NOVEL SOLUTIONS TO
FINANCING MEDICARE HEALTHCARE BENEFITS
Our presidential election is only days away. Fought
eight million people in America are uninsured and healthcare costs are arising
2 to 3 times faster than our nations GDP. Where will America's healthcare
system be in 5 years. Welcome to Reach MD monthly series to Focus on Public
Health Policy. This month we explored many questions facing healthcare today.
Albert Einstein said we cannot solve our problems with
the same thinking we used when we created them. Do we need an Einstein to
solve Medicare's pending insolvency. You are listening to Reach MD XM157, The
Channel for Medical Professionals. Welcome to the Clinician's Roundtable. I
am your host, Dr. Bill Rutenberg andwith me today is
Dr. Thomas Saving.
Dr. Saving is the university distinguished professor of
economics and director of the Private Enterprise Research Center both at the
Texas A&M University. Dr. Saving has been a Trustee of the Social Security
and Medicare Trust Fund since 2000. He is co-author of the book, the diagnosis
and treatment of Medicare. Today, we are discussing Dr. Saving's novel
solutions to financing Medicare Healthcare benefits.
Welcome Dr. Savings. It is a treat to have you with us again
at the Clinician's Roundtable.
It is great to be here Bill.
Well, I am putting up today with Einstein. So, you have
something that you have been working on at the institute as a Medicare
trustee. What needs to be done now to change the way we are funding this
I think fundamentally we have to make individual consumers
care what it costs while at the same time handling what we might refer to as a
social insurance problem. That is that some individuals are sicker than
others, and we have to find a way to give them the amount of funding that it takes
by giving them the incentive to shop for what they buy, and at the same time it
gives the providers the incentive to for example to specialize in certain
aspects and we can think of diabetes for example and one of the big issues has
been that is the CMS, who are the people who run you know the Medicare and
Medicaid programs. One of their big issues and I remember that when Mark
McCollum was there. Mark and I talked about this using disease management.
They have got wonder outcomes from disease management.
Yes, I remember that.
Yeah and what disease management is as you know and the most
of your listeners do is that individuals are going to take care of themselves
in a way that is going to reduce costs and in my response to Mark and everyone
I said that is only going to work if you incentivise the patients to take care
of themselves and the providers have to be incentivised and HMOs are clearly
incentivised to try to get their customers to take care of themselves because
that is going to directly lower their cost, but it is not clear that it is in
the customer's interest to do that and we have to find a way to do that, and I
think we do that with something like the significant expansion of health
savings account where the individuals at the end of the year the money that
they don't spend on healthcare is their money and they can spend it anyway they
want to. They can go on buy computer with it. They can buy a new care. They
can do anything that they want with it. That means that every dollar they
spend during the year is theirs. Even though we have given it to them at the
beginning of the year it is their money and they are going to go in when they
come to see you, for example, with their children when ask you what is this
going to cost and what are the options. What are my options. What if you give
me you’re a prescription. What happens if I don't take it. That is a piece of
information that is important for them to know just as when I go to get their
car work done and says you need not do air filter and it is going to you cost
you 30 dollars and you say what happens if I don't get one and what is going to
happen. If you ever listen to car talk on the weekend and you hear the Tappet
brothers are always telling people whether this is important repair or its not,
and I think that is what individuals need to know and that is what they be
asking because it is their money.
But if it was their money where our mother's say, save it
for a rainy day. Do you think people really got to save it for a rainy day or
at the end of the year they are going to go. Well, I got this windfall
profit". I am going to go get myself a new color TV.
Well, they are to be able to do that. That's my point.
But then what you are going to do with them when they are 65
The house savings account this what something that will
happen every year. So, the money there is left over is yours, but each year it
is your money, but now you are asking a different question which is what do we
do, how do we get people to prepare for the fact that they are going to retire
at sometime or another, and I think that is really important issue and that
means we are going to have to somehow establish part of your Medicare taxes
should be used to build up where we might refer to as a health insurance
account. That at the end of the time when you get to retirement, you are going
to have a flow of funds and that flow of funds the way we try to look at it is
that is going to be your deductible and that money, that is your money, in each
year you are going to have this annuity that you have accumulated during your
lifetime just as you pay taxes now, these taxes are going to account the
belongs to you, and at the end just your social security, you get a monthly
payment from it. That is your deductible, but if you don't spend the money by
the end of the year, this is for healthcare, but at the end of the year if you
haven't spend it, it is yours to spend on anything you also want to. Now, once
you get beyond the deductible, then what is left of Medicare would be picking
up the tab, but all the way up to this deductible, which will be significant by
the time you get to say people, who are born in 1970 by the time, they would
retire because those people are only 38 years old now. When they get to 65 the
higher earners according to this symptoms would be paying for 90% of their
healthcare the first year after they retire. Low income people will only be
paying for 30%, but everybody would care what it costs and everyone would be
viewing this, and I think you as a provider they would want to know what is
this going to cost me and they might make comparisons. You might have to <_____>
advertise your prices the way the LASIK surgery people do. One of my board members
is radiological oncologist at MD Anderson, and I would say I dream I am driving
in Houston and I see a big sign that says come to MD Anderson 95% dollars a day
everything included. The point is that how LASIK surgery is advertised. You
see the sign and the price is big. That is important.
What good would it be for me as a Medicare provider to
advertise my prices when they are fixed by the Medicare fee schedule?
The Medicare fee schedule under this reform has to be gone.
No more Medicare fee schedule.
So under your system of redefining and redesigning Medicare,
there would be no fee schedule.
That's right. Med packet will be gone. Individuals are
buying it just like there is no fee schedule for anything else that you buy.
You walk into best buy, there are any fee schedules. The fee schedules are
going to be determined by the market, but the prices would be real and so you
would know what it was when you went in, for example hospitals will compete and
there is hospital in Pennsylvania that guarantees your heart surgery. If you
have to go back in, they pick up the tab. So, you know what is going to cost
you. They cannot get reimbursed for Medicare for that, but you are in a real
market that is exactly what things will be. We are going to do quadruple
bypass for you. If you have to come back, if you have to…