The High Personal Cost of End of Life Care

According to Ezekiel J. Emanuel,

IT is conventional wisdom that end-of-life care is an increasingly huge proportion of health care spending. I’ve often heard it said that people spend more on health care in the year before they die than they do in the entire rest of their lives. If we don’t address these costs, the story goes, we can never control health care inflation.

Wrong. Here are the real numbers. The roughly 6 percent of Medicare patients who die each year do make up a large proportion of Medicare costs: 27 to 30 percent. But this figure has not changed significantly in decades.

It seems reasonable to infer that by "figure" Emanual means "percentage", as it is implausible that the dollar figure expended on care during the last year of life has not changed significantly "in decades". So what does that percentage figure mean in terms of dollars?

The Medicare program provides subsidized medical insurance for the elderly and for some disabled people. Spending for Medicare totaled about $555 billion in 2012, providing coverage for about 50 million people.

Let's use the low-end figure, 27%. Emanuel is instructing us that 6% of Medicare recipients consumed 27% of $555 billion - let's round that off to $150 billion for 3 million Medicare recipients, an average of $50,000 per person. That, in contrast to $8,617 on average for everybody else. Let's not forget, also, that many of those patients will be in long-term care facilities for much of the year, subsidized by their savings and, once those are depleted, by Medicaid. While the proportion may not be rising, the dollar amount is rising - faster than inflation - and while the numbers bear out the position that people don't, on average, spend "spend more on health care in the year before they die than they do in the entire rest of their lives" the numbers do suggest an enormous expenditure on medical care for patients who receive little benefit from that care - and perhaps pay an enormous personal price on top of the financial cost.

And the total number of Americans, not just older people, who die every year — less than 1 percent of the population — account for much less of total health care spending, just 10 to 12 percent.

Given that younger Americans are much more likely to die from traumatic injury, it's not really a surprise that when they're included in the picture the percentage declines. But as Emanuel surely knows, although care for traumatic injury can be phenomenally expensive, people are not actually talking about car crashes when they are talking about the high cost of end-of-life care.

Emanuel makes a better point about cost reduction,

The more important issue is that just because we spend a lot on end-of-life care does not mean we can save a lot. We do know that costs for dying patients vary widely among hospitals, which suggests that we can do better. And yet no one can reliably say what specific changes would significantly lower costs. There is no body of well-conducted research studies that has proved how to save 5, 10, much less 20 percent.

That's true in part. There are patients who are clearly terminal, but whose families insist upon additional treatment (sometimes overruling the wishes of their loved one) at significant cost. Also, if you think through the logical implications of a typical voucher plan, there appears to be a significant population of people who would "save" money simply by cutting off payment for treatment. While it remains correct that there's no good way to define, in advance, when the last year of life begins and what approaches to treating a specific medical condition will save money without compromising care, if you're willing to be sufficiently mercenary to ration care and make that $50K figure impossible for the average elderly person to reach, you'll "save" money.

If you want to try to identify means of saving money - approaches to end-of-life care that avoid the cost of hospitals, skilled nursing facilities, and the like - it's necessary to engage in the analysis of available data on approaches to patient care, costs and outcomes. If you want patients to be informed of their options, including the fact that by foregoing the aggressive treatment of what is likely to be a fatal disease they may both live longer and have a better quality of life, you have to actually educate the patient - and as Emanuel notes the last effort to introduce that sort of education on a widespread basis collapsed under Republican hysterics about "death panels".

Emanuel is correct that doing nothing to improve the quality of care for the dying is not an acceptable approach to end-of-lie care, but at the same time he suggests that we're doing very little. Emanuel supports end-of-life counseling for patients (the so-called "death panels"), increased availability and use of palliative care, and revised criteria for admission to hospice care. But we can also do some comparative outcome research, which might help us create better criteria for who truly is approaching the end of life, and what treatments that might represent top notch quality of care for a younger patient may undermine quality of life and perhaps even shorten the remaining lifespan of an elderly patient.

The Elderly Cannot Be Informed Consumers of their Most Expensive Care

I am not sure how I came to the page, but in going through the proliferation of articles I had opened in my browser with the intention of "getting to this later", I found "Saving Medicare from Itself" written in mid-2011 by Avik Roy of the Manhattan Institute. For the most part the article simply rehashes the conventional wisdom about Medicare - if costs continue to significantly outstrip inflation, the program cannot be sustained.

Given that Roy started out by, in effect, preaching to the choir, he had what should have been a relatively simple task. Use the available facts and data to point to possible solutions to the problem of healthcare inflation. I know that some argue that the problem of healthcare inflation is going to cure itself - that the changes that led to the rise in costs reflect the significant evolution of the industry and, as we exit the era of new blockbuster drugs and improvements in medical technology become more incremental, inflation will tame itself. But history is a better teacher than wishful thinking - or as Burgess Meredith put it... - we have to plan as if healthcare inflation will continue to rise. And you know what? If we find ways to make healthcare significantly more affordable without compromising quality, even if the cost curve cures itself we'll be much better off as a society.

If Roy believes his own thesis, then one of his arguments should be, "We should look at how other industrialized nations are able to offer a comparable quality of care, with comparable outcomes, at a much lower cost, and at least think about doing what they're doing." Alas, Roy is not so much interested in advancing good policy as he is in advancing the agenda of reducing the scope of Medicare.

Roy argues,

The largest driver of Medicare cost inflation is the fact that retirees bear little of the expense for their own care. As a result, seniors have no incentive to avoid unnecessary or overpriced treatments. Rettenmaier and Saving have shown that, between 1960 and 1985, growth in health expenditures was highest in those categories of spending in which consumer cost-sharing was lowest (such as hospital care), and lowest where consumers were most responsible for their own expenses (like prescription drugs, which were not covered by Medicare during that period).

If that actually were the cost, you should see a different rate of medical inflation for non-elderly populations. You should see yet another, much lower rate of medical inflation for procedures that normally fall outside of insurance coverage. And you should see a much higher rate of inflation in industrialized nations that offer universal or near-universal healthcare coverage. But... you don't.

Roy overlooks the fact that people are inevitably going to be poor consumers of healthcare services. They like their doctor, so they keep going back to their doctor - and while the relationship will benefit many patients, others will keep going back to a doctor who is providing substandard care or who is opportunistically ordering unnecessary tests and procedures, perhaps through self-referral, in order to maximize his revenues. How does Roy suggest that the average elderly person determine whether the doctor she trusts is providing sufficient care, or if a different doctor might offer equivalent care at a lower price or better care at a higher price that nonetheless results in a net savings?

But more than that, where does Roy imagine that the savings will come from? If we're talking about seniors with chronic health conditions, they are going to need diabetes supplies, oxygen, catheters and the like. No way around it. Does Roy believe that individuals can get better pricing on care, supplies and services than an insurance company or government agency that can negotiate a discount? If so, I would like to see him connect that theory to the reality in this country, where the uninsured pay the highest prices for their medical care. If I were to be less charitable, I might ask whether Roy's intention is that the elderly have to choose the care, medication and equipment they need, versus paying their bills, buying food....

One has to ask if Roy's goal is to bend the cost curve, or if it's simply to shift medical costs from Medicare onto elderly individuals. If we presuppose that the elderly can afford the care that they require, it remains fair to observe that a cost shift does not actually address either the cost of the healthcare system or healthcare inflation. It simply means that instead of the money coming from Medicare, it will come from a senior's savings. Or their children's savings. Because unless the goal is deprivation, the money has to come from somewhere.

The problem with Roy's argument actually goes much deeper, when you consider the times when the elderly can easily run up five and six figure medical bills. A senior falls and fractures her hip. A senior has a heart attack or stroke. A senior collapses and is diagnosed with acute kidney failure. They can be in a hospital with a five figure medical bill before they're even able to consider whether they're in the most appropriate care center with the most appropriate doctor and most appropriate treatment plan. When you suffer a catastrophic health issue, odds are you are going to have to rely upon some combination of serendipity and the good intentions of others to get you to a point of medical stability - Roy's conceit that it is possible to address this type of issue by giving seniors an incentive to shop around for the best deal isn't realistic.

Roy complains that the same general problem holds true across the board:

The same holds true for all consumers of health care — not just the elderly. Medicaid and the system of employer-based health insurance both provide a great deal of first-dollar insurance coverage, meaning that consumers do not pay directly for services they receive and therefore have no clear sense of relative costs and values. In 1960, individuals paid directly for 52% of national health expenditures, but by 2008 that share had declined to just 12%. Americans are shielded from the real costs of their health care; as a result, it costs too much.

Except here's the thing: Insurance companies have been experimenting with copayments and deductibles to try to save money. And that cost-shifting has been relatively successful. However, on the whole, the net cost to the consumer has gone up. Why? Because when you have comprehensive insurance and your doctor says, "You need a CT scan", somebody from the medical center calls up your insurance company to see if it's covered. If the answer is "No," the patient is likely to receive a less expensive test that is covered by insurance. On the other hand, if the patient does not have that invisible intermediary, there's nobody to come back with, "Why not start with an ultrasound (or other test that might either confirm or refute a potential diagnosis) and we can see if the CT remains necessary once we have the results." They simply hear their doctor saying, "You need this," and so they pay for it.

Which brings to mind another contributing factor: the doctor may not have any idea what the tests, procedures, and medications he orders cost. In fact, there's a large, lucrative industry built around trying to convince doctors to prescribe expensive, patented medications, or to use new medical technologies, implants and devices. Perhaps that would be mitigated in part if more patients were overtly cost conscious, but I doubt it - it's not realistic for doctors to keep track of the relative cost of myriad treatment options, and to try to guide patients through their choices - particularly at those times when the most expensive care decisions are being made. Even if we assume that the information is available, accurate and that the patient is capable of understanding the financial information. It's simply not realistic.

Note that Roy also assumes that the fact that "In 1960, individuals paid directly for 52% of national health expenditures" while now "but by 2008 that share had declined to just 12%" means that people are choosing to obtain care that the don't actually require. A big part of the difference comes directly from Medicare - a program that was created in no small part because the elderly were being underserved by the health insurance market. We also now diagnose and treat a wide range of chronic health issues that were barely on the radar screen, or even unknown to medicine, back in 1960. We also offer a wide range of medical treatments that significantly improve the quality of life that were in their infancy or largely unavailable in 1960. A big part of the difference comes from the fact that, as a society, we have decided that certain medical care should be provided to people even when they cannot afford to pay a cent toward that care - hence programs like Medicaid and laws like EMTALA.

Roy makes little effort to advance his position that healthcare costs would decline if consumers were required to pay for a greater percentage of their care, and as I noted the data suggests that costs could actually increase. Roy does not attempt to document that the care is unnecessary, or the mercenary argument that if we apply a cost-benefit analysis we as a society will be better off even if we deny people access to necessary medical care.

At the end of his article, Roy reveals himself to be little but a foot soldier for the Romney/Ryan "reform" plan - not a policy analyst, but a political advocate. His first recommendation is right out of the political coward's playbook - "Don't change anything for anybody aged 55 or older." That's not about making good policy or protecting people - it's about votes. If in fact his second proposal, cost sharing (i.e., increasing what people have to pay for the care they receive) leads people to "make sensible decisions about whether to pursue treatment", it will do so for somebody who is presently 55 or older. If in fact his third proposal, means testing, is a reasonable measure, there's no reason to exempt the present generation of wealthy Medicare recipients from that standard. Worse, cost-sharing is unlikely to work, and means testing is not likely to produce appreciable savings.

Roy's next proposal is to "index the Medicare retirement age to life expectancy", that is, to make people wait longer to qualify for Medicare. Never mind that a significant population of seniors already postpone medical treatment until they qualify for Medicare. Never mind that the cost of postponed treatment can mean that the overall cost of Medicare goes up, or that more people will end up either on Medicaid, or become eligible for Medicare through SSDI instead of through reaching the retirement age. If there is a valid argument that actual savings could be realized, Roy hasn't tried to make it, relying instead upon supposition.

Roy's first meaningful proposal is to work harder to eliminate fraud from Medicare. Except everybody wants to eliminate fraud. Doctors and clinics get sued and prosecuted for Medicare fraud. Roy's solution? To privatize administration of Medicare. He may as well argue that we should wave a magic wand. There is no reason to believe that privatized administration will reduce fraud, and every reason to anticipate that it will increase costs.

Roy's ultimate proposal is that we implement a Ryan-style voucher plan for Medicare, while allowing seniors to buy insurance through a health insurance exchange. You know, the sort of exchange that's "the end of the world" as part of the PPACA, but for some reason is the height of market efficiency for a post-Medicare voucher program for the elderly.

Roy closes by attempting to put Medicare "in context":

Addressing this problem would require reforming and integrating Medicare, Medicaid, the employer-sponsored system, and the individual market (and would therefore require replacing Obamacare with a very different set of health-care reforms well beyond Medicare). It would involve addressing the runaway costs of defensive medicine and medical-malpractice litigation. Such changes would of course be extremely difficult to undertake, as the heated ongoing health-care debate amply demonstrates.

Roy wants to "integrat[e] Medicare, Medicaid, the employer-sponsored system, and the individual market"? That sounds a lot like what would be accomplished through "single payer". So no, that's actually not what Roy wants. Were Roy and his brand of analyst serious about reform they would be looking around the world at how other industrialized nations have responded to the same issues and proposing that we emulate their success. Instead they urge us to ignore our lying eyes, drink the Kool-Aid, and double down on our history of failed market-based (non-)solutions.

Note also Roy's introduction of the canards that "defensive medicine" and medical malpractice play a significant role in the current problem, and his prevarication that they are "runaway costs". They weren't important enough to address in his plan to save Medicare, but how can you close out a political argument like this without dropping them in for good measure? A serious analyst would put the prevention of malpractice and maloccurrence on the agenda, while recognizing that any effort to push the "runaway malpractice costs" like would reveal him as a dilettante. The current system compensated a very small percentage of malpractice victims, and is very accurate at weeding out unsupported claims. There's no indication that so-called "defensive medicine" could be eliminated even if doctors enjoyed absolute immunity - and if you look at the facts even the most sweeping "tort reform" measures, such as the laws in Texas that come close to giving doctors immunity, do not affect the manner in which doctors order tests and procedures. What changes things? The sort of salaried arrangement used by facilities like the Mayo Clinic and the Cleveland Clinic. Go figure.

Strip away the window dressing and the argument boils down to, "Medical care costs too much and costs are rising too quickly. I have no solutions, so I propose eliminating any form of group health insurance, giving poor people vouchers that they can use to pay for individual insurance policies, and calling it a day."

How the Media Plays Out its Role in Our Risible Economic Debate

After a couple of opening paragraphs of pure snark, the Washington Post's editorial board criticizes the President for failing to clearly articulate why he is running for a second term. I've previously called for the President to do exactly that, but unlike the Post's editorial board I'm not going feign outrage if the President sets different priorities than I would prefer.

After attempting to trivialize the President's stated second term agenda by pointing to his plan to help states hire more math and science teachers, and his proposal to end certain tax subsidies for the energy industry,

He wants to take away $4 billion in tax breaks from oil companies. (The deficit in the fiscal year that just ended was $1.1 trillion.)

Why am I reminded of Robert Samuelson's notion of what constitutes "pocket change". Have we truly entered an era in which $4 billion in waste is not worthy of consideration, and in which a proposal for its elimination is mocked? If your concern truly is to balance the budget, why not respond, "One $4 billion item of waste down, 224 to go"? If you read the Post you know the answer - that's not the type of government expenditure that concerns its editorial board.

From there the Post gets to the meat of the President's tax proposal,

And he wants to increase tax rates for the wealthy. That would put a serious dent in the deficit, but it wouldn’t solve the fiscal problem, which unaddressed will “lead to a level of federal debt that would be unsustainable from both a budgetary and an economic perspective,” the Congressional Budget Office recently said.

First the problem is the deficit, and cutting waste isn't enough. Next it's, "The President has a clearly stated proposal that will cut the deficit" but, after a bit of sleight of hand, the deficit is no longer the issue.

So now that we're no longer talking about deficits, but are talking about the "level of federal debt", what does the Post have to say?

A solution can come only from restraining spending, especially growth in Medicare and Medicaid, and raising revenue, and not just from the rich.

Let's back up for a moment. The leading reasons we have a significant deficit at the moment are the Bush tax cuts, the Bush Administration's unfunded wars, and the economic downturn. As I recall, the Post supported all of the above. Yes, we would have a substantial deficit right now even without those factors, but principally attributable to revenue reduction from a profound recession and spending measures meant to help us pull out of the recession and to soften its blow on families. The point being, as we pull out of the recession and return to more normal levels of employment, more people will have income and tax revenues will rise.

And yet, when it comes to figuring out how to raise more revenue, creating more jobs, reducing unemployment, reinvigorating a middle class and improving its wages, none of that occurs to the Post's editorial board. It's "Why aren't you cutting entitlements." It's not that they're unaware that growing the economy will raise tax money - it's that they aren't being candid about their own agenda. If the Post's editorial board has a proposal by which tax revenues can be raised without impairing the economy, above and beyond as a result of growth or the proposed modest rollback of the Bush tax cuts, it's high time they shared it. After all, they found the time to chide Mitt Romney for not sharing the details of his secret plan to make revenue neutral his proposed massive tax cuts, so why keep their own secret plan so close to the vest?

You have to love this part. Remember how "A solution can come only from restraining spending... and raising revenue, and not just from the rich"? Seriously, this is the next sentence of the editorial:

Yet Mr. Obama has put forward no plan to curtail entitlement costs, while Mr. Romney at least is willing to say that benefits for wealthy Medicare recipients will have to be cut back.

That is, immediately after acknowledging that the President proposed a tax increase that will significantly reduce the deficit, and poo-pooing that it's not enough because it isn't sufficiently broad-based, they're praising Romney for making an economically meaningless pledge about trimming Medicare benefits for the wealthy. Even if he keeps that promise, the revenue savings will be trivial. So why is it bad for the President to take a serious, effective measure to close the deficit, but laudatory for Romney to make a cynical, hollow gesture? The most obvious inference is that the Post's concern is not with deficits but is instead with entitlements.

The editorial board next returns to its prior snarkiness,

Why the reticence? Maybe, after promising so explicitly four years ago that he would make hard choices and refrain from kicking the can down the road, he’s reluctant to make the same promises again. Maybe the usual Democratic “Mediscare” campaign is so useful he does not want to muddy the waters — or, more accurately, un-muddy them — with budgetary honesty.

You would think that at least one member of the editorial board would remember the Affordable Care Act, including its serious effort to find cost savings in Medicare. You would think that they would remember that the Republicans immediatedly engaged in demagoguery about the ACA, screaming at the top of their lungs about "death panels" and "cuts to the Medicare benefits you paid for." They claim to have watched the debates, so it's difficult to believe that they could have missed the demagoguery from Romney and Ryan about "cuts" to Medicare. Which side is engaged in budgetary dishonesty and is resorting in "Medicare" tactics, again?

Funny, also, how the Post is suddenly unconcerned about Social Security. Which candidate explicitly addressed Social Security and what it would take to make it fiscally sound over the long term? If you need the reminder, it was President Obama. Does the editorial board have the grace our courtesy to say, "At least he has promises to fix this other thing we've been harping about?" Nope. As with discussion of the ACA, any such honesty would undermine the two points they are trying to make, that the President has made no proposals to prevent entitlement costs from spiraling out of control, and that the only possible solution is massive cuts in those programs.

It seems fair at this juncture to ask, how does the editorial board believe that the federal government can cut Medicaid spending? We're not talking in that context about a population with a lot of resources to spare. To the contrary, if you have significant resources you don't qualify for Medicaid. If you cut Medicaid you cut the provision of medical care to that population.

You can, of course, use ACA-type measures to try to identify waste, to evaluate which treatments are the most cost-effective. But in case they missed it, the Supreme Court recently ruled that Medicaid is such a large program, contributing so much money to state coffers, that states must be given the right to opt out of any significantly revised program and be allowed to continue with the status quo. Seriously, does the Post have even one idea it can share? Romney at least came up with PBS and Sesame Street - and the repeal of the cost-saving measures for Medicare that the board wants to pretend Obama didn't sign into law.

As for Medicare, even if they assume Romney is sincere, they know that savings from his proposal to trim benefits for the wealthy would be trivial. They know that his pledge to repeal Obamacare will increase the cost of the program. They know that a promise to do something a decade from now, even if it's something they would applaud (i.e., turning Medicare into a voucher program) is nothing more that irresponsible buck-passing. Within that context, they want the President to promise additional cuts to Medicare - above and beyond the cuts that Romney and Ryan are suggesting will devastate seniors' ability to obtain care?

The Post is right about this: It would be nice if we could have an adult discussion about these issues and how we might mitigate, if not solve them. If the editorial board spent any appreciable amount of time reflecting on the subject, though, they would realize that unless they break with their longstanding tradition they aren't part of that solution. They're not even making an effort.

Did the Supreme Court Make it Unconstitutional to Repeal Medicaid?

In what appears to be an unprecedented interpretation of the Spending Clause, Justice Roberts held that if the federal government makes a significant change in who is eligible to participate in a program, the states receiving funding for the original program cannot constitutionally be required to either accept the changes or end their participation - they must also be able to maintain the status quo.

Roberts introduced an analysis that derives from contract law: Medicaid is a contract between the federal government and the states and, while the federal government reserves the right to modify that contract, it is possible for a modification to be so dramatic that it transforms the program into something other than what was accepted by the states. As in Roberts' view the changes implemented by the ACA reach that point, Congress must allow states to continue the present contract, rather than forcing them to choose either to accept the expanded program or to opt out entirely.

To look at it another way, Roberts appears to be declaring that you cannot take the existing Medicaid program, dramatically change the way it works, and say it's the same program merely because you use the same name. He has a point: that would be almost as ridiculous as turning Medicare into a voucher program and pretending that you're not ending Medicare as we know it. (Cough.)

If the change to Medicaid is as drastic as Roberts suggests, you could take the position that it's not an amendment of the existing program. You could regard it as the repeal of the existing program and its replacement with a new program that simply uses the same name. Would Roberts argue that an explicit termination of Medicaid, and its explicit replacement with "Medicaid II" would be unconstitutional? If not, and Congress has the right to terminate the Medicaid program, how can the "threatened loss of over 10 percent of a State's overall budget" - the exact same loss that would result from the program's perfectly lawful repeal - prevent the federal government from asking states to accept or reject the amended program?

Republican Price Controls

It's easy to forget that the last President to impose wage and price controls on the country was the very Republican Richard Nixon. But for all their talk about the power of markets, there are contexts in which they remain happy to impose price controls:

The University of Florida, the state’s flagship school, has been hit particularly hard [by cuts in state funding]. In an opinion article in The Gainesville Sun, a former university administrator said this year would bring “$38 million in budget cuts, creating an accumulated reduction in state funding to U.F. of 30 percent, or $240 million, since 2006.”

The university has responded to these cuts with tuition increases, although the Legislature has set ceilings on tuition that keep schools from fully offsetting the cutback in state support. This is true in many other states, too.

Similarly, for all their talk about "free markets" in healthcare, you won't find any serious effort by Republican politicians at any level of government to do away with the mechanisms used by Medicare and Medicaid to limit their expenditures through various forms of price control. The pharmaceutical lobby was strong enough to prevent the government from negotiating over the cost of prescription medications, but doctors have a "take it or leave it" choice with Medicare and Medicaid, and the rest of the insurance market often follows Medicare's lead.

To the extent that you want to argue that state-paid or subsidized colleges and insurance are different from their market equivalents, you need to explain why the free market has not displaced them from the market. Or why it's not a good idea to end the subsidies and let the public programs and colleges compete with their private competitors. Public rhetoric aside, Medicare and Medicaid were introduced due to a failure of the markets, and public universities were founded and funded in order to provide higher education to a population that was underserved or excluded by private universities, at a reasonable cost. The principal competition between private colleges and their public counterparts occurs at the bottom of the market, with for-profit diploma mills attempting to peel away students who lack the necessary ability, desire, need and/or resources to attend an elite private university.

Medicare Is, After All, Health Insurance....

Jane Gross presents a decent case that elderly people would benefit from having long-term care insurance. She also suggests that Medicare would benefit from denying coverage for certain medical treatments and procedures based upon the age and medical condition of the beneficiary.

Yet Medicare, which pays for all of the above, does not, except in rare instances, pay for long-term care in a supervised, safe place for frail or demented old people, or for home aides to help with shopping, transportation, bathing and using the toilet.

Well, yeah, because Medicare is health insurance, not long-term care insurance.

When the Obama Administration attempted modest steps toward educating the elderly about their end-of-life medical choices, the political right went into propaganda overdrive, shrieking about "death panels" and health care choices being dictated by government bureaucrats. When the Obama Administration attempted to create a means of making available affordable long-term care insurance, it became clear that most people would not voluntarily buy it and that, as a consequence, it would be all-but-unaffordable to those who wanted it.

Nationwide, the median annual cost of a nursing home in 2010 was $75,000; room and board in an assisted living facility, with no additional help, was $37,500; and the most basic category of home health aide, who can perform no medical tasks, like the dispensing of medication, was $19 an hour. These expenses are left to the elderly (and their adult children) to pay for out of pocket until their pockets are all but empty.

Then they are eligible for Medicaid, the state-run safety net for the poor. While Medicare, a federal program, is financed by payroll taxes, and thus is an “earned” benefit, Medicaid is “charity,” in the minds of the formerly middle class who worked their whole lives and never imagined themselves destitute.

I'm not sure what to make of this. Medicare was not and is not intended to be long-term care insurance, even if people need long-term care insurance. Even if we could achieve significant savings through elimination of such health insurance benefits as feeding tubes, "Abdominal and gall bladder surgery and joint replacements, for those who rank poorly on a scale that measures frailty," and "Tight glycemic control for Type 2 diabetes" for those who will likely die before suffering serious complications from diabetes, as the author suggests, and even if we deny costly medical treatments and surgeries for those who might not benefit, we would not achieve savings sufficient to offer long-term care insurance as part of Medicare. Meanwhile, at least when you're indigent, Medicaid does provide long-term care coverage. I appreciate Gross's argument that people who spend down their assets and qualify for Medicare might perceive it as "charity", but even if we called it "Medicare" would it be any less of a charitable program? You would still have to pay for the new benefit out of the general fund.

In the case of my mother, who died at 88 in 2003, room and board in various assisted living communities, at $2,000 to $3,500 a month for seven years, was not paid for by Medicare. Yet neurosurgery, which I later learned was not expected to be effective in her case, was fully reimbursed, along with two weeks of in-patient care. Her stay of two years at a nursing home, at $14,000 a month (yes, $14,000) was also not paid for by Medicare. Nor were the additional home health aides she needed because of staffing issues. Or the electric wheelchair after strokes had paralyzed all but the finger that operated the joy stick. Or the gizmo with voice commands so she could tell the staff what she needed after her speech was gone.

She paid for the room. My brother and I paid for the private aides and bought her the chair and the “talking board.” What would her life have been like without the skilled care she required and the ability to get around her floor and communicate her needs? I shudder to think. But none of this was Medicare’s responsibility.

Yet Medicare would pay for “heroic” care for a woman who was dying of old age, not a disease that could be treated: Diagnostic tests. All manner of surgery. Expensive medications. Trips to the emergency room or the hospital — had she not refused all of them, in the last year of her life. So, in less than a decade, by my low-ball estimate, my mother spent $500,000 of her own money and uncalculated sums from her two children before winding up what she considered, with shame, “a welfare queen.”

The author warns us, "Alas, 70 percent of the elderly will need extended care before they die." But I'm not hearing a solution. Yes, we can improve the efficiency of Medicare and, if we can push back against Sarah Palin-style propaganda wars designed to frighten Medicare recipients, we can better allocate resources. But the idea that the savings could pay for meaningful long-term care insurance seems like wishful thinking. The author has been writing about these issues for a long time, yet while she shares the cost of Medicare and lets us know that future costs are "scary", she does not attach any projection of what her proposal to also cover long-term care would cost. Consider,

In 2003, Medicaid paid $83.8 billion dollars for long-term care services, roughly one-third of all Medicaid spending. 27.8 billion of these dollars were spent on community-based long-term care services.

If we are to be frightened that "there are 47 million Medicare beneficiaries, costing a half trillion dollars a year", and that "In 2050, the population on Medicare will number 89 million", what of this:

The aging of the population, especially those 85+—the most in need of long-term care—is expected to result in a tripling of long-term care expenditures, projected to climb from $115 billion in 1997 to $346 billion (adjusted for inflation) annually in 2040.

You cannot pay for that by trimming the fat from Medicare. If people want Medicare to include long-term care coverage, contributions will need to be raised significantly.

On Budget Issues, Thomas Friedman Misses the Mark

Thomas Friedman laments that as the world suffers at the whim of "the two most merciless forces on earth: the market and Mother Nature", we're not doing enough to balance the budget. His initial point is correct, although obvious: the two political parties prefer to play politics while putting off the hard work involved with fixing, or at least trying to fix, some of our nation's more pressing problems. But let's be honest for a moment: one of the reasons the budget deficit is so large is because of "the market" - thanks to a severe, protracted recession and painfully slow recovery, tax revenues are significantly reduced. I'm not sure if Friedman truly means to make the case that we need to cut the budget to the core to avoid significant deficits, even if that means prolonging, worsening, or triggering a second dip in the recession and jobless recovery, but that appears to be the theory he's pushing.

Friedman also appears to be arguing that, with enough planning, we can anticipate any unexpected development and avoid its least pleasant consequences. So if we create an alternative energy policy and "Saudi Arabia is destabilized", we'll barely feel the impact of $200/bbl oil. Or if Congress passes climate change legislation we'll somehow be able to avoid having "Mother Nature hit[] some internal climate tipping point" that could shake the world's economy (and maybe prevent hurricanes and earthquakes). Real life is, of course, much more complicated.

Friedman believes that the President could do more to define an agenda for the future, push specific proposals and educate the public. And he's correct. Would that cause any legislation to be passed on any of the issues Friedman declares to be urgent? Nope. And while the President's policies and approach to the issues often (and unsurprisingly) do appear to be shaped by opinion polls, it's disingenuous to argue that people "voted for Obama to change the polls not read the polls". First, the polls reflect what people want. Second, when powerful interests align themselves against what the people want (e.g., a public option) people like, dare I say Thomas Friedman, seem more inclined to align themselves with the powerful interests than with the will of the people.

Let's be specific for a moment. Thomas Friedman wants a new energy policy. That policy has been defined in his columns as a gas tax of between 50 cents and $1 per gallon. That appears to be the beginning and end of his conception of policy reform. It won't affect him, because he can easily afford to fill the tank of his Lexus SUV (while patting himself on the back for owning a hybrid, and ignoring the fact that his household energy consumption probably matches that of a number of small towns, even given due consideration to his use of solar panels and geothermal heating in his gargantuan mansion). But it's not his personal consumption that actually bothers me, or even the concept of a higher gas tax. (We should have implemented a higher gas tax decades ago, when the rest of the world was doing so, resulting in adaptation over time rather than a shock to the system.) It's the fact that his proposed cure is a regressive tax, one that would have no meaningful impact on himself or his lavish lifestyle but would create significant hardship for most Americans.

So what does Thomas Friedman want our nation to do? He identifies "things we need to invest more in — like education and infrastructure" and "things we need to reduce, like entitlements and defense spending." How does Friedman propose fixing things? With "serious, sensible, Simpson-Bowles-like budget cuts and tax increases". Um... except the Simpson-Bowles proposal was neither serious nor sensible. It was focused on ideological fixes - like capping revenues - accompanied by the notion that you could cap spending on certain programs and avoid exceeding those caps by means left undefined.

Let's be honest for a moment here. Social Security is not in crisis. It's the target of an ideological war. The long-term budget picture for Social Security can be fixed for additional decades with some relatively modest adjustments to the tax rate, retirement age, and benefits levels. Although it's fun to pretend otherwise, we have to keep in mind that as we push the retirement age up we're likely to push a growing population of older workers into the Social Security disability system years before they qualify for retirement benefits - we need to be careful not to find ourselves rearranging the deck chairs and potentially increasing costs to the taxpayer. But the big hurdle is that it's now a favorite right-wing talking point that the Social Security trust fund "doesn't exist", to put it mildly, making it awkward for the Republicans to sign on to a simple adjustment. Similarly, even if we pretend that Richard "Suck on This" Friedman is interested in meaningful cuts,¹ military budget cuts aren't going to balance the budget.

The other two entitlement programs are, of course, Medicare and Medicaid. The issue with them is much less "can we afford the status quo" and much more, "if health care inflation continues at present levels, these programs will quickly become unaffordable." The measures that we could take to lower present spending, which is absurdly high when you compare both spending and results to other developed nations, could extend the viability of Medicare and Medicaid for a number of years, but inflation will still catch up with us. So how do you tackle inflation?

The Simpson-Bowles approach, again, is to say "We're going to cap spending" and "We're going to impose consequences if the cap is exceeded." That's not "serious" - it's meaningless twaddle. We're not going to wish our way out of inflation, nor are the nation's senior citizens and their families going to sit quietly when the "spending cap" is reached and benefits are cut.

Medical inflation is a difficult issue. It's not going to go away with Simpson-Bowles-style evasions and gimmickry. Nor was Simpson-Bowles particularly concerned with rebuilding the nation's infrastructure² or spending more on education.³ Other than perhaps it's regressive nature, what does Friedman actually like about the Simpson-Bowles approach?
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1. Within the same column, in the context of climate change, political instability and high food and fuel prices, "the world needs a strong America more than ever" - would Friedman have us believe that he's speaking only of economic strength?

2. When asked about their lack of proposed infrastructure investment, Simpson and Bowles explained "infrastructure was indeed a problem in need of upgrade, and... the solution is to reduce the deficit in order to free up the necessary funds to tackle the problem, rather than adding it to existing spending".

3. Simpson and Bowles proposed cutting federal spending on education.

And Yet... Everybody Will Still Die

Paul Krugman correctly notes that we can't fix the budget problems created by Medicare and Medicaid simply by cutting spending.

Think of it this way: Congress could, with a stroke of a pen, cut Social Security benefits in half. But it couldn’t do the same with health spending: Medicare can’t suddenly start paying to replace only half a heart valve or mandate that bypass operations stop halfway through.

Limiting health costs, therefore, requires a smarter approach. We need to work harder on prevention, which can be much cheaper than a cure. We need to find innovative ways of managing health care. And, above all, we need to know what works and what doesn’t so that Medicare and Medicaid can say no to expensive procedures with little or no medical benefit. “So-called comparative effectiveness research” is central to any rational attempt to deal with America’s fiscal problems.

He correctly criticizes Mike Huckabee for attempting to perpetuate the tired old line about "death panels", particularly in relation to comparative effectiveness research. Huckabee's comments highlight a contradiction in the Republican stance on Medicare: they want to kill it, for example by replacing Medicare with a voucher system, never mind that you wouldn't be able to obtain meaningful insurance coverage with the voucher - but at the same time want to protect and even to expand it in order to curry favor with older Americans - hence their creation of unfunded drug benefits and prattle about "death panels".

But while Krugman is correct that we need to find ways to bend the cost curve, and that prevention and comparative effectiveness research may be the best way to achieve that, those measures will only go so far. Because we can delay the inevitable, but eventually a lot of us will end up in nursing homes and eventually every single one of us is going to die. The cost of that long-term care will for many people be largely picked up by Medicaid, and the high cost of end-of-life care by Medicare. The end of life counseling that the Republicans distorted into "death panels" might help with the cost of end-of-life care, but I'm skeptical that a significant number of people in our age- and death-phobic society will suddenly embrace the inevitable and eschew expensive treatments. Also, while it's easy to express shock at the extraordinary medical cost for the average person's last year of life, the fact remains that it's usually easier to tell when that "last year" begins in retrospect, and that while you may be able to get people to agree that they would be better served by living out their last year in home hospice care it may be quite another thing to convince them, "And you're already in your last year." Assuming we can accurately make that assessment.

Social Security as a "Welfare Program"

Robert Samuelson could have written a much shorter column than this,

We don't call Social Security "welfare" because it's a pejorative term, and politicians don't want to offend.

Translation: "I want to call Social Security 'welfare' because I consider that term to be pejorative." That interpretation of Samuelson helps explain why he spends so much time and effort trying to tear down Social Security rather than addressing how it might be made (even more) sustainable. Let's take a look at his arguments....

The first argument offered by Samuelson appears to be that Social Security is "welfare" because "Social Security, Medicare and Medicaid, the main programs for the elderly, exceed 40 percent of federal spending." I thought we were talking about Social Security itself, though, not "Socialsecuritymedicareandmedicaid". The relevant spending figure is that for Social Security, not for Samuelson's personal conception of a three-headed beast. By combining the three, Samuelson gets to avoid admitting that Social Security can be "fixed" with modest adjustments to taxes and benefits, as opposed to the "massive deficits, huge tax increases or draconian reductions in other programs" he sees as necessary to maintain "Socialsecuritymedicareandmedicaid" at present levels with no change in medical inflation. I'm not familiar with any definition of "welfare" that is contingent upon how much a unit of government spends on a particular program.

Samuelson provides a definition for his conception of a "welfare program":

Here is how I define a welfare program: First, it taxes one group to support another group, meaning it's pay-as-you-go and not a contributory scheme where people's own savings pay their later benefits. And second, Congress can constantly alter benefits, reflecting changing needs, economic conditions and politics.

To me, that seems like a bait and switch. After all, Samuelson appears to want to use the term "welfare" as a pejorative, to convey the idea of a wealth transfer from the deserving to the undeserving. The first prong of his definition is more consistent with the Constitution's "General Welfare Clause", Article I, Section 8, Clause 1:

The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;

Now perhaps Samuelson truly believes that government spending that inures to the benefit of the general public, necessarily resulting in a transfer of wealth, is a "welfare program". But while he has devoted countless columns to railing against "Socialsecuritymedicareandmedicaid", I'm having a hard time thinking of a time when he has come down hard against, say, corporate welfare. Or where he has taken the position that we spend far too much taxpayer money on ensuring the safety of food and pharmaceuticals.

In fact, under his definition, it's difficult to conceive of any government spending program that benefits an individual that he would not describe as "welfare" - are there any such programs that are "contributory scheme[s] where people's own savings pay their later benefits"? You paid property taxes for fifteen years, then your kid started school? School is a welfare program! You pay taxes to build and maintain roads in your community? Welfare program! Public parks? Welfare program! Snow removal from public streets and highways? Well, you get the idea. And yes, if we're using the conception of "welfare" found in the General Welfare Clause, those are "welfare programs". But that's not the definition Samuelson wants us to infer - that's not the pejorative.

The second prong of Samuelson's definition, "Congress can constantly alter benefits, reflecting changing needs, economic conditions and politics"? I'm having a difficult time thinking of a single item in the federal budget for which Congress cannot alter spending and policies based upon its perception of "changing needs, economic conditions and politics", whether or not the spending might fall under the General Welfare Clause, Commerce Clause, or... you name it. So how is this aspect of the definition meaningful?

It's possible to make cogent, honest arguments for the reform of Social Security. It's even possible to present the perjorative definition of "welfare" - the one Samuelson sidesteps with his bait-and-switch - and admit that your real objection is to Social Security as a transfer of wealth to people you see as undeserving. It's a shame Samuelson is unable to articulate such an argument.

David Brooks' Math Problem

Like "everybody else", David Brooks wants to balance the budget.

The greatest pressure comes from entitlements. Spending on Medicare, Medicaid, Social Security and interest on the debt has now risen to 47 percent of the budget. In nine years, entitlements are estimated to consume 64 percent of the budget, according to the invaluable folks at the Committee for a Responsible Federal Budget. By 2030, they are projected consume 70 percent of the budget.

When you throw in other politically untouchable programs, like Veterans Affairs, you arrive at a situation in which a vast majority of the budget is off limits to politicians who are trying to control debt. All cuts must, therefore, be made in the tiny sliver of the budget where the most valuable programs reside and where the most important investments in our future are made.

Let's confront it at the outset: David Brooks is what some waggishly call a "very serious person" when it comes to balancing the budget, which means that he's not actually concerned with balancing the budget. Sure, he's worried about potential future growth in entitlements, and we do need to address that growth. But his seriousness begins and ends with "How do we cut entitlements". Not, "How do we reform entitlements to make them sustainable," or "How can we get the same benefits while spending less money." Nope, you do it his way or you get a dismissive sneer about how you're putting the "vast majority of the budget... off limits".

It's easy to find Republican commentators who complain, with reason, that Medicare and Medicaid are unsustainable and we must find a way to bring their cost growth under control. They're right. So let's look around the world, right now, at what other developed nations are doing. Are there any that spend as much as we do for health care? Are there others that get better outcomes? How about emulating them? Nope, not even a possibility. Not even if it will help control the cost curve and balance the budget.

It's a fair retort that other nations haven't achieved perfection. They may get similar or even better outcomes at much lower costs, but their medical cost growth curves (even if lower) are also unsustainable. But that's neither a valid basis to reject their approaches, nor to examine those elements that work and adapt them to the U.S. system. At least if the goal is to balance the budget. If you're willing to blow a huge hole in the deficit and allow out-of-control medical inflation due to your love of our pseudo-free market system, fair enough. But if so, why should anybody regard you as serious about balancing the budget. Your "my way or the highway" approach is every bit as obstructionist as that of your imaginary foe who won't agree to cut even a penny from Medicare.

As for Medicaid? Untouchable? Brooks can't be serious.

Social Security is not a pressing issue. It's budget is balanced well into the future. If you believe that the U.S. will be in such a bad position by then that it is going to start defaulting on its debts, well, what can I say? If that's our future, getting a Social Security check will be among the last things you'll be worried about. It's possible to balance Social Security for additional decades with relatively minor adjustments, but that will only have people like Brooks sounding the alarm about the next date after which Social Security is projected to be unable to pay full benefits.

I am perfectly content to talk about Social Security reforms and the impact of an aging population. People in Brooks' camp? They talk about privatizing Social Security, then they check the polls and find out that "privatizing" is not polling well so they start talking "personal accounts" (which must be selected from a narrow range of government-defined options, from which private managers will skim management fees, and for which there is no guaranteed return) while simultaneously complaining that it's unfair to speak of their plan as "privatization". Beyond that, what is Brooks offering? How... serious.

Brooks lectures the Republican Party that they have to do more than talk and dream about cutting entitlements - it's time to turn those dreams into reality:

Over the next few weeks, Republicans will try to cut discretionary spending to 2008 levels and tell their constituents they are boldly reducing the size of government. That is a mirage. Anybody who doesn’t take on entitlement spending is an enabler of big government.

Yes, the Republican budget plan is a joke. Has been a joke. Will be a joke. But wait a minute here. What word is completely absent from Brooks' editorial on how to be serious about the budget. He's mentioned interest, Social Security, Medicare, Medicaid, veteran's benefits.... That's right, in an editorial oddly titled "The Freedom Alliance",¹ he has forgotten about that pesky military budget.

If Brooks wants to make a policy argument about why the military budget should be untouchable, he's free to do so. The New York Times would pay him for that column, as it does with any other. But as with the argument he doesn't make as to how we could save billions, right now, by adopting a different approach to health care spending, he has no discernible interest in the subject. He'll complain that Teach for America's $18 million earmark is at risk, but forget about paying for it by pulling 40 or so combat soldiers out of Afghanistan.

Note another concept missing from Brooks' analysis: the tax increase. He's sort of a twisted Marie Antoinette. "Hey you - you want some cake? You can eat cake. You just have to take it away from veterans, sick people and old people." Buy more cake? You gotta be kidding, right? Once again he could offer a policy argument - why the rich, who are richer than ever, should not pay more taxes. But nope. Instead he's championing the recommendations of the failed Simpson-Bowles deficit commission and telling us that if we want barely trained college grads teaching our kids, grandma's gotta give up her medicine.
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1. This "Freedom Alliance" apparently involves various groups that want government money teaming up to convince the masses that our freedom is at stake if we don't convince Congress to cut entitlement spending in favor of perpetuating their earmarks. Go grass roots!

Why Waiting Periods Can't Substitute for a Health Insurance Mandate

One of the arguments raised in relation to the mandate is that, rather than requiring people to obtain insurance, we could resolve the problem of free riders by limiting when people would be able to obtain insurance if they had a pre-existing medical condition. For example, Ross Douthat recently suggested that people should only be allowed to obtain insurance without regard to their pre-existing conditions during enrollment periods held every two years. I'll assume this rule would not apply if you had continuous coverage - for example, if you were on your parents' health insurance, you could transition to a different carrier without waiting for an enrollment period.

There is an inherent arbitrariness to the concept of enrollment periods, in that somebody who chose not to acquire health insurance and discovered a potentially expensive health condition a few weeks before the enrollment period would face little or no penalty, while a person who discovered the problem or was catastrophically injured after the enrollment period would be penalized for close to two years. But let's say, for now, that the arbitrariness doesn't matter - that the average period of non-insurance would be about a year. Will that fix the problem? Nope.

First, even if we assume that the population that will choose not to carry insurance will be almost entirely young and healthy, the fact remains that some young, healthy people will develop acute or chronic medical conditions that are very expensive to treat or manage. Just as presently occurs, many of these people will not be able to pay for some (or perhaps any) of their medical treatment. Some subset of that population will undertreat their conditions, potentially resulting in the deterioration of their conditions as well as acute phases that require emergency treatment and hospitalization - costs that won't be covered by insurance. Recall, that one of the goals of this reform is to avoid the over-utilization of emergency medical services, and to reduce the cost to hospitals associated with the treatment of uninsured patients. Also, patients with chronic medical conditions usually don't get either good continuity of care or good management of their conditions through emergency departments. They're more likely to keep cycling through emergency rooms until they either qualify to obtain insurance or end up on Medicaid.

Young people are also at risk of catastrophic injury. A serious car accident can easily result in acute medical care costs in the six figures, followed by the cost of rehabilitation. The acute portion, again, will trigger EMTALA - the patient will be taken to an emergency room and the hospital will be legally obligated to treat the patient and stabilize his condition. If we attempt to punish the patient by providing inadequate follow-up care or rehabilitation, we risk transforming that healthy younger worker into somebody who is partially or fully disabled at significant cost to society. Further, their medical bills remain unpaid.

Although the libertarian will argue that an individual is entitled to take the risk, that only holds true if the individual can't pass the cost of a bad gamble onto the rest of society. As the system is structured - and nobody is suggesting the repeal of EMTALA - the individual will pass those costs on to the rest of us and it's thus fair to ask that he obtain at least catastrophic coverage - and that's actually all that the Affordable Care Act requires.

Second, some of the people who decide that they "can't afford" health insurance will not be young or healthy. They will be people who already have health conditions or are at high risk for developing them. Over the year or two during which they're ineligible to insure, their conditions may deteriorate. Diabetes could go out of control, leading to the need for more expensive management, or even serious complications such as limb loss, vision loss or kidney failure. Hypertension, already too often untreated in parts of our nation's population, can develop into congestive heart failure. Part of the concept of the ACA's reforms is to get early diagnosis and better management of chronic health conditions. By allowing people who misjudge the seriousness of their condition, something that's pretty common for people in the early stages of a chronic health problem, to go uninsured, we lose that benefit and are likely to end up paying significant future medical costs that could have been reduced or avoided with proper early care. Again, some of these people will become disabled, potentially increasing Social Security costs, Medicaid costs and reducing their productivity.

Third, the insurance companies are going to balk at the idea that the population of younger, healthier workers will potentially be able to avoid purchasing insurance. If it needs to be explained, insurance works by pooling risk. You need lower-cost patients in the system for insurance to be able to pay for the care of higher-cost patients. The assumption behind the waiting period seems to be that medical costs are roughly equal from person to person, and that even if people who don't buy insurance are a bit more profitable the insurance company can make up for that by... picking up the cost of their care after the waiting period, when they may be even sicker. The fact is, a small portion of medical patients comprise the majority of costs to the system. The uncontrolled diabetic who keeps presenting at the emergency room, the car accident patient, the cancer patient.... Insurance companies need a lot of healthy participants in the pool to reasonably distribute the cost of those patients medical costs in a given year are into the six figure range.

Fourth, if we create this waiting period we also create what amounts to a look-back period of up to two years during which we can expect insurance companies to try to claim fraud by a recipient of insurance in order to deny coverage or revoke the policy.

Under the current system, something as relatively simple as seasonal sneezing can jeopardize your financial security, HHS argues, citing a 2001 study for the Kaiser Family Foundation.

“Even when offering coverage, insurers can exclude whole categories of illnesses related to a preexisting condition. For example, someone with a preexisting condition of hay fever could have any respiratory system disease – such as bronchitis or pneumonia – excluded from coverage,” HHS said.

Part of the goal of this reform is to end those games, but it it quite likely that insurance companies looking at a new enrollee whose medical costs are going to be in the five to six figure range will continue to try to revoke coverage once the "enrollment period" loophole is created.

And that's off the top of my head.

I do sympathize with the notion that this is a novel form of taxation by the federal government. I've argued for years that there are better approaches than an individual mandate, albeit the best being to simply impose a tax balanced by some form of tax credit to be used toward the purchase of insurance - you don't want to buy insurance, fine, but you don't get the tax credit. A big part of the problem here is that nobody wanted to be honest about what was going on - "How do we pass a tax without calling it a tax". But let's try to find workable solutions to the idea. If you're going to require insurance companies to cover pre-existing conditions, something Douthat concedes that many Republicans support and that it appears he personally supports, "enrollment periods" not only won't be effective, they will undermine many of the cost-saving aspects of the Act.

Where Can I Find Employers Offering Pensions?

In a rather silly tribute to what she sees as a British love of austerity, Anne Applebaum lectures,

Hardly anyone in America is talking about cuts in Medicare, Medicaid or Social Security, for example, the biggest budgetary items (even though "private" pensions now look a lot safer, even when taking stock market fluctuations into account, than those who will depend entirely on a bankrupt federal budget 20 years hence).

Where exactly can I find a job that offers me a private pension? A secure one, that is. (Given her faith in private pensions, would Applebaum eliminate the Pension Benefit Guaranty Corporation as unnecessary?) Seriously, what country does she live in because... oh yeah, that's right, it isn't this one.

If Applebaum lived in this country, perhaps she would have noticed that Social Security cuts are very much on the table, and that the discussion recently made headlines in rather colorful terms. Medicaid benefits have been slashed across the country. Sure, Medicare reform is difficult, although the Obama Administration should get credit for going after Medicare Advantage subsidies; but when Applebaum comments, "In Britain, by contrast, everything is on the table: pensions, housing benefits, disability payments, tax breaks" it's interesting to note that her list of "everything" does not include cuts for the NHS - the budget has been "ring fenced" with some shifts in spending and plans to limit future growth. Sound familiar?

What is interesting about Applebaum's list is that she's principally rattling off benefits for the poor. She should recall from the 1990's that "welfare reform" is both popular and easy. She should be aware that Britain offer significantly more generous social support than the U.S., and that's unlikely to change even after the cuts are made.

Yes, wartime rationing had an effect on the nation, and I remember my grandmother's cupboard overflowing with boxes of sugar cubes - she was not going to go through another war without having sugar for her tea. But really, no, other than the handwriting on the wall being much more obvious, I don't sense that the British are slashing the budget because they want to show of their stiff upper lips and whatnot. If they loved austerity as much as Applebaum suggests, how does she imagine they got into their present financial crisis?

It's Well Past Time for Medicaid Reform

Many approaches could be taken to Medicaid reform, including replacing the patchwork of state Medicaid programs with a consistent level of benefits through a national program, transitioning it to a voucher system (although for any reasonable amount of coverage that would cost far more than the status quo), creating a plan to put Medicaid recipients onto a private plan when the insurance exchanges come into effect (with need-based subsidies of deductibles and copayments).... But what we have right now is a mess. The expansion of Medicaid that is supposed to occur under the healthcare reform bill may break its back - even if present levels of participation by care providers are maintained, in many parts of the country those levels are inadequate to serve the existing population of Medicaid recipients.

The demand that the healthcare reform bill be "revenue neutral" killed any chance that the bill would address the many woes of Medicaid. Nationalizing the program and funding it at adequate levels would require a significant infusion of federal cash. It may be possible to engage in a privatization of the system through the exchanges created by the current bill, but that would also likely be significantly more costly than the status quo. Also, no private insurer is going to want to touch the end of life costs that Medicaid picks up for many of the nation's long-term nursing home residents and elderly population.

If any Republicans are listening to David Frum, or if Frum himself is done wringing his hands, maybe they could share some ideas?

Gingrich & Goodman Idea #9: "Stop Health-Care Fraud"

I guess it's hard to come up with a list of "10 GOP ideas", which I suppose John C. Goodman and Newt Gingrich include non-GOP ideas, ideas at odds with actual GOP ideas, and even Democratic Party ideas in their list. As with "making health insurance affordable", it's rather silly for either party to try to lay claim to fighting fraud.

Every year up to $120 billion is stolen by criminals who defraud public programs like Medicare and Medicaid, according to the National Health Care Anti-Fraud Association. We can help prevent this by using responsible approaches such as enhanced coordination of benefits, third-party liability verification, and electronic payment.

Were the GOP to propose legislation with a serious likelihood of combating fraud, I think it would pass by overwhelming support from both parties. But... this isn't actually a GOP priority and they have proposed no such bill.

Who is making a crack-down on fraud a priority? Well, it's not Newt Gingrich:

"The Obama administration is committed to turning up the heat on Medicare fraud and employing all the weapons in the federal government's arsenal to target those who are defrauding the American taxpayer," HHS Secretary Kathleen Sebelius said during a news conference at the Justice Department with Attorney General Eric Holder.

"But our joint efforts don't just stop at the jailhouse door," she said. "Every dollar we can save by stopping fraud can be used to strengthen the long-term fiscal health of Medicare, bring down costs and deliver better service to Medicare beneficiaries."

The government's job will be anything but easy.

During the past five years, thousands of Medicare fraud offenders have shown that they can outsmart the vulnerable healthcare system for the elderly and disabled. Their weapons: cash kickbacks to Medicare patients, manipulation of medical records to justify bogus charges, and use of different billing codes to get around Medicare's technology to block false claims.

Maybe Gingrich missed the speech?

The only thing this plan would eliminate is the hundreds of billions of dollars in waste and fraud, as well as unwarranted subsidies in Medicare that go to insurance companies -- subsidies that do everything to pad their profits but don't improve the care of seniors. And we will also create an independent commission of doctors and medical experts charged with identifying more waste in the years ahead.

Without wanting to diminish the importance of empowering patients, it should be noted that if you restructure Medicare's payment system such that each doctor can "renegotiate and reprice their services" with each individual patient, as Gingrich and Goodman propose, you're significantly increasing the opportunity for fraud.

I'll give Gingrich and Goodman credit for having the President's back on this issue, but I'm surprised they don't know that President Obama is a Democrat.

(Return to Parent Article.)

Samuelson Wants to Slash Support for the Elderly, Round...

I've lost count. In any event, it's yet another argument by Robert Samuelson to slash Medicare, Medicaid and Social Security. His initial premise isn't what's bad:

In all the recent reports, speeches and news conferences concerning the federal budget outlook -- including the administration's proposed budget for 2011 -- hardly anyone has posed these crucial questions: What should the federal government do and why; and who should pay?

Samuelson argues that current expenditures and their projected growth will make it impossible "to close the massive deficits without big cuts in existing government programs or stupendous tax increases." That, of course, ignores the fact that healthcare reform could reduce the overall cost of healthcare for the nation, and could potentially both increase quality and decrease healthcare inflation. When it comes to reform, other than "slash, burn and privatize", Samuelson appears to be in the "just say no" club. And having fixed himself in that corner, he is comfortable saying "No borrowing or tax increases to pay for this" because he knows that absent reform the financial situation will continue to deteriorate - perpetuating the vicious circle that he uses to support his argument for slash and burn. The only other government program he identifies for possible cuts? Farm subsidies.

Samuelson proposes raising the eligibility age for Social Security and reducing the benefits available to wealthier retirees. You could argue that he's missing the point - wealthier retirees for the most part paid a lot more into the system during their lifetimes and thus, as the system is designed, are supposed to receive higher payouts during their retirement. But he knows that. He's pushing a "reform" that can reasonably be expected to diminish support for Social Security among higher wage earners, with the goal of shifting the program from an insurance system that benefits everybody to a welfare system that could be viewed as expendable. Seriously, an argument can be made for replacing Social Security with a welfare program for the elderly, but any such program should be funded out of the general fund. (And we shouldn't forget that the reason people like Samuelson prefer that to the status quo is that welfare programs are easier to cut or eliminate.)

Further, the consequence of raising the age of eligibility would inevitably be an increase in expenditures out of the general fund, as retirees in their late sixties seek disability benefits instead of retirement benefits. Samuelson proposes,

Eligibility ages for Social Security and Medicare should be gradually raised to 70, coupled with a requirement for people to buy into Medicare at 65.

But what if a sixty-five year old can't afford the premium? Also, given that the fundamental problem with Medicare is the high cost of end-of-life care, how would that translate into a level of cost savings that would prevent the fiscal nightmare Samuelson projects? Further, why not take things in a different directly - let anybody over the age of 55 buy into Medicare at a rate such as "the average cost per recipient plus ten percent"? The extra revenues generated would subsidize care for those over 65, and you wouldn't need to impose a means test for a full or partial waiver of premiums for those between ages 65 and 70 - something likely to erase much of the revenue that Samuelson imagines would be generated by the mandated buy-in.

But let's get back to Samuelson's initial argument - that we need to ask "What should the federal government do and why". What gargantuan federal expenditure isn't mentioned in Samuelson's piece? (I doubt I have to tell you that it's military spending.) Part of a debate over the proper role of the federal government is whether or not we should scale back our military expenditures. Do we need to be exponentially more powerful than the next largest military power, or is a smaller increment more reasonable? If you need to be reminded, here's what Samuelson has previously argued about military expenditures:

A possible war with Iraq raises many unknowns, but “can we afford it?” is not one of them. People inevitably ask that question, forgetting that the United States has become so wealthy it can wage war almost with pocket change. A war with Iraq would probably cost less than 1 percent of national income (gross domestic product). Americans have grown accustomed to fighting with little economic upset and sacrifice.

When it comes to war, the Iraq war (more than $1 trillion spent to date, many projections of long-term cost in the $2-3 trillion range) is "pocket change"? As compared to Samuelson's dire scenario from ten years in the future?

In 2020, the gap is $1 trillion, again approaching a fifth [of spending]: Spending is $5.7 trillion, taxes $4.7 trillion.

Suddenly that $1 trillion has become "real money".... No, it's a matter of priorities:

But I am certain — now as then — that budget consequences should occupy a minor spot in our debates. It’s not that the costs are unimportant; it’s simply that they’re overshadowed by other considerations that are so much more important.

If Samuelson supports the expenditure, budget issues are at most a minor distraction. So it's far from a surprise that when Samuelson calls for a debate on what "the federal government do and why; and who should pay" he means only to gore somebody else's ox.

The Games Politicians Play

I don't know if Obama should scold the person who stuck the birth control provision into the stimulus bill, or thank them. The scolding should follow from the fact that this was supposed to be a pork-free, non-political bill that could pass with broad bipartisan approval. The birth control provision gave right-wing Republicans a talking point - they could point to it and say "What does birth control have to do with stimulation."

And that brings us to the possible "Thank you." Other than being fodder for an easy one-liner, Republican opposition has been unprincipled and dishonest. The fact is, the provision is good public policy and is consistent with the Medicare policies of a number of Republican governors. It would have saved those governors a ton of money and unnecessary hassle in obtaining waivers so that they could offer birth control benefits through Medicaid. And when the provision was dropped, the Republican answer was still "no" - giving Obama the opportunity to... do this:

“We’re not going to get 100 percent agreement, and we might not even get 50 percent agreement, but I do think people appreciate me walking them through my thought process,” the president said, as he left a meeting with GOP senators just off the Senate floor.

“I hope I communicated a sincere desire to get good ideas from everybody,” he added. “My attitude is this the first major piece of legislation we’ve worked on, and that, over time, some of these habits of consultation and mutual respect will take over, but old habits die hard.”

The shoe is on the other foot. The Republicans were ignoring public policy in favor of a talking point, leaving Democrats to explain why the birth control provision belongs in a stimulus package and makes good sense. Now the talking point is gone and the Republicans are left to sputter things like "We need more tax cuts" or "It's unfocused... not that we have any better ideas".

Obama was placed in an awkward position by the legislators who stuck the birth control provision into the stimulus bill. That measure was inconsistent with his stated goals for the bill. But to ask for its removal opened him up to attacks from the left, accusations that he's selling out women's health. While it's standard Washington fare to stick appropriations like this into "must pass" legislation, this really wasn't the time. I hope that Democratic party leaders have a bit of a sit-down after this, to discuss how they might avoid shooting the President and themselves in the foot over the next two years. Meanwhile, they should work to get a similar appropriation passed through, perhaps, a bill directing some aid or assistance to the states or updating Medicaid rules.

"Cut My Benefits"

In today's Post, Robert Samuelson makes the case for transforming Social Security (and Medicaid) into at least partially means-tested programs:

We ought to nudge these programs back toward their original purpose as safety nets -- and not retirement subsidies. When the ratio of workers to retirees was high, we could afford to blur the two roles. In 1960 there were five workers for every retiree. But now there are three, and the projection for 2030 is two. The consequences of subsidizing retirement are increasingly undesirable. It penalizes the young, threatens the economy with higher taxes and drains capable workers from the labor force.

But in his giving GW Bush limited credit for "indirectly" broaching this issue, Samuelson overlooks the fundamental point of Bush's reforms - which are not to means test Social Security, so as to ensure that the neediest of the elderly are supported, even as cuts to the wealthier (and wealthiest) of the elderly are implemented to avoid the necessity of a tax increase.

The working poor would ultimately be hit the hardest by Bush's "reforms", as they would have the smallest "private accounts" while qualifying for the lowest retirement benefits (assuming any are still provided). And while the changes Bush proposes would also affect retirees of substantial means, Bush (like Samuelson) anticipates that they can take care of themselves. That may provide some overlap between the means-testing Samuelson proposes and the privatization Bush proposes, but there's no small difference between maintaining and undermining Social Security as a safety net.