How Medicare Is misrepresented

A common phrase in the current debate over the so-called fiscal cliff is “Medicare needs to be restructured.” The term serves as code for policies unlikely to be appealing to voters, a term that can mean everything and, thus, nothing.

The question is what problem restructuring is to solve in traditional Medicare, which remains one of the most popular health insurance programs in this country. People who use this vague term should always be challenged to explain exactly why and how Medicare should be changed.

Critics of traditional Medicare – even those who should know better – often accuse it of being “fee for service.” It is a strange accusation. After all, fee-for-service remains the dominant method of paying the providers of health care under private insurance, including Medicare Advantage, the option of private coverage open to all Medicare beneficiaries.

Describing Medicare as fee-for-service insurance is about as thoughtful as describing a horse as “an animal that has four legs,” a characteristic shared by many other animals. The practice is particularly odd, given that traditional Medicare as early as the 1970s was the first program to develop so-called “bundled payments” for hospital inpatient care – the diagnostically related groupings, known as D.R.G. – in place of fee-for-service payment of hospitals, an innovation that has since been copied around the globe.

A more descriptive term for traditional Medicare would be “free choice of providers” or “unmanaged care” insurance. These features, of course, would hardly be viewed as shortcomings among people covered by traditional Medicare or their families. Neither term would be a good marketing tool among voters for proposals to abandon traditional Medicare…

A case can be made, on theoretical and sometimes empirical grounds, that properly managed or coordinated care can on average yield superior medical treatments, at lower cost, than completely unmanaged care under classical indemnity insurance.

The problem has been and continues to be that this is not the folklore among patients or doctors. The latter, as noted, generally believe they can manage their patients’ care properly without outside interference into their clinical decisions. Among patients and doctors, the term managed care is still not quite respectable.

This can explain why critics of traditional Medicare delicately but nonsensically prefer to decry it as being fee for service rather than as free-choice-of-providers insurance or unmanaged-care insurance.

I hadn’t seen Uwe Reinhardt on television in a spell when he popped up on Tom Keene’s SURVEILLANCE yesterday morning on Bloomberg TV. I had forgotten his dry wit and political economist’s accurate simplicity of definitions. The folks I can understand the easiest also often make the most sense.

This blog post is one the earliest of his current series on Medicare.

Meanwhile, click the link and RTFA. Education, it’s wonderful.

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