Medicare's future: Our unspoken problem

Posted on January 14, 2008 | Type: Op-Ed | Author: Thomas C. Patterson
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Sam Coppersmith concluded his analysis of Austin Hills health insurance difficulties on these pages by asserting that the Americans most satisfied with health coverage are those on Big-Government-Run Medicare. Government works better the sub-headline assured us.

So folks like getting free stuff from government better than paying for it themselves? Amazing. On the other hand, Medicare isnt quite the panacea left-wingers like to depict.

For starters, newly minted Medicare enrollees (my peer group, unfortunately) are discovering most primary care physicians are refusing to accept new Medicare patients. The problem is that when government bureaucrats decide who gets paid what for medical services, they don't make the same decisions you and I would.

While most patients like having specialists available, we want our doctor. We want someone who knows us and our family personally, who treats our routine problems and our chronic illnesses, then refers us to specialty care when necessary. But the Medicare poobahs wont pay someone just for talking to you. If you need a cataract removed or a heart valve repaired, you are in luck. But cognitive services talking to patients, working through their health problems aren't valued by the decision makers.

The result is totally predictable. The supply of primary care physicians is drying up. Medical students, viewing the declining income and high-hassle lifestyles of primary care docs, are flocking to specialty training. Primary care physicians are not being produced at replacement rates. Boutique practices, in which patients pay thousands of dollars yearly just to assure doctor availability, are becoming popular. But that's not much consolation to the average Medicare patient who is entitled to services that aren't available.

There are other problems with Medicare. The availability of Medicare reimbursement is a driver of the enormous amount of money spent on futile, end-of-life procedures. Yet most Medicare recipients find coverage so spotty for what they really need, they are compelled to buy Medi-gap policies. Ironically, these supplements cost about what seniors paid for health insurance prior to Medicare. Meanwhile, medical economists are unable to identify any improvement in Americans longevity attributable to Medicare.

Ultimately, it doesn't make any difference whether beneficiaries are satisfied with Medicare or whether the program deserves their approval. Medicare is nonviable economically. It may be popular but its living on borrowed time.
We don't like to think about it, but Medicare Part A has an unfunded liability over the next 75 years of $11.6 trillion. That means if we don't do anything, don't add new benefits, don't include new beneficiary groups, don't raise or lower any taxes, there will be an $11.6 trillion gap between the cost of hospital services we promised to people already alive and money available to pay for it.

That doesn't include Medicare payments to health-care providers (Part B) or the Medicare drug benefit (Part D). It doesnt account for Medicaid, Social Security or other entitlements. All told, were handing off a $50 trillion to $60 trillion obligation to future generations with no means of meeting it.

Andrew J. Rettenmaier and Thomas J. Saving of the National Center for Policy Analysis recently proposed an intriguing reform that would address the spending catastrophe. They suggest allowing workers to deposit some of their Medicare taxes into a personally owned Health IRA. On retirement, the HIRA would fund an annuity to partially cover their Medicare-eligible expenses. HIRA owners could choose their insurance and cover out-of-pocket expenses. Their Medicare entitlement would be reduced accordingly. Under their plan (available at, reformed Medicare spending would be 20 percent to 35 percent less than under the current program.

Whether this is the right direction, at least it starts the discussion of Medicare's future, a national conversation we desperately need. The presidential candidates, with a couple of minor exceptions, avoid the subject. Those on the left propose to dig the hole deeper by promising even more unfunded entitlements.

They'll get serious and start talking to us like adults about real problems only when we politically reward them for doing so. Until then, we roll merrily along, pretending tomorrow will never come.

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