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Medicare Trouble
The trouble with Medicare.


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Senate Minority Leader Tom Daschle (D., S.D.), recently wrote in a letter to President Bush that he wants the president to “put aside” his proposal to “privatize Medicare.”

It would be too expensive, he says, citing a recent study that found that private plans pay 15 percent more than Medicare does for the same medical services.

He doesn’t note that Medicare’s payments don’t come close to covering the full bill or that the average Medicare patient pays roughly $2,000 per year to cover the shortfalls. He doesn’t talk about the crisis situations that have erupted in some cities because doctors refuse to take on new Medicare patients.

Yet this problem has reached a breaking point, particularly in Denver and Seattle. In Denver, only a third of the doctors say they will accept new Medicare patients. That’s down from 52 percent in 2001, a rate of decrease that Kathy Lindquist-Kliessler, executive director of the Denver Medical Society, calls “alarming.” In Seattle, the percentage of doctors who accept new Medicare patients fell from 71 percent to 55 percent in four years, according to the Washington-based Center for Studying Health System Change.

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Gaining access to doctors, particularly specialists, has become increasingly difficult for seniors. Another report by the Center for Studying Health System Change indicates seniors are waiting far longer to see doctors for checkups and even for specific illnesses, that the proportion of physicians who accept all new Medicare patients is falling (from 74.6 percent to 71.1 percent in just four years) and that the percentage of surgeons willing to operate on new Medicare patients is falling faster still — from 81.5 percent to 73 percent in the same period.

More to the point, Dr. Lois Copeland, a physician in Hillsdale, N.J., said she has lost two patients recently because surgeons refused to operate on them — one because an overworked doctor said he was too “exhausted” to operate safely. “Bring the over-65 population into the private insurance market,” says Copeland. “Rationing is upon us, brought on by the malpractice litigation crisis and aggravated by the price controls of Medicare.”

Why? Medicare controls its costs by limiting benefits and setting artificially low fee schedules for the services it does cover. Last year, for example, Medicare unilaterally cut physician payments 5.4 percent. And doctors, who have seen the costs of operating a medical practice increase 60 percent in the last decade, can’t and won’t take such hits much longer.

The American College of Physicians, the source of the 60 percent figure, had to revise its guidelines recently to accommodate doctors who want to recover some of these rising costs by charging for phone consultations, filling out forms for patients and handling non-emergency matters during their off hours.

Sen. Daschle and others erroneously charge that President Bush wants to remedy the situation by “privatizing” Medicare, a measure they say would require seniors to join HMOs to receive their prescription-drug benefit.

But President Bush proposes only that seniors be offered a benefits program broadly similar to that enjoyed by Sen. Daschle and his staff, as well as 9 million other federal employees, dependents and retirees — the Federal Employees Health Benefits Program. It’s a government program that offers beneficiaries a variety of plans with different features. They can choose, for instance, to keep their doctors.

What takes the cake is that Sen. Daschle says President Bush’s plan “doesn’t work,” when what clearly doesn’t work is Medicare. It doesn’t work for doctors or hospitals, which are fed up with its slow reimbursement, more than 111,000 pages of rules and paperwork and a nearly indecipherable price-control system. Increasingly, it doesn’t work for patients, who are finding it harder and harder to locate a doctor. It doesn’t work for all seniors, who pay more than half of their health-care costs out of pocket because Medicare has such big gaps in coverage.

And absent meaningful reform, it’s definitely not going to work for taxpayers. Today, Medicare consumes 12 percent of the federal budget and similar shares of most state budgets. By 2030, it will devour 28 percent to 38 percent of federal taxes, based on the latest projections from Medicare’s board of trustees. This means substantial tax increases, even if the money in the Social Security trust fund is shifted to this expense, says Dan Crippen, former head of the Congressional Budget Office.

The point is: Medicare is in trouble. Meanwhile, the federal employees’ health program provides a blueprint for a more affordable way to add a prescription-drug benefit for seniors, fully integrated into a health-insurance package. This is a system in which patients choose, private companies respond and taxpayers save.
Which is a lot more than Sen. Daschle, or anyone else, can say for Medicare.

Robert Moffit is director of the Center for Health Policy Studies at the Heritage Foundation, a Washington-based public-policy research institute.



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