Tar­get providers’ sense of en­ti­tle­ment

Amer­i­cans are pay­ing more for Medi­care, but where is that money go­ing?

Modern Healthcare - - OPINIONS / COMMENTARY - By Rose­mary Gib­son

Spring­time in Wash­ing­ton brings the an­nual fed­eral bud­get rit­ual. This year, Pres­i­dent Barack Obama’s bud­get for 2014 in­cluded a pro­posal to in­crease Medi­care pre­mi­ums for higher-in­come se­niors. Other ideas to sus­tain Medi­care are cross-pol­li­nat­ing across the po­lit­i­cal aisle.

Both Repub­li­cans and Democrats have dis­cussed rais­ing the Medi­care el­i­gi­bil­ity age from 65 to 67.

What­ever the White House and Congress de­cide, Amer­i­cans need to be pre­pared for sticker shock when they en­roll in Medi­care.

A grow­ing share of many older Amer­i­cans’ So­cial Se­cu­rity in­come is be­ing con­sumed by Medi­care pre­mi­ums and co­pay­ments, ac­cord­ing to the fine print in the Medi­care trus­tees re­port.

About 27% of a se­nior’s So­cial Se­cu­rity check, on aver­age, was used in 2011 to pay for pre­mi­ums and co­pay­ments for Part B physi- cian ser­vices and Part D pre­scrip­tion drugs.

By 2084, 46% of So­cial Se­cu­rity in­come will be con­sumed by Medi­care parts B and D. Th­ese amounts don’t in­clude cost-shar­ing for Medi­care Part A hos­pi­tal care.

In the late 1960s, only about 6% of a se­nior’s So­cial Se­cu­rity check was spent on pre­mi­ums and co­pay­ments for Part B. Part D didn’t ex­ist then.

Noth­ing has stopped the cost of health­care from swal­low­ing older Amer­i­cans’ in­come. In fact, if Obama’s pro­posal to re­duce an­nual costof-liv­ing ad­just­ments for So­cial Se­cu­rity takes ef­fect, Medi­care costs will con­sume an even larger share of shrink­ing So­cial Se­cu­rity checks.

Where does all this money for Medi­care go? Most peo­ple think of Medi­care as an en­ti­tle­ment for se­niors. It is also big busi­ness. The health­care in­dus­try re­lies on Medi­care for nearly $600 bil­lion in an­nual rev­enue. In 1965, when Medi­care was cre­ated, no health­care com­pa­nies were on the For­tune 100 list. Now there are 15.

Ac­cord­ing to the In­sti­tute of Medicine, 30%

of health­care spend­ing is wasted and doesn’t add to the health of the pub­lic. Last month, dur­ing a speech to health­care lead­ers in Maine, I told the true story of a sur­geon who wanted to be a good stew­ard of re­sources. He asked his hos­pi­tal about the cost of sup­plies in his op­er­at­ing room and found that he didn’t need half of what had been pur­chased. About 10%, worth $70,000, had ex­pired and had to be thrown away.

Af­ter the speech, a mem­ber of the au­di­ence de­scribed the dis­card­ing of mas­sive amounts of unused hos­pi­tal sup­plies that would fill a large swath of a bas­ket­ball court. Later, a pro­fes­sor in a school of phar­macy said stu­dents are re­quired to wit­ness the pe­ri­odic dis­posal of moun­tains of unused pre­scrip­tion drugs.

This type of waste oc­curs not just be­cause of poor buy­ing de­ci­sions by hos­pi­tals. The multi­bil­lion-dol­lar mar­ket for hos­pi­tal sup­plies and equip­ment is ripe for trans­parency.

As for health­care fraud, if 10% of Medi­care spend­ing, or nearly $60 bil­lion, is frit­tered away each year, this amount is equiv­a­lent to the life­time Medi­care pay­roll tax con­tri­bu­tions of hun­dreds of thou­sands of Amer­i­cans who worked hard to earn that money.

Demo­cratic and Repub­li­can pro­pos­als to sus­tain Medi­care re­quire the pub­lic to pay more. Why should we?

Se­niors’ en­ti­tle­ment to Medi­care is not the rea­son that the pro­gram is headed for the fis­cal cliff. The health­care in­dus­try’s sense of en­ti­tle­ment to Medi­care’s money is the prob­lem.

Ex­ces­sive prices that in­cite dis­may among the pub­lic are a man­i­fes­ta­tion of the en­ti­tle­ment men­tal­ity. So is the overuse of tests and treat­ment whose pur­pose is to meet pro­duc­tiv­ity tar­gets.

While some Repub­li­cans al­lege that Medi­care fos­ters a cul­ture of de­pen­dence among se­niors on govern­ment, elected of­fi­cials turn a blind eye to the real cul­ture of de­pen­dence that the health­care sec­tor has on Medi­care.

Con­sci­en­tious health­care lead­ers are caught be­tween their pro­fes­sional re­spon­si­bil­i­ties and their role as pri­vate cit­i­zens. At work, they wit- ness the profli­gacy and feel pow­er­less to change course. At home, they know that the con­se­quences of in­ac­tion are dire.

The Medi­care de­bate in Wash­ing­ton should not be about rais­ing pre­mi­ums or the el­i­gi­bil­ity age. Th­ese pro­pos­als would ce­ment and per­pet­u­ate mis­al­lo­ca­tion of the pub­lic’s money.

Rather, the de­bate should be about re­duc­ing the health­care in­dus­try’s de­pen­dence on the wan­ing good will and blind gen­eros­ity of the pub­lic.

The mis­al­lo­ca­tion of pub­lic re­sources can be cor­rected only with an in­formed cit­i­zenry that knows where their money is go­ing, who is get­ting it and how it is be­ing used.

This is the first step to pre­serve and pro­tect Medi­care for the peo­ple it was meant to serve.

Medi­care is an en­ti­tle­ment

and big busi­ness.

Rose­mary Gib­son is prin­ci­pal author of Medi­care Melt­down: How Wall Street and

Wash­ing­ton are Ru­in­ing Medi­care and

How to Fix It.

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