Saving Medicare (judgment, pension, work, payments)

[katharsis]

Originally Posted by Ralph_Kirk

We don't have to rush to the hard choices, where there is so much dispute that nothing will ever get done.

There is more than enough low-hanging fruit. There are Tylenol tablets charged at $10 each. There are bags of cotton charged at $30 each.

A few years ago, a Chicago station shopped around the metro for a routine appendectomy and found hospital costs for the same service ranging from $1500 to $250000 within a 10-mile radius.

When my mother had brain surgery, the hospital fitted her with temporary scull protection: A leather helmet that looked much like the old-school leather football helmets. They billed $2000 for that leather helmet.I looked inside it. The helmet was made in South Korea. Now, I've been to South Korea. I've bought leather goods in South Korea. I know that helmet could not have cost more than $200, shipped. But I took some pictures of the helmet and too them to a local riding livery shop that made custom leather goods. I asked them for an estimate to make such a helmet. They priced it at $500. So the hospital charged $2000 for an imported helmet that surely didn't cost over $200 and could have been custom-made locally for $500.
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Excellent point, and I agree wholeheartedly!! (Although I think both aspects should be looked at.)

[riffle]

Originally Posted by Ralph_Kirk

We don't have to rush to the hard choices, where there is so much dispute that nothing will ever get done.


There is more than enough low-hanging fruit. There are Tylenol tablets charged at $10 each. There are bags of cotton charged at $30 each.



A few years ago, a Chicago station shopped around the metro for a routine appendectomy and found hospital costs for the same service ranging from $1500 to $250000 within a 10-mile radius.


When my mother had brain surgery, the hospital fitted her with temporary scull protection: A leather helmet that looked much like the old-school leather football helmets. They billed $2000 for that leather helmet.


I looked inside it. The helmet was made in South Korea. Now, I've been to South Korea. I've bought leather goods in South Korea. I know that helmet could not have cost more than $200, shipped.


But I took some pictures of the helmet and too them to a local riding livery shop that made custom leather goods. I asked them for an estimate to make such a helmet. They priced it at $500.


So the hospital charged $2000 for an imported helmet that surely didn't cost over $200 and could have been custom-made locally for $500.


There is a lot of low-hanging fruit in hospital costs before we get to any life-and-death issues.

Question: where do you think the $2000 is going? Like how much is the hospital marking up, vs. the distributor, vs. the manufacturer?

[athena53]

Originally Posted by westender

Agreed -- people used to "go home to die." Nowadays, these heroic health care interventions are far more common.

Since the taxpayers are paying, I think we should have some say in how these decisions are made. Over 70? No heroics -- just palliative care.

It's not quite as simple as an age cutoff. I'm 66, so getting uncomfortably close to 70. A little over a week ago I completed a Duathlon in 2 hours and 40 minutes and was darned grateful I could finish. Then I looked at the results and found that two 70-year old men had each completed it an hour FASTER. I wanna find out what they ate for breakfast. My point is that you need to look at the overall picture- not just age, but what's the likelihood they can withstand aggressive treatment? If one of those guys had the same disease as someone with COPD, for example, or who was a lifelong smoker, you might elect to treat the stronger one. Sadly, some people with acute myeloid leukemia are survivors of some other cancer but the treatment of their original cancer led to them developing AML years later. They might be less likely to survive treatment.

The Freakonomics podcast once had an episode called "Glorious Sunsets"- the name of an imaginary insurance company that would give you a nice bonus- $40,000 or $50,000- if you chose palliative care instead of aggressive treatment. You can't do it because of the ethical issues, of course- Warren Buffett and Bill Gates could choose to take every measure possible without worrying about their family, but Jane Sixpack may forego treatment to leave money to help her grandchildren. Interesting thought exercise, though, that points out that unlimited health care has a cost.

Originally Posted by Ralph_Kirk

A few years ago, a Chicago station shopped around the metro for a routine appendectomy and found hospital costs for the same service ranging from $1500 to $250000 within a 10-mile radius.

That CANNOT be an apples-to-apples comparison. $1,500 might get you an operating room and a surgeon. The anaesthesiologist, the lab, latex gloves for everyone in the OR, any time the patient stays in the hospital...those have to be extra.

Although it certainly does point out the lack of transparency in hospital costs, which is another problem we have to solve.

[Mircea]

Originally Posted by RationalExpectations

Medicare is on an unsustainable financial course. All serious economists agree. How bad is it? Medicare spent 3.6% of gross domestic product in 2016, more than six times the share it consumed in 1967.

That's not relevant, but it's a great example of propaganda.

Prices have risen since 1967, so naturally Medicare spends more.

Also, right after 1967, you had a huge influx of computer technology, including medical technology, which in fact caused Wage Inflation.

Medical technology is also inherent expensive, because there is no Economy of Scale. If you manufactured MRIs for the 187 Million households, they'd cost less than a car costs, but you only ~5,000 hospitals, so MRIs, CAT scanners, PET scanners and other radiological equipment and specialized medical equipment is made-to-order.

No one even dreamed in 1967 that the technology that exists today would exist.

Population demographics have changed, too.

In 1967, you had 18,194,000 people age 65 and older.

Today, you have 52,586,000 people age 65 and older.

Originally Posted by RationalExpectations

There are 3 fixes we need to implement:

• First, Medicare’s eligibility age is much too low. Back in 1967, the average 65-year-old American was expected to live 14.8 more years. In 2016, 65-year-olds live 19.3 more years on average—a roughly 30% jump while the government has not adjusted the age required for benefits. The solution is to raise Medicare’s eligibility age incrementally so it once again provides for about 14.8 years of benefits on average.

That's a failed solution.

It disingenuously and deceptively ignores the fact that the HI tax rate has remained unchanged at 2.9% for employer and employee since 1990.

HI like FICA operates in exactly the same way. From our 6th Grade Math class:

Revenues = #Workers * Wages * HI rate

We know that if we increase or decrease any of the multipliers, the product increases or decreases.

You're short 11 Million workers -- the same amount as Social Security -- and unless you find 11 Million workers STAT and put them to work by 8:00 AM tomorrow, you cannot solve this problem.

That means you will need to:

1) employ all 5.5 Million currently unemployed by 8:00 AM tomorrow; and
2) bomb several countries, send in the Army and Marines, kidnap 5.5 Million people and bring them back to the US so they can start work by 8:00 AM tomorrow; and
3) maintain a 0% UE Rate for the next 75 years.

Good luck with that.

You cannot increase wages, because the increase would be so substantial it would induce Wage Inflation and wreck your economy.

You can, however, increase the HI tax, and you'd only need to increase it a small amount once and the problem is solved for the next 100-200 years.

Note that increase the eligibility age would also compel workers to remain in the work-force, substantially increasing your UE Rate.

That effect is long-term.

It skews the earnings curve for younger workers. They never earn over their life-time what they potentially could have earned and it also further damages both Social Security and Medicare.

Originally Posted by RationalExpectations

Second, there has been a fourfold increase since "the disabled" among working-age adults. We need to restore the original disability standard—which has become lax—so that people qualify for benefits only when they are “unable to work any job in the economy.”

Non-sequitur and totally irrelevant. The alleged increase in "disabled" is commensurate with the increase in population. Note that increasing the eligibility age for Medicare also results in persons who legitimately could receive Disability, but opt to take Retirement benefits instead, applying for and receiving Disability which only serves to harm Social Security and Medicare further.

One must receive Disability benefits for 24 months before being eligible for Medicare, and few Disability beneficiaries use Medicare Part A. Disability beneficiaries pay premiums for Medicare Part B, but few actually use that, either.

Few people are actually aware of CDRs. Social Security puts everyone in three groups:

1) those whose condition is likely to improve, and their medical records are reviewed every 18 months.
2) those whose condition may improve, and their medical records are reviewed every 3 years.
3) those whose condition is not likely to improve, and their records are reviewed every 5 years.

Few people fall into the third group, and they do involuntarily discharge people from Disability on CDR.

Originally Posted by RationalExpectations

Third, we need to raise deductibles and coinsurance premiums. The average beneficiary today consumes six times more medical services than in the previous generation, even without counting the drug benefit introduced in 2006. At the same time, most Medicare beneficiaries pay 68% less in deductibles than the previous generation and are charged coinsurance on steeply discounted rates. The solution is to charge actuarially sustainable rates for deductibles and for co-insurance.

More nonsense.

The average beneficiary consumes medical services that were non-existent in 1967.

The drug benefit is a non-sequitur, irrelevant and an obvious attempt to mislead. The HI Trust Fund is for Medicare Part A. The SMI Trust Funds are for Medicare Part B and Part D and currently there are no issues with the SMI Trust Fund. Medicare Part C is not even relevant.

Social Security and Medicare suffer from the same problem, that is the ratio of Workers:Beneficiaries.

In 1965, there were 4 workers for each Social Security and Medicare beneficiary.

Today there are 2.5 workers per beneficiary, because like I said, you're short 11 Million workers.

The good news is the ratio will remained unchanged at 2.0-2.5:1 for the next 100-200 years.

HI Revenues = #Workers * Wages * HI rate

FICA Revenues = #Workers * Wages * FICA rate

All you have to do is increase the tax rate and the problem is solved for both programs in perpetuity.

[Quietude]

A new record, I think.

[Ralph_Kirk]

Originally Posted by riffle

Question: where do you think the $2000 is going? Like how much is the hospital marking up, vs. the distributor, vs. the manufacturer?

The general rationale of hospitals for their inflated costs is that it is to compensate for all they lose in lost revenue to people who can't/won't/don't pay for care. That would mean the hospital pockets the excess fee.

However, if that's the case I'd want the legislature to force them to itemize the costs properly--the line item for a bottle of Tylenol should be no more than it would cost from Walgreen (or less)--and then add whatever they think they need to add as a "bad patient losses surcharge." Let us see what that figure actually is.

However, the fact that charges between hospitals using the same supply network vary so immensely causes me to believe they don't really have a clue what their operating costs are. They're just charging as much as they can the way an ambulance-chasing lawyer sues for as much as he can.

Insurance companies, of course, know this. And insurance companies also know what the real costs should be. That's why insurance companies never pay what the hospitals charge.

The fact that hospitals can routinely accept much less than their bill from insurance companies--and remain in business- indicates to me that their bills are overblown fiction.

[Ralph_Kirk]

Originally Posted by athena53

That CANNOT be an apples-to-apples comparison. $1,500 might get you an operating room and a surgeon. The anaesthesiologist, the lab, latex gloves for everyone in the OR, any time the patient stays in the hospital...those have to be extra.

The station's investigation corrected for all that.

[Enigma777]

Medicare is not going anywhere. It is the third rail--Reagan found out the hard way. People love and need Medicare. As noted there is plenty of waste that can be cut, and there are plenty of other places to cut. Like the military and subsidies to groups affected by bad policies. Nobody is going to take health care away from seniors on social security.

[riffle]

Originally Posted by Ralph_Kirk

The general rationale of hospitals for their inflated costs is that it is to compensate for all they lose in lost revenue to people who can't/won't/don't pay for care. That would mean the hospital pockets the excess fee.

However, if that's the case I'd want the legislature to force them to itemize the costs properly--the line item for a bottle of Tylenol should be no more than it would cost from Walgreen (or less)--and then add whatever they think they need to add as a "bad patient losses surcharge." Let us see what that figure actually is.

However, the fact that charges between hospitals using the same supply network vary so immensely causes me to believe they don't really have a clue what their operating costs are. They're just charging as much as they can the way an ambulance-chasing lawyer sues for as much as he can.

Insurance companies, of course, know this. And insurance companies also know what the real costs should be. That's why insurance companies never pay what the hospitals charge.

The fact that hospitals can routinely accept much less than their bill from insurance companies--and remain in business- indicates to me that their bills are overblown fiction.

I don't see how this is "low-hanging fruit", though. Unless you know who is actually paying the overblown fictional rack rate, and who isn't, and have another way to make up the difference.

[RationalExpectations]

Originally Posted by llowllevellowll

I love how the first consideration people typically have when they consider the state of these programs is how to ensure less is given to the citizen, i.e. we need to bump up the age.

This is about saving the Medicare system from complete collapse. Life expectancy have gone up, and its time to adjust the age of Medicare qualification to reflect that. There should be a reasonable transition time, of course.

Originally Posted by llowllevellowll

I'd first aim to work on maintaining funding while controlling costs since the U.S. has the highest healthcare costs in the world.

The Medicare program already controls costs. It sets prices. That squeezes the overall healthcare balloon so that non-Medicare prices go up. But this thread is about the Medicare portion - and the prices are already constrained and controlled.

Originally Posted by llowllevellowll

Surely those profiteering from this broken system should be the first casualties and not aging Nancy or Harold.

There is significant fraud in the system. It would be great to get rid of it, but it is a bit of a game of whack-a-mole.

This isn't about Nancy and Harold. This is about saving the entire system from collapse.