"For Oliver Fein, MD, Medicare and other public healthcare policies have been a major part of his life since he left Case Western Reserve University School of Medicine in 1967. Currently, Dr. Fein is a general internist at NewYork-Presbyterian Hospital in New York City, a professor of clinical medicine and public health at Weill Cornell Medical College and chair of the New York Metro Chapter of Physicians for a National Health Program.
Dr. Fein says he has always been interested in the delivery of healthcare to vulnerable populations, especially the poor and elderly. He spent his residency in public hospitals, and his clinical practice was based in academic medical centers where he could continue to see Medicaid and Medicare patients. When it comes to Medicare, Dr. Fein explains it is "not a perfect program," but it will continue to be tremendously important for hospitals and physicians alike.
Here, he shares his thoughts on where Medicare stands today, if the program is really as insolvent, as some say it is, and what he would do if he helmed CMS.
Question: Medicare is, for all intents and purposes, one of the most important payors in the country. What are some of the fundamental problems with it, and what does it do well? Is it really as insolvent as some public policy leaders say it is?
Dr. Oliver Fein: Let's start with what Medicare does well. [Medicare] is a situation where when you turn 65 and have worked 40 quarters, or 10 years, in this country, you're eligible. The simple eligibility of Medicare is just wonderful, and I think people really appreciate that. From a physician's point of view, the sense I have is, there are some that believe Medicare doesn't pay them enough. So, therefore, they don't take Medicare patients. I think that's been highly exaggerated. There was a study from the Archives of Internal Medicine in 2011 that argues, in fact, the number of physicians that accept Medicare is much larger than acknowledged in the anecdotal literature. That may change if this whole [sustainable growth rate] issue isn't solved.
The other thing to say is many [physicians] who are in private practice have told me they like Medicare because they can count on getting the check each month. There's no hassle of claims being denied that occurs with private health insurance. What has happened is most insurers are for-profit entities. Any way they can delay payment means they can make money on premiums they've collected. Well, since there is no for-profit motive in Medicare, claims denials are rare. I think overall, beneficiaries like Medicare, and it's a program that physicians overwhelmingly think is an important program for them.
For hospitals, Medicare is kind of their intermediate payor. It may not be as good as contracts they've been able to negotiate with private insurers, but it's better than contracts with Medicaid insurers. The result is even specialized places like Memorial Sloan-Kettering Cancer Center take Medicare whereas they may deny certain for-profit private insurers because they feel they don't get adequate reimbursement from them.
In terms of Medicare's solvency, Medicare's trustees and most economists will say the money that has been collected from people's payroll checks makes the program solvent through 2024. So what does that mean? The money is there to pay projected payouts that will be needed in those years for Part A. Some people are talking about Medicare going broke after that. It is perhaps that the monies collected won't equal what's paid out — but that assumes there's no change in the payroll tax. Currently, [payroll tax contributions to Medicare] are 1.45 percent from you and 1.45 percent from your employer. Let's increase that by a little bit to 1.5 or 1.55 percent of salary, and we could extend the life of this program on the Part A side to perhaps 2040 or 2050. I think that's one dimension.
The other thing to realize is that on the Part B side, Medicare is a 25-75 program. The beneficiary, on average, contributes 25 percent of cost of the program, and the government takes the rest out of current tax revenues. Does that mean program is broke? Well, if we continue to have wars in Afghanistan and Iraq and have military costs that are so substantial, we're not going to collect enough tax revenue to cover it. [However], if you just shrink [the military budget] a little bit, we'll have plenty of money to cover Part B contributions.
Part C, or Medicare Advantage, is also designed in such a way where beneficiaries are able to elect a private health insurance company to mange their benefits. And when that happens, the doctor and the hospital are dealing with a private insurance company, not Medicare. What has been shown is private [Medicare Advantage] companies are getting 11 to 14 percent more money than if the beneficiary stayed in the public program. The program is designed to reimburse the private insurance companies more generously. They also risk select, and one of the classic ways they do that is by offering a free gym club membership, for example. So if we really paid private insurers less [Medicare] money, there would be more money in program, and again one wouldn't be talking about us going broke.
Q: There's been a consistent refrain in the hospital sector that raising the eligibility age of Medicare from 65 to 67 or higher would help control costs as well. What do you think would result from that plan?
OF: It will deal with the government costs. If you don't cover a whole sector of the population, sure, Part A costs will be less, Part B costs will be less, Part C and D costs will be less. But it is enormously unfair, and the hospital sector will ultimately get very hurt by this. This works for people of upper incomes because many of them actually do work past age 67. It's the laboring class — the coal miners, steelworkers, garbage collectors, people who have to do real, physical labor who frankly ought to retire at age 65 who are the ones really adversely affected by this.
If those older, low-income folks are laid off by their employers, they lose their insurance — and that will come back to slap hospitals in the face. When contrasted with 30-year-olds with no insurance, hospitals will find themselves swimming in a new form of debt.
Q: What about the inverse? What if Medicare's age was lowered to add in younger, healthier people?
OF: That's where we should be going, it seems to me. Incorporate younger people in Medicare, who will cost the program much less on a per capita basis. One could decide to cover children. Children are a great example. They require relatively cheap care even though they do have immunizations in the first year of life. But on a per capita basis, they are much cheaper. Let's incorporate them in the Medicare program, and as they get older, keep them in the program.
Q: What about reducing the number of health insurers? Would that make financial planning at hospitals, for example, easier?
OF: The studies we've looked at show that since administrative costs of multiple health insurers are on average 20 percent to the insurance company and up to 40 percent to the physician because they have to hire extra staff to deal with multiple insurers and challenge unjustly denied claims. [Physicians for a National Health Program] decided to compare Toronto General in single-payor Canada with Massachusetts General Hospital in Boston, since they are similarly sized. At Toronto General, there were three billers in the billing office; Massachusetts General had over 300.
Frankly, every single-payor bill that exists in Congress includes jobs retraining, so if we went to single-payor, there wouldn't be this concern. We haven't actually seen a good economic study of how many fewer employees you would need in the insurance sector. Some people have looked at the issue in terms of the amount of time a primary care physician has to spend dealing with prior approval, denial of claims, so on and so forth. Larry Casalino, MD, PhD, [chief of the division of outcomes and effectiveness research at Weill Cornell Medical College] shows that in terms of income, practicing primary care physicians are probably spending an enormous amount of money having to deal with multiple insurers.
Q: If you were in charge of CMS, what would be some of your main initiatives?
OF: Initially, I would try to figure out a good strategy to reduce payments to the private health insurers who take Part C and see if we couldn't get that down to a more reasonable amount of money. CMS doesn't control the percentage of payroll tax, and CMS doesn't control how to get more money into the system. All that it could control is how to spend less and do it efficiently.
Medicare's deductable for Part A has become quite substantial. It's now over $1,100. Part B's deductible is $140. Part D's is $335. These are major barriers to low-income patients' access to care. I would like to see them reduced or eliminated. I also would like get rid of the doughnut hole, and the proposal in the ACA will eliminate it later in 2020.
I would propose a lot of things Don Berwick, MD, [former CMS administrator] was doing to boost quality and reduce cost, but they would not be adequate. For instance, penalties for readmissions — yeah sure. But hospitals are paid on a DRG basis, and physicians are paid on a fee-for-service basis. The physician has an incentive to keep patient in hospital longer, and the hospital has an incentive to get the patient out.
To the degree the physician has patients' interest in mind, it may be good for physicians to resist the hospitals' pressures to discharge early. I'm not sure I want to give physicians a financial incentive to do that, but it may make sense that the physician who is close to the patient feels this patient really can't go home, is not medically stable, the home situation isn't ideal to go to yet — I respect that. That's important."
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