Fix MEDICARE Now–Part 2

Posted by David Edman in April 2010, Blog, Healthcare Reform Blog on April 4th, 2010 | No Comments »

There are a number of discussions taking place about the Medicare Program–what is wrong and what is right.  I’d like to add my 2 cents, because I believe that in many ways, Medicare is a microcosm of the public vs. private debate about what is wrong (and what is right) with our healthcare system.

Medicare has 4 parts:

• Part A, Hospital (started in 1967)
• Part B, Physician and Other (started in 1967)
• Part C, Medicare Advantage (started in 1985 under a different name)
• Part D, Prescription Drugs (started in 2004)

When people talk about Medicare, they generally refer to ‘traditional Medicare’—Parts A & B & later D.  This is where the federal government ‘negotiates’ with providers, sets the rates of payment, and cuts the checks.  And, those who can afford it typically purchase a private Medicare supplemental policy to cover those services not paid by Medicare.  KEY POINT: this program is a financial disaster.  This is the program that is costing taxpayers 10X what was originally projected, and is the reason that thankfully the concept of a ‘Public Option’ was turned down as a part of Obamacare.  The government has no track record of success in the health insurance business.

Part C or Medicare Advantage is an effort to deliver Medicare benefits through the private sector.  It is justly being criticized today for payment excesses, but it used to be a VERY successful program.  At the outset, private plans were compensated based on a formula that approximated 95% of what the government would normally pay per capita.  Because of better ‘managed care’ leading to efficiencies, the plans were able to add benefits in order to attract membership.  That is why Medicare Advantage is popular.  SO WHAT HAPPENED?  Under the watchful eye of our elected representatives, capitalism and a lack of transparency allowed this program to be bastardized by the insurance companies (sound familiar Wall Street?).

So, the demise of Medicare Advantage under Obamacare (except for the deals cut in certain states) is misplaced—let’s not throw out the baby with the bath water.  Let’s fix what is wrong with the Medicare program , and go back to the Medicare Advantage basics of the 1980s.  How do we do this?

• Allow only PPOs and HMOs to participate in Medicare Advantage
• Limit the number of plan choices to foster competition.
• Return to rates of payment to private plans approximately equal to what the government would pay under traditional Medicare.

Obamacare can be fixed.  Big government control and over reliance on regulation in health care will reduce quality and innovation, and be a financial disaster.  We can do better.