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Medicare Summit Debate: Is Medicare A Good Model For Universal Coverage?

One of the highlights of the Medicare Policy Summit was a panel discussion entitled “Medicare Expansion, Entitlement Reform, and National Health Coverage.” The goal of the discussion was to explore the potential role that Medicare could have in serving as a model for universal health insurance coverage in America. I’ve captured some of the key points that each panelist made:

First panelist: Grace Marie Turner, President, Galen Institute.

Grace Marie Turner has been instrumental in developing and promoting ideas for reform
that transfer power over health care decisions to doctors and patients.
She speaks and writes extensively about incentives to promote a more
competitive, patient-centered marketplace in the health sector.

Top 5 reasons why “Medicare for all” will not work:

1. The provider payment rate is not sustainable.

2. It cannot be sold as a free-standing health insurance policy. Medicare is full of gaps in coverage which must be covered with a series of supplemental plans like Medi-Gap.

3. The centralized nature of the benefit structure limits patient choices.

4. There will be political opposition by seniors to opening the flood gates to millions more beneficiaries, which would reduce their current coverage.

5. Medicare is already in debt to the tune of 38 trillion dollars.

What is a better solution to achieve universal coverage?

Private, competing plans can better provide tailored benefits to groups of uninsured. This would also increase patient choice and customization of care. Medicare Part D is run under a private sector model and is currently 40% under budget. This is evidence that the private sector, influenced by market forces, is better at cost containment.

The bottom line is that we have to decide if we want to reform healthcare with top-down directives or by aligning incentives. I believe we need to do a better job of coordinating care – it’s a financial issue.

Second panelist: Robert E. Moffit, Ph.D., Director of the Center for Health Policy, The Heritage Foundation.

Moffit has been an advocate of the free market principles of consumer choice and competition since the early 1990s, when he chastised Congress for keeping such a system of choice and competition ” exclusively for itself and federal workers while considering ways to impose vastly inferior systems on almost all [other] Americans.”

Who do you want to make key healthcare decisions for you?

1. Your employer

2. The government

3. Individuals and families

Other industrialized countries have accepted option #2, but America is a very different culture. We must enlist the states as the laboratories of democracy that they should be. The Medicare Advantage plan is revolutionary.

Third panelist: Robert Berenson, M.D., Senior Fellow, The Urban Institute

Dr. Berenson’s current research focuses on modernization of the Medicare program to improve efficiency and the quality of care provided to beneficiaries.

The consumer-directed healthcare system is not what the public wants or needs. We need supply-side solutions, not demand-side solutions. Medicare has been more successful than private plans at reducing costs.

There’s no doubt that a government-run healthcare system is not what Americans want – but I see no other alternative. The Massachusetts (state level solution) is not going to be successful because they provided universal coverage without any cost containment mechanisms in place, so costs simply sky rocketed.

Currently, 20% of Medicare beneficiaries discharged from the hospital are readmitted, and half of those are due to avoidable complications. Follow up care (after hospital discharge) is not well managed. Most patients discharged from the hospital don’t see a healthcare professional for follow up within 30 days of their discharge. We have to do better.

Grace-Marie Turner: Should Congress Expand Health Insurance To Cover All Children? No

Some thoughts to chew on from Grace-Marie Turner:

But expanding SCHIP to cover all children would be a mistake, for four reasons:

1. First, Congress should make sure poorer, uninsured children are covered first. At least two-thirds of uninsured children already are eligible for SCHIP or Medicaid but aren’t enrolled. If SCHIP were expanded to cover children in higher-income families, their parents would rush to the head of the line to get the taxpayer-subsidized coverage. When a “free” government plan is offered, it’s nearly impossible to resist. Poorer children would be left behind as states focus on enrolling higher-income kids.

2. Second, expanding the program would “crowd out” the private insurance many higher-income kids already have. Hawaii offers proof. Earlier this year, the state created a new taxpayer-financed program to fill the gap between private and public insurance in an effort to provide universal coverage for children. But state officials found families were dropping private coverage to enroll their children in the government plan. When Gov. Linda Lingle saw the data, she pulled the plug on funding. With Hawaii facing budget shortfalls, she said it was unwise to spend public money to replace private coverage children already had.

3. Third, putting many millions of children on a government program will quickly lead to restrictions on access to care. A young boy died in Baltimore not long ago from an untreated tooth infection, even though he was enrolled in SCHIP. Few dentists can afford to take SCHIP patients because the program’s reimbursement rates are so low. The boy’s mother couldn’t find a dentist to see him. In Massachusetts’ move toward universal health coverage, more people have insurance, but they are finding that physicians’ practices are often filled, with waiting lists for a new patient appointment at 100 days and counting. Putting more children on SCHIP will add to the program’s financial pressures, making it harder for poorer kids to get care.


4. Finally, government insurance means that politicians and bureaucrats, not parents, make decisions about the care children receive and about what services will or will not be covered.

Hawaii Learns Tough Lession: Free Childrens Health Insurance Program Abused By Wealthy Parents

Fascinating commentary on human nature. Thanks to Grace-Marie Turner at the Galen Institute (this excerpt is part of an article published in the NY Post today):

HAWAII just had a vivid les son in health-care economics, learning that if you offer people insurance for free – surprise, surprise – they’ll quickly drop other coverage to enroll.

As a result, Hawaii is ending the only state universal child health-care program in the country after just seven months.

The program, called the Keiki (Child) Care Plan, was designed to provide coverage to children whose parents can’t afford private insurance but who make too much to qualify for other public programs (such as Medicaid and Hawaii’s State Children’s Health Insurance Program). Keiki Care was free for these gap kids, except for a $7 office-visit fee.

But then state officials found that families were dropping private coverage to enroll their children in the plan. “People who were already able to afford health care began to stop paying for it so they could get it for free,” said Dr. Kenny Fink of Hawaii’s Department of Human Services.

In fact, 85 percent of the children in Keiki Care previously had been covered under a private, nonprofit plan that costs $55 a month.

When Gov. Linda Lingle saw the data, she pulled the plug on funding. With Hawaii facing budget shortfalls, she realized it was unwise to spend public money to replace private coverage that children already had.

Yet Lingle is facing a political firestorm in the state from critics who say that she’s denying children health insurance – notwithstanding the fact that children in Hawaiian families earning up to $73,000 a year are eligible for Medicaid…

The Hawaiian debacle should also be a caution to Barack Obama, who wants to mandate that all children have health insurance. This would plainly not only require penalties for those who didn’t comply but also new programs to help parents get their children covered. The risk of crowd-out will be great.

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