Bush's Medicare Case Uses Faulty Diagnosis
newsday.com
March 13, 2003
It's a world newly defined by certitudes - good versus evil, with us or against us, French versus freedom fries.
This hardly seems an appropriate moment to mention that one of the great certainties that drives those who would "reform" Medicare - to save it, supposedly, from itself - is at best uncertain and at worst plain false. That is President George W. Bush's belief that private insurers can rescue a Medicare system that is antiquated in its benefits and "on the brink" in its finances. The ideology holds that the insurance industry can better contain health care costs than the government.
But except for a brief period in the early 1990s when rigid HMOs flourished and insurers squeezed down rising health-care costs, managed care hasn't managed this feat. Double-digit premium increases for employer-provided health insurance are again routine - outpacing medical inflation, overall inflation and the growth in workers' earnings since 1998, according to the Kaiser Family Foundation. Hewitt Associates, the consulting firm, predicts a 15.4-percent average increase in employer health costs again this year.
And what of Medicare, that hard-to-control monster? A new study by two Urban Institute researchers shows that over three decades, the government ogre has done as well - even better - than the supposedly lean-and-limber insurers at controlling spending.
Between 1970 and 2000, researchers Cristina Boccuti and Marilyn Moon found, Medicare's average annual spending growth rate per enrollee was 9.6 percent, compared with 11.1 percent for private insurers. To make a fair comparison, the researchers excluded types of care each system provides that aren't comparable to the other's. Medicare spending for home health and skilled nursing care - rarely used by the younger patients insured by private plans - wasn't counted. Spending on outpatient prescription drugs - which has been rapidly driving up private insurance costs but which is unavailable to most Medicare patients - wasn't counted, either.
They examined spending on hospital and physician visits, the two categories they found most comparable.
They found comparable rates of spending growth for physician and clinic visits until the late 1980s,
when Medicare began doing much better than private insurers at holding down
expenditures - largely due to tight reimbursement rates imposed by Congress.
As for hospitals, the two systems turned out to be roughly the same
in their rates of growth, with Medicare ending up just slightly higher
in spending than the private insurers by 2000.
The analysis did not account for differences among patients who tend to be insured under each system. No allowance was made for the advanced age of Medicare patients - who are sicker, overall, than patients in younger families insured by private plans.
"It's not the case that you can say Medicare spending is out of control on a per-patient basis," said Moon, a former trustee of the Medicare and Social Security trust funds. "If you do that, you would have to say private plans also are out of control."
It would, no doubt, be no use to await such an admission. Karen Ignani, president of the American Association of Health Plans, questioned the study's methods, particularly its exclusion of drug costs. She said Medicare had done better on controlling expenditures for doctor visits because the government has been "starving physicians" with low reimbursements.
"It looks like the study worked hard to draw a political conclusion that's not supported by the data," Ignani said.
So then, what supports the president's conclusion that Medicare should be "reformed" by handing its patients over to private insurers? Where is the evidence that they do better at cost control for anyone, let alone the oldest, sickest patients? Why, if there is to be a drug benefit added to Medicare, does the president want to push elderly patients toward private insurers when the government could become a huge buyer of drugs - with say, the combined purchasing power of Wal-Mart, Target and Kmart - and force deep discounts?
Don't expect answers. There is no certainty like that which is sustained by faith rather than the testing of fact.
Email: cocco@newsday.com
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