Beach and Patrick Tyrrell – February 8, 2012

The percentage of US citizens who do not pay federal income taxes, and who are not claimed as dependents by someone who does pay them, has climbed more than four-fold from a low of 12 percent in the late 1960s to 49.5 percent in 2009.

Index

More than 70 percent of federal spending goes to programs that encourage dependence.

Index

The Index of Dependence on Government multiplies each program’s yearly expenditure by its weight. The total of the weighted values is the Index score for that year. The Index is calculated using the following weights:

Housing: 30 percent
Health Care and Welfare: 25 percent
Retirement: 20 percent
Higher Education: 15 percent
Rural and Agricultural Services: 10 percent

Index

More than 67 million Americans receive assistance through the programs included in the Index.

Index

If we add government employees, the number dependent on government increases to more than 91 million.

Index

Reproduced with permission from The Heritage Foundation
Read the full report at The 2012 Index of Dependence on Government

August 11, 2012

Romney’s VP: Paul Ryan—A Bold Choice, a Big Risk

By JOSH BOAK, The Fiscal Times

August 11, 2012

Bowing to pressure from the conservative wing of his party, Republican Mitt Romney has picked House Budget Committee Chairman Paul Ryan as his vice presidential running mate, and ensured that the congressman’s controversial plan to transform Medicare into a voucher-type program will become a central issue in the presidential race.

via Romney’s VP: Paul Ryan—A Bold Choice, a Big Risk.

December 29, 2011

TaxVox » Blog Archive » A Medicare Reform Plan That Just Might Work

Senator Ron Wyden (D-OR) and House Budget Committee Chairman Paul Ryan (R-WI) did a remarkable thing: They announced a bipartisan plan to fix Medicare, probably the most contentious of policy issues.

And amazingly, what they came up with might just work…….

Ryan-Wyden would work like this:

Those 65 and older would receive a subsidy to purchase insurance. They could either buy traditional Medicare or a private policy that met government benefit and marketing standards.
Private insurers would have to offer plans at least as good as fee-for-service Medicare and be barred from denying coverage based on pre-existing conditions.
The subsidy would be tied to the cost of the second-lowest cost private plan or traditional Medicare. This would be relatively generous.
Seniors would buy coverage through an insurance market that would very likely mimic the exchanges in the 2010 health law.
For the first time, the proposal would cap Medicare cost growth. Thus, instead of continuing Medicare as an open-ended entitlement whose costs automatically rise with health expenditures, the program would impose a global budget on the program. In theory, at least, the combination of market competition and this overall budget would slow the growth of Medicare costs. This could be the most contentious element of the entire plan.
The plan would provide additional subsidies for low-income seniors but increase premiums for those with high-incomes. It would also offer a new catastrophic benefit.
It would apply only to those who turn 65 in 2022 or later.

via TaxVox » Blog Archive » A Medicare Reform Plan That Just Might Work.