Paul Krugman is Half Right On Medicare

Republicans are promoting a plan which would destroy Medicare, claiming that Medicare cannot survive in its present form. Paul Krugman argues that Medicare is sustainable:

I keep seeing people say that Medicare in its current form is not sustainable, as if that were an established fact. It’s anything but.What is Medicare? It’s single-payer coverage for the elderly. Other countries have single-payer systems that are much cheaper than ours — and also much cheaper than private insurance in America. So there’s nothing about the form that makes Medicare unsustainable, unless you think that health care itself is unsustainable.

What is true is that the U.S. Medicare is expensive compared with, say, Canadian Medicare (yes, that’s what they call their system) or the French health care system (which is complicated, but largely single-payer in its essentials); that’s because Medicare American-style is very open-ended, reluctant to say no to paying for medically dubious procedures, and also fails to make use of its pricing power over drugs and other items.

So Medicare will have to start saying no; it will have to provide incentives to move away from fee for service, and so on and so forth. But such changes would not mean a fundamental change in the way Medicare works.

Of course, what the people who say things like “Medicare is unsustainable” usually mean is that it must be privatized, converted into a voucher system, whatever. The thing is, none of those changes would make the system more efficient — on the contrary.

So this business about Medicare in its present form being unsustainable sounds wise but is actually a stupid slogan. The solution to the future of Medicare is Medicare — smarter, less open-ended, but recognizably the same program.

Krugman is right that Medicare is sustainable. Changes will be necessary to account for demographic  changes in an aging society, and to account for increasingly expensive technology. He is wrong in concentrating on fee for service as the main problem. After all, the current fee for service Medicare system is far more cost effective than private insurance is. Krugman is also wrong  in saying that eliminating fee for service “would not mean a fundamental change in the way Medicare works.”

Private insurance tried to eliminate fee for service. The HMO era was a disaster, trying to save money by giving incentives not to provide medical care. Those who have gone through this in the past while working are unlikely to see this as desirable for their future years when they qualify for Medicare.

Adjustments certainly need to be made to Medicare, including adjustments to what services are  paid for and how they are paid under a fee for service system. Some modifications which are currently being experimented with may also be of value, such as partially paying based upon performance or for providing the services of a Medical Home, might turn out to be worthwhile modifications. However, any successful system which provides for the needs and desires of individual patients will need to include a strong fee for service component.

Mitt Romney Claims Obama Is Supporting 9/11 Truthers

Mitt Romney, talking on the weekly GOP infomercial Fox News Sunday, accused Barack Obama of supporting 9/11 Truthers such as Iranian President Mahmoud Ahmadinejad.

Susceptibility to brainwashing must run in the Romney family. His father admitted he was brainwashed about Viet Nam. Unfortunately Mitt does not understand how he has been brainwashed by the far right.

There Are Crazier People In The World Than Glenn Beck

I’ve had many posts regarding the delusions and misinformation commonly spread by the right wing in the United States. Dealing with disputes involving domestic politics often ignores the fact that there are even crazier people in the world than Glenn Beck who we disagree with even more with regards to reality. For example, there is Iranian President Mahmoud Ahmadinejad:

Two days before his official trip to Afghanistan, Iranian President Mahmoud Ahmadinejad called the terrorist attacks of September 11, 2001, a “big lie” intended to pave the way for the invasion of a war-torn nation, according to Iranian state media.

Ahmadinejad, known for his harsh rhetoric toward the West and Israel, said the attack on U.S. soil was a “scenario and a sophisticated intelligence measure,” Iran’s state-run Press TV reported Saturday.

The assault was a “big lie intended to serve as a pretext for fighting terrorism and setting the grounds for sending troops to Afghanistan,” Press TV reported Ahmadinejad as saying.

It’s not the first time Ahmadinejad has denied a historical tragedy. In the past, he has denied the existence of the Holocaust, which claimed the lives of some 6 million Jews during World War II, and suggested Israel should be “wiped off the map.”

“Today,” he said Saturday, “with blessings from the Almighty, the capitalist system, founded by the Zionists, has also reached an end,” Press TV quoted Ahmadinejad.

Reconciliation Commonly Used For Health Care–Not The Nuclear Option

Despite the talk that health care reform is dead, the Democrats have at least a 50:50 chance of passing the Senate bill and fixing it by use of budget reconciliation. Republicans are trying to counter this by falsely claiming this would be using the “nuclear option.” Steve Benen provides a good summary of what the “nuclear option” proposed by Senate Republicans in the past really consisted of and how it differs from what the Democrats are actually considering.

Budget reconciliation has been used many times in the past to pass a variety of measures. Today NPR’s Morning Edition had a story on how reconciliation has been used to pass health care measures. This includes COBRA and creating CHIP. Reconciliation has also been used several times to make changes in the Medicare and Medicaid programs. The story concluded with a discussion of using reconciliation for changes in Medicare:

Budget reconciliation has also been an important tool for changing the Medicare program.

“Going back even close to 30 years, if you start say in 1982, the reconciliation bill that year added the hospice benefit, which is very important to people at the end of life,” says Tricia Neuman, vice president and director of the Medicare Policy Project for the Kaiser Family Foundation.

Over the years, budget reconciliation bills added Medicare benefits for HMOs, for preventive care like cancer screenings; added protections for patients in nursing homes; and changed the way Medicare pays doctors and other health professionals.

Because the point of budget reconciliation was usually to cut the deficit, the huge Medicare program was nearly always on the chopping block. But there’s another reason it became the bill of choice for other far-reaching changes.

“This happened primarily because it was the only train leaving the station, so if policymakers wanted to make a change in health policy, the only way to do it would be to amend a reconciliation bill, and that’s really why it happened,” says Neuman, a former congressional health policy staffer.

In fact, over the past three decades, the number of major health financing measures that were NOT passed via budget reconciliation can be counted on one hand. And one of those — the 1988 Medicare Catastrophic Coverage Act — was repealed the following year after a backlash by seniors who were asked to underwrite the measure themselves. So using the process to try to pass a health overhaul bill might not be easy. But it won’t be unprecedented.

It also must be remembered that similar health care bills passed the House by a majority vote and by the  Senate by a super-majority. Now all we are talking about is using a simple majority vote to make adjustments to two separate bills which have already passed in order to prepare the final bill. This is not anything which is either radical or unprecedented.

White House Responds To Concerns of Bloggers Over Health Care Plan

With the debate over health care reform getting more heated on the left, Crooks & Liars reports on a White House conference call which answered some of the objections from liberal bloggers:

I started by asking about the recent maneuver to block imported drugs. I said it was “shameless,” not only because Candidate Obama ran on the issue of allowing Americans to buy cheaper drugs from Canada, but because the FDA already does site inspections in those same plants they were calling unsafe. (Basically, in order to sell any drugs in America, your manufacturing facility must meet the same standards as an American plant.)

I was pleasantly surprised to hear that they would be submitting an HHS bill in the near future – they’d “just this week” gotten funding to address any safety concerns, but more importantly, to start putting an infrastructure in place to import drugs.

My other question (as a former reporter who frequently covered insurance corruption) was about using state insurance commissioners to enforce new insurance regulations.

I said that in many states, insurance commissioners were pretty much owned by the local insurance companies, and I was skeptical as to whether making them the enforcers would actually work.

DeParle said HHS Sec. Kathleen Sebelius, a former state insurance commissioner, was not one of “those” commissioners, and she would be overseeing state departments. Sebelius already met with state insurance commissioners, she said, and having found a wide discrepancy in authority from state to state, got language inserted in the bill that would give them additional powers. (DeParle noted that the West Virginia commissioner didn’t even have the authority to see if insurance companies were solvent.)

DeParle said this was the widest expansion of insurance regulation in 20 years.

David Axelrod also chimed in, noting these changes were part of the reason why the insurance industry has opposed the bills so stringently. If this was a giveaway, he said, they wouldn’t be lobbying so hard to defeat the bill.

I have to give it to Axelrod on this: Without even a little exaggeration, I’d say that standardizing state oversight is probably the insurance industry’s worst nightmare. They’ve always taken advantage of a hodgepodge of weak state regulations, sprinkling generous political contributions along the way to buy off state legislators. So this bill is really what you want from federal regulation: Overriding weak state laws that trample consumers.

Other points:

Joan McCarter from Daily Kos wanted to know if the annual cap on expenses was left in the Senate bill. DeParle said they were working with CBO and Senate on improvements, and said a lot of what people thought was happening was due to “misinformation.” She said CBO said to put the qualifier “no unreasonable limits” in the bill language so they could score it, and said they’re working with the American Cancer Society in an attempt to make an enhancement to the system. She said at the very least, it will ban annual limits.

Open Left’s Chris Bowers wanted to know if the White House wanted the bill to go to the conference committee – or did they support “ping-ponging,” which would essentially mean the House would accept the Senate bill without changes. (DeParle said no, they want to get it to the conference committee.)

In response to a question from MyDD’s Jonathan Singer, Axelrod talked about having a daughter with a chronic illness while he was a reporter in an HMO plan. “I spent tens of thousands of dollars out of pocket that I didn’t have. The stress was extraordinary. This bill attempts to fix the system on the basis of the human costs on patients and their families.” He called it “wrongheaded to suggest these bills aren’t infinitely better than anything we have today. This is an extraordinary moment on which we can win.”

Economic Incentives and the Medicare Buy-In

The prospect of expanding Medicare in place of a public option has led to discussion of how this is likely to be received. Matthew Yglesias writes:

Medicare doesn’t pay hospitals and doctors as much as private insurance does. Hospitals and doctors don’t like that. They want to get paid more. Which is understandable. In addition to my main job here at CAPAF, I also write columns regularly for The Daily Beast and The American Prospect Online. I won’t go into specifics, but one of these fine online journalism outfits pays me 67% more per column than the other. Naturally, I wish the stingier publication would reimburse me at the higher rate. But they don’t see it that way.

To some degree this analogy as valid, but for health care the comparison is more complicated than comparing the rates of pay between different publications.  Reimbursement for health care charges is more complicated than getting paid for writing and hopefully Yglesias doesn’t have to worry about whether he will be paid at all. While Yglesias primarily writes about hospitals and cost shifting in his post, I’ll comment regarding the situation I know first hand–physician billing.

Private insurances generally pay more than Medicare so theoretically I should prefer that we do not expand Medicare. However, Medicare has some things going for it which make me happy to see more on Medicare. If a patient is on Medicare I pretty much know I’ll get paid. (The most common real world exception is when it turns out the patient is really enrolled in a private Medicare HMO I don’t participate with.)

With private plans there are far more reasons why I might not get paid, such as pre-existing conditions, deductibles which might be thousands of dollars, patients losing coverage, or unexpected rules on what is covered. (At least Medicare posts all their rules on line, limiting surprises).

With some plans I might get paid more, but it also costs more overhead for billing and obtaining authorizations. It is  far less expensive to deal with Medicare. I simply send in an electronic claim and receive a check in three weeks. With private plans, sometimes it is this easy, and sometimes they throw a bunch of roadblocks in the way of getting paid.

While Medicare does pay less, looking at things purely from the perspective of my own economic benefits I still like the idea of more people having Medicare. Sure, at times this will mean I’ll receive less pay if a patient changes from a private plan to Medicare, but generally it will not be all that much less. Many other times it will be patients who currently have no insurance or have an insurance plan which winds up not paying all that well. My bet is that I’ll still come out ahead (although a public option which pays 5% more than Medicare would be preferable assuming it paid as reliably as Medicare).

Ezra Klein reports that hospitals are gearing up to oppose the Medicare buy-in.

Medicare pays less for services than private insurers do, or than the public plan would. To consumers, that’s called “getting a better deal.” To hospitals, it’s called “making less money.” A hospital’s total operating budget is always based on its total revenue. They add the income from patients with private insurance, Medicare, and Medicaid, add in the whatever pittance they get for uninsured patients, and use that pool of money to offset their total operating expenses. That, in the simplest form, is the business model.

That model works as long as all three major streams of revenue stay constant. But changing some of their current private patients who are billed at $4,000 per day to Medicare patients who are charged $3,000 per day scares them. Where does the money come from? A health-care wonk will optimistically tell you it comes from more efficiencies. An industry cynic will tell you it comes from increasing volume. For some hospitals, it comes from nowhere, and they’re suddenly in financial trouble.

Comparing hospital charges is also far more complicated than this example. The amounts that a hospital charges are irrelevant. Medicare pays hospitals based upon a Diagnostic Related Group (DRG) system. A fixed amount is paid based upon the DRG which the diagnosis is assigned to. For example, Medicare will pay the same amount for a patient admitted with Congestive Heart Failure regardless of whether they are in the hospital for two days or five days and regardless of all those scary prices for each individual item you might see if you look at the hospital bill.

Actually it does get far more complicated than this as other factors will also influence the total payment, but Medicare payment is not based upon charges per day or charges for individual items. This might not change the fact that hospitals would prefer to have more patients with private insurance as opposed to Medicare, but it is such a common mistake in the discussion of health care reimbursement that I thought I would address it here.

Hidden Costs of Medicare Advantage Plans

The Medicare Advantage plans were set up by George Bush to reward the insurance companies for their contributions. The plans pay large subsidies to care for Medicare patients. As a result, it takes from 13 percent to 19 percent more to care for patients in Medicare Advantage plans than in the government Medicare program. Most of this extra money goes to increase profits for the insurance companies. Some  plans use a portion of the money to provide benefits such as health club memberships.

These extra benefits often don’t turn out to be a good deal for patients. Many don’t use the exercise programs, and often patients in Medicare plans do have access to exercise facilities. I’ve had patients who signed up for Medicare Advantage plans which promised dental benefits only to find that there weren’t any dentists in the area who actually accepted the plan.

Health insurance plans should be judged primarily on their health care benefits, but often the extra benefits are offset by higher out of pocket expenses for routine health care. For example, Medicare patients who do not have a secondary insurance pay 20 percent of  Medicare allowed amounts for office calls. Many Medicare Advantage plans have copays of $15 to $30 which exceed the 20 percent Medicare copay. There is no copay for laboratory testing in the government Medicare program but some Medicare Advantage plans do have a copy for lab work.

The Washington Post has an article on the hidden costs of the “free” perks from Medicare Advantage plans:

The trouble is, the extra benefits are not exactly free; they are subsidized by the government. And some of the plans pass their costs on to seniors, who pay higher co-pays and additional fees to get care.

“It’s a wasteful, inefficient program and always has been,” Sen. John D. Rockefeller IV (D-W.Va.) said at a recent hearing. At its core, Rockefeller added, Medicare Advantage is “stuffing money into the pockets of private insurers, and it doesn’t provide any better benefits to anybody.”

President Obama has proposed cutting more than $100 billion in subsidies over 10 years, a contentious component of health-care reform that will be fought in earnest as the bills move through Congress. But unlike some issues that touch off partisan sparring, Medicare Advantage has an unlikely band of bipartisan defenders who have already battled to restore $10 billion of the proposed reductions.

In a health-care debate defined by big numbers and confusing details, the prospect of losing benefits such as a free gym membership through the Silver Sneakers program is tangible, and it has spooked some seniors, who are the nation’s most reliable voters and have been most skeptical about reform.

Medicare Advantage was established in the 1970s (under a different name) when private insurers convinced Congress that they could deliver care at lower costs than Medicare. The program blossomed in the late 1990s when Congress bolstered it with millions in additional federal subsidies to for-profit HMOs. It has proven popular among younger, active seniors who had managed-care plans as workers, and about a quarter of Medicare’s 45 million beneficiaries are enrolled.

Many private plans require no additional monthly premiums, yet the government pays an average of $849.90 in monthly subsidies to insurance companies for a person on Medicare Advantage, according to the Kaiser Family Foundation. That is about 14 percent more than the government spends on people with standard Medicare, according to the nonpartisan Medicare Payment Advisory Commission.

“The promise of Medicare Advantage and Medicare HMOs was to save the government money, to save consumers money, all the while providing additional benefits and coordinating care,” said Joseph Baker, president of the Medicare Rights Center. “That promise has been unfulfilled overall because the plans are overpaid by the federal government at this point.”

Reaction To Attacks on Obama From Right and Left

There is response to attacks on Barack Obama from both the right and left. Eugene Robinson responded to attacks against Obama after he received the Nobel Peace Prize:

The problem for the addlebrained Obama-rejectionists is that the president, as far as they are concerned, couldn’t possibly do anything right, and thus is unworthy of any conceivable recognition. If Obama ended world hunger, they’d accuse him of promoting obesity. If he solved global warming, they’d complain it was getting chilly. If he got Mahmoud Abbas and Binyamin Netanyahu to join him around the campfire in a chorus of “Kumbaya,” the rejectionists would claim that his singing was out of tune.

Let the rejectionists fulminate and sputter until they wear their vocal cords out. Politically, they’re only bashing themselves. As Republican leaders — except RNC Chairman Michael Steele — are beginning to realize, “I’m With the Taliban Against America” is not likely to be a winning slogan.

The far right already resembles the Taliban, even if to a far less degree, with their support for religious fundamentalism and rejection of the modern world. This just gives them one more topic to agree on. With the right wing echo chamber causing the right wing to increasingly reject reality and adopt extremism, there really might not be any significance between them after a few more years of a Democratic president.

Meanwhile BooMan is venting against those on the left who have been attacking Obama in response to the overreaction to an anonymous comment yesterday:

You call him a warmonger, but he gets the Nobel Peace Prize. He ends torture and allows his Attorney General to investigate it, and you call him a torturer. He tries to enact health care reform with a robust public option and you accuse him of seeking every opportunity to sell-out to the insurance industry. He bails out the cratering financial services industry and prevents a second Great Depression, and you accuse him of selling his soul to corporate CEO’s. I’m not saying that all of these criticisms lack validity. I’m not saying that people shouldn’t advocate for the things they care about passionately. I just want to know where you get the fucking idea that an anonymous White House staffer who gets asked about all this criticism would feel obligated to show you deference and respect.

What’s he supposed to say? That all the criticism is right on the mark?

The truth of the matter is, right or wrong, the progressive blogosphere has been a more severe and on point critic of the Obama administration than any teabagger. And, in many ways, that is to the community’s credit. We don’t embrace the cheerleader’s role and that gives us more credibility. When the president screws up, we’re willing to call him on it. But, Jesus Christ, do you expect the administration to lie down and say, ‘Thank you, sir, may I have another’?

If you berate them for not closing Guantanamo fast enough, not ending Don’t Ask, Don’t Tell fast enough, not evacuating Iraq fast enough, not passing a health care bill fast enough, and so on…do you not expect one their number to at some point push back and point out that making these kind of changes takes time and is a bit difficult?

There are legitimate policy areas where people on the left might criticize Obama, but some are losing all perspective. We must consider the mess which Obama inherited, and the amount of opposition to many liberal goals from the right. To some degree this is a matter of expectations. I never expected the United States to turn into a Utopia under Obama–After Bush I primarily wanted to see a president who did not do so many awful things. It is also a question of time. Not everything can be achieved in less than one year.I am often just happy that, whenever Obama is on television, we have a president who can speak coherently about the issues.

While I have not agreed with all of Obama’s decisions, he does deserve credit for his record so far this year. So far we have had reversals of Bush policies on matters such as the ban on federal funding of embryonic stem cell research, raids on sellers of medicinal marijuana, and the global gag rule. His economic policies may have kept us out of a depression. The Nobel Peace Prize does demonstrate how he has changed attitudes about the United States elsewhere in the world. We are near passage of comprehensive health care reform and responding to global warming is now on the table. Neither the health care legislation or proposals to deal with climate change might be perfect, but they represent a considerable change from a president who opposed any meaningful health care reform, tried to destroy Medicare with the original proposals for his Medicare D plan, and who denied the scientific evidence for global warming. It is one thing to push Obama for more progress. It is totally insane, as some on the left are doing, to claim we are living in the third Bush term.

Debunking Health Care Myths

McSweeny’s debunks more health care myths. For example:


The Democratic health care reform proposal will not let you choose your own doctor.


You will have a wider-than-ever range of doctors to choose from! In order to accommodate 45 million new patients, the plan expands the definition of “doctor” from “medically licensed professional” to now also include:

• Morning radio DJs who have adopted the moniker

• Televised bullies (Phil, Laura)

• PhDs in any field, and “All But Dissertation” PhD candidates. Trust us, you will have no problem getting an appointment to see these master procrastinators.

• Soda creators (Pepper, Brown*)

– – – –


Obamacare™ will ration life-saving medicine away from the elderly and disabled via “Death Panels.”


While nothing can replicate the current mercy-driven system of rationing via “Private Insurer Form Letter,” the new proposal certainly does not consign end-of-life decisions to panels of faceless bureaucrats. Rather, they are taken up by exciting, glamorous “Celebrity Death Panels”™ (C-List minimum).

– – – –


People in Britain are deeply unhappy with their socialized medicine system, which ours will become.


People in Britain are deeply unhappy with everything. It is their only source of happiness.

– – – –


Universal health care will transform the United States into another Cuba/Canada/France/Venezuela/The Democratic Republic of the Congo.


A common misconception! It will, in fact, transform us into a Jamaica/Costa Rica/Amsterdam/Chad.

– – – –


If you do it standing up, you’ll have a boy.


The BHO-HMO offers full coverage for pre-, neo- and post-natal care, without regard to procreative positioning.

The myths discussed here aren’t really that much more absurd than those coming from the Republicans.

Is It Possible For America To Look At Health Care Reform Like Adults?

So far we are seeing a lot of predictable political posturing on health care reform but few are willing to approach the issue like adults. The Republicans are uttering the usual talking points, while Michael Steele provides an example of how little they have to say on the actual issues. Obama is pushing hard. Unfortunately the Democrats have been promising a free lunch, and now voters are getting nervous as they realize they might not receive this.

Earlier polls showed voters were willing to support health care reform even if it meant paying taxes. Obama should have taken advantage of this this and appealed to voters’ better instincts–as well as sticking with reality. Instead he tried to claim that health care reform will save money. The problem is that measures such as preventive medicine and computerization of medical records will pay not for health care reform. This might save money in the long run but it will take longer than Obama can Constitutionally remain in office to see real savings from these measures. In the short run (i.e. Obama’s first and potential second term) it will be necessary to spend more money to expand health care coverage to all, increase the provision of preventive medicine, and overhaul the system.

Claims that we can change the health care system without spending money upfront are no more reality-based than the claims we could go to war in Iraq without it costing us very much. We can no more pay for health reform from future savings than we can pay for the Iraq war out of imagined oil revenues.

The Democrats are trying to also say they can pay for this by only taxing the wealthy but there simply might not be enough wealthy tax payers to pay for this.

What Obama should have done back when people were saying they were willing to pay more for health care reform was to come up with a plan where the cost was discussed honestly. Then Obama should have promoted the plan based upon the value to everyone (including but not limited to the near 100 million who are under-insured or uninsured). The selling points would include:

  • Everyone would be assured that they can purchase affordable health care coverage, regardless of their age and regardless of their medical condition
  • Everyone would be assured that they would not lose their insurance because they became ill, or lost their job
  • Insurance prices would likely go down over time, ultimately offsetting initial tax increases

Sure the first two provisions are included in the pending legislation but I wonder how many really understand this. If you want people to support a plan based upon these benefits it is necessary to promote these features which benefit all. Democrats cannot allow the Republicans get away with framing health care reform as primarily a  measure to force those with coverage to pay for the coverage for others (or claim this is a government takeover of health care).

Reassurance that one can obtain and keep affordable health care coverage is of benefit to everyone, both the insured and the uninsured. When we look at the number of bankruptcies in this country due to losing health care coverage and the difficulty in purchasing coverage on the individual market, these are  things everyone can benefit from. As everyone benefits, everyone who is able to should pay the taxes needed to finance this should be paying in. A broad based tax to cover this provides the best chance of actually paying the costs.

Americans want to continue to have among the best subspecialty care in the world, but we cannot continue to have the worst delivery of health care in the industrialized world. Besides access to care, American also desire to continue to enjoy the amount of choice they have had (assuming they had the coverage) and want neither the draconian restrictions of some foreign countries or of some American HMO’s.

Someone needs to talk to the American people as adults about health care in this country–including the need to pay the costs to have the type of health care system most Americans want. Barack Obama has the ability to communicate the information. He needs to talk to Americans like adults instead of pretending health care reform can pay for itself or can be paid for simply by taxing the rich.