Left Behind: Will Cutting Medicare Hurt Seniors?
First Posted at Forbes on 12/11/2012
Forget finances and the fiscal cliff: raising the Medicare eligibility age from 65 to 67 is likely to kill some of those left behind – even if they already have private insurance. And cutting provider reimbursement too deeply? Ditto.
Most of the criticism of a proposed two-year age hike has focused on the flawed fiscal rationale. But research evidence shows it’s not a matter of “your money or your life;” it’s a bad idea that hurts both.
The financial issues have been well-explored. We’d be dropping the actuarially healthiest group of seniors, with minimal savings, while putting the cost of caring for the remaining population onto a smaller group of sicker beneficiaries. At the same time, paying the medical expenses for the 65- to 67-year-olds who do become ill will fall either on private insurers or Medicaid. That’s shifting money, not saving it.
Meanwhile, those who don’t qualify for Medicaid or can’t afford private insurance will defer needed care. By the time they make it to the Medicare rolls, their cost of care could wipe out any budgetary savings.
The Incidental Economist blog recently highlighted evidence that raising the eligibility age has a regressive health impact; that is, poorer people will lose a greater percentage of their benefits, and it will adversely affect their life expectancy over time. But there is more direct evidence that “over time” could literally be the difference between the day before you’re covered by Medicare and the day you are, whatever your income level.
In an attempt to determine whether Medicare coverage truly saves lives (that’s actually been a hotly debate research question), a 2009 study in The Quarterly Journal of Economics looked at patients who showed up in the emergency room at California hospitals with problems needing immediate attention. In other words, they were unlikely to have ended up at the ER just because they got their Medicare card. The researchers divided the group between those just under age 65 and those 65 and older.
Those age 65 and over were a stunning 20 percent less likely to die within a week of admission those just under age 65. Moreover, the difference in death rates persisted for at least nine months. Importantly, the gap was too big to be explained by uninsured under-65s suddenly getting it.
The authors speculated that Medicare patients may have received more intense medical treatment. So much for the evils of government-run health care.
A 2011 study in the Annals of Internal Medicine indirectly buttresses that conclusion. Earlier, much-publicized Dartmouth research examined high-level differences in Medicare spending across different regions of the country and concluded that more medical spending had no relationship to better outcomes, This study, looking at more detailed individual patient data over a longer period of time, reached the opposite conclusion.
Within limits – since no one denies that expensive overuse and safetyproblems remain rampant in U.S. health care – more medical care both saved lives and reduced avoidable and costly hospital stays. Specifically, according toa separate study that appeared earlier this year, a 10 percent increase in medical care use was associated with an 8.4 percent decrease in the mortality rate and a 3.8 percent decrease in the rate of avoidable hospitalizations.
Given looming cuts in Medicare payments to providers, a little-noticed studyof the impact of payment cuts in the Balanced Budget Act of 1997 is even more intriguing. The National Bureau of Economic Research paper, updated earlier this year, categorized hospitals by the degree of payment cuts (small, moderate, or large), then tracked actual patient outcomes for Medicare beneficiaries treated at these hospitals for heart attacks over an 11-year period.
Money mattered. After controlling for various factors, researchers found that the death rate from heart attacks for patients treated at hospitals facing large Medicare payment cuts jumped when compared to hospitals where reimbursement reductions were lower. Medicare accounts for about 40 percent of an average hospital’s total revenues, and the death rate difference was due in part to “reductions in staffing level and operating cost following the payment cuts.”
By way of perspective, the median age of current U.S. senators is 63 years old. Senate Minority Leader Mitch McConnell turns 71 in February; Harry Reid turned 72 earlier this month. Vice President Joe Biden is 70. The average age of men who have a first heart attack is 66.
If blunt tactics like lowering the Medicare eligibility age or slashing provider reimbursement across the board aren’t the right way to control Medicare costs, then what is? What the Annals authors suggest will sound familiar to anyone paying attention to fundamental changes already underway in the health care delivery system. They (as do others) urge greater focus on providing more efficient care for each individual’s particular condition through physician use of comparative effectiveness research abetted by “organizational incentives” to reward providers of high-quality, cost-effective care.
In other words, what Medicare needs is accelerated implementation of initiatives such as the Patient-Centered Outcomes Research Institute and the Accountable Care Organizations that are the little-noticed backbone of theAffordable Care Act. The way to save Medicare? Obamacare.