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Medicare and Masochism

Ed Kilgore writes about Medicare which reminds me that I've been meaning to point out that this is where the masochistic cult that passes for elite conventional wisdom in Washington may do real damage.

According to the High Lords of Punditry, we've got trouble right here in Capital City, with a capital "T" and that rhymes with "e" and it stands for "entitlements." The trouble with entitlements is that they're projected to grow too costly. This is a problem that needs dealing with. The primary way it needs to be dealt with is by "painful measures" -- i.e., benefit cuts.

Lately, we've been seeing this analysis of the situation primarily applied to Social Security wherein the grain of truth in the theory is so small as to be hard to detect. This is massively annoying, but ultimately, it's actually so far from the truth that I doubt it will do much harm. Democrats seem to be resisting the temptations of masochism, and rightly so. The trouble is that as applied to Medicare it isn't entirely wrong. It really is true that maintaining all of our current policy commitments with regard to Medicare will wind up boosting spending to an unwisely high level. This grain of truth is big enough that it could move people to act, but small enough that it could lead to large-scale unnecessary human suffering.

Medicare masochism is basically a manifestation of intellectual laziness combined with callousness. Medicare policy is extremely complicated. Our health care system is messed up in a large number of ways, and Medicare has many design problems that lead spending to be higher than it needs to be. But Medicare policy is not only complicated, and difficult, but deadly boring. Devising a workable proposal that would control spiraling costs in a smart way would be very hard. In fact, it would be beyond the capacity of pretty much every pundit in town. Indeed, I doubt that 85 percent of the bloviators out there could even comprehend a reasonable proposal if it was put before them. 90 percent of the remainder are simply too lazy to do it. Politicians fail to implement such reforms for a bunch of reasons, but one important reason among them is that it's genuinely hard to figure out what we should do. Rather than acknowledge any of this, however, the opinion elite prefers to simply call for "courage" and "pain." And, of course, pure willpower can cut costs easily enough by simply shifting costs onto patients. But this doesn't actually solve anything. It'll be almost as large a drag on the economy and it'll get people killed.

What's needed are actual solutions -- efforts, for example, to end the supply-driven element of Medicare spending -- that will reduce the cost of care, not simply shift that cost around. But we'll never get even close to having such solutions available until the pain caucus shuts up for a few years about the courage and starts opening up column inches for people who actually know what they're talking about to put some ideas forward.

March 28, 2005 | Permalink

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» Designing a New US Health Care System from Maternal
There is something slightly odd about MY’s post. Living in Columbus, OH, I not only do not care what the Lords of Punditry think, I can’t quite grasp what such a feeling would be like. More importantly, I don’t feel despair thinking about the pro... [Read More]

Tracked on Mar 29, 2005 7:20:24 AM

» Fixing Medicare... It is Hard Work from Craig's Thoughts, Theories, and Tantrums
I think that Matt Yglesias makes the point I have been harping on for as long as I have been involved in politics and medicine. Devising a workable proposal that would control spiraling costs in a smart way would be... [Read More]

Tracked on Mar 29, 2005 1:27:04 PM

Comments

As a start, how about getting rid of some of the idiocies in the Medicare "drug benefit" (ha!) bill? I'm thinking of the payoffs to drug and insurance companies. Of course the current regime would never do this, but the Dems need to be suggesting it--loudly.

Posted by: Rebecca Allen, PhD | Mar 28, 2005 8:36:24 PM

Terrific post, Matt.

There were several problems with the Medicare bill that contained the drug benefit plan, but the drug benefit was an excellent addition for Medicare. The prime problem with the drug benefit was not providing for Medicare to act as a negotiator or purchaser of drugs as the Veterans Administration. But, the drug benefit extablishes a precedent and will not be given up, so I am pleased. Democrats had better be defending Medicare and not complaining about the program driving us to ruin. We need to enhance health care coverage for all, and John Kerry had an excellent plan in this regard.

Posted by: Jennifer | Mar 28, 2005 8:49:33 PM

Dude, I think you are talking about "sadism." These opinion elite types aren't going to feel any pain.

Posted by: Colorado Luis | Mar 28, 2005 8:52:06 PM

Indeed, sadism. Though, I don't know what the hell most people are thinking. Unlike social security, even the wealthy pundit class should be worried about Medicare, as you've gotta be pretty damn rich to not be concerned about insurance/medical expenses at age 75.

Posted by: Atrios | Mar 28, 2005 9:08:39 PM

I think Colorado Luis is right. I think sadism is the taking of comfort in or deriving pleasure from another's suffering. Masochists derive pleasure from their own suffering and the Washington media country clubbers aren't going to have to personally worry about the trainwreck that is Medicare. Regardless, this is a great post, which points toward a useful meme. Republicans may have all the "ideas" but Democrats are smarter than Republicans, thus we should elect Democrats so they can right the ship.

Posted by: fnook | Mar 28, 2005 9:10:05 PM

"The trouble is that as applied to Medicare it isn't entirely wrong. It really is true that maintaining all of our current policy commitments with regard to Medicare will wind up boosting spending to an unwisely high level."

You concede too much ground by framing the question this way. 'Are we spending too much on Medicare?' is the wrong question. See here and here. Better questions would be:

Are we spending too much -- or too little -- on health care, regardless of how that care is paid for?
Could we produce health services and deliver them more efficiently than we currently do?
Is the distribution of health care equitable?
However much health care we want, how should we pay for it? (In particular, is Medicare a good health insurance plan?)

You do not have to be a masochist to pose these questions. Each question has a clear and hopeful answer.

We will spend more in the future, and overall we will judge that what we are getting is worth the cost.
Yes, there are many ways to make health care more efficient, and we have many good ideas about how to accomplish them.
No, the system is grossly ineqitable. It could be made significantly more equitable at a very reasonable cost, relative to the lives that would be saved and the human welfare that would be created.
Our present system of some people insured by their employers + some people insured by the government + some people not ensured at all is about as stupid as you could want. Designing a better system is very feasible.

I will concede that the politics of changing the health care system are depressing.

Posted by: Bill Gardner | Mar 28, 2005 9:18:08 PM

Medicare policy is complicated, but more importantly, you cannot address "problems with Medicare" without addressing the problems in our health care system as a whole. Any pundit (or politician) who claims to do so should not be taken seriously.

Posted by: ranj | Mar 28, 2005 9:43:59 PM

Bill Gardner is right.

The first part of wisdom is to stop talking aout "entitlements," i.e. Social Security with Medicare. We're doing pretty well here.

The second part of wisdom is to stop talking about Medicare separate the rest of the healthcare system.

Posted by: lemuel pitkin | Mar 28, 2005 9:47:39 PM

"...wisdom is to stop talking about Medicare separate the rest of the healthcare system."

I agree completely.

Posted by: Jennifer | Mar 28, 2005 9:53:08 PM

Great post.

I've got to differ with everyone saying that you can't fix Medicare without fixing the larger health care sector of which Medicare is just one payor. I think that misconstrues the role of Medicare(CMS). Almost all the private insurers copy Medicare in setting their rates, approving procedures and assessing technologies. As just one example, CMS recent approved implantable defibrillators for heart failure. The privates will now all fall in line. There are types of care where the privates go beyond Medicare but generally Medicare sets the pace.

Although you mentioned it offhandedly towards the end of the piece, reducing the supply-driven element would be an enormous achievement and one worth chasing down. David Cutler's book is an excellent treatment of health care economics but in a recent Ny Times article he stated that removing wasteful spending was near impossible. From inside the health care morass, that seems overly dour. In fact, it seems conceptually quite easy to pick out tens of billions of useless spending and estimates range up to 1/3 of all health care spending (~$500 B) could be pared without adverse consequence. What it would take is the courage to face down big donors with alot of access in Washington- never easy.

Anyway, once again a great post that finally gets down to business and dispenses with overworked banalities.

Posted by: QuietStorm | Mar 28, 2005 11:41:26 PM

Sadism, for sure. But Atrios is also right -- I don't know how rich David Broder and his buddies are, but surely not rich enough to pay for all of their own healthcare (or the parts he's willing to jettison from medicare) without making some painful sacrifices.

What's happened here is that the servants (in this case, a bunch of upper middle class pundits) have adopted, without realizing it, the moral and political point of view of their masters (the republican fat cats). So, although Broder isn't rich enough to own his own jet, he hangs out with people who do and has started to think emulate them in all the ways he can. Zeligism as evidenced by moral collapse.

I don't mean to pick on Broder, of course. He's just a standin for all of his buddies.

Posted by: Charlie Robb | Mar 29, 2005 12:12:00 AM

Ditto Bill and lemuel.

But a few points that will be coming to the front that have been mentioned but not highlighted here. Medicare "crisis" assumes three things:

1) That we will as a society simply let Medicare (and health care generally) rise to an unsustanable portion of GDP

2) That over the next twenty years we will not have the same cost revolution that we saw in consumer electronics and computers, that advances in drug therapies and microsurgery will not pay off in ways that cut total health costs per individual when taken over a lifetime

3) That the income predictions built into the current Medicare Report are somehow related to economic reality.

I'll leave the second argument to the technologists, but the first and third directly echo the Social Security debate. The first builds in the assumption that seniors are alternately powerless (they will step aside and let the Trust Fund bonds be repudiated) and unstoppable (they will refuse to accept a single cut to their SS check or their medicare). Well crisismongers can't have it both ways. If we come up with an equitable solution there is no reason to believe that seniors won't buy in. As for the third argument, the income projections are based on the same pessimistic assumptions as Social Security, the Medicare Trustees programmatically adopt Intermediate Cost. That portion of Medicare that is funded by payroll is starting out with the assumption that productivity will dramatically slow to 2.0% by Christmas and then slowly sink from there to ultimate 1.6%. Think of that the next time they try to deploy some infinite future projection for Medicare, they are counting on trillions of dollars of income less than ordinary economic growth is going to provide.

Social Security is not a crisis, it is not even a problem. Medicare is a problem no doubt, but it is one that needs to be addressed with honest numbers. To date it is not getting that.

Posted by: Bruce Webb | Mar 29, 2005 9:52:08 AM

> That we will as a society simply let Medicare
> (and health care generally) rise to an unsustanable
> portion of GDP

Without arguing about the effectivness or efficiency of the current health care system [I have strong thoughts about both ;-) ], if we as a society choose to replace our gratuitous consumption of SUVs and McMansions with gratuitious consumption of health care what exactly is wrong with that?

In fact, given that our economy has a worm-eating-its-tail aspect anyway, and that the supply of McMansions is just about full given our demographics, we might HAVE to incrase health care spending to keep the unicycle from falling off the economic high wire.

Cranky

Posted by: Cranky Observer | Mar 29, 2005 10:24:56 AM

Cranky,

If we pay ten per cent more each year for the same health care, that isn't increasing consumption, it's just changing the addresses. Now, I realize that this extra ten per cent is not all price increases, that there are more procedures done and drugs prescribed each year. But if the end result, health, is not any better, what good is it?

QS

Posted by: QuietStorm | Mar 29, 2005 10:41:04 AM

Cranky,

If we pay ten per cent more each year for the same health care, that isn't increasing consumption, it's just changing the addresses. Now, I realize that this extra ten per cent is not all price increases, that there are more procedures done and drugs prescribed each year. But if the end result, health, is not any better, what good is it?

QS

Posted by: QuietStorm | Mar 29, 2005 10:41:54 AM

Cranky,

If we pay ten per cent more each year for the same health care, that isn't increasing consumption, it's just changing the addresses. Now, I realize that this extra ten per cent is not all price increases, that there are more procedures done and drugs prescribed each year. But if the end result, health, is not any better, what good is it?

QS

Posted by: QuietStorm | Mar 29, 2005 10:44:01 AM

Quiet,
Not disagreeing, but the population is getting older (requiring more legitimate medical care) and medicine is improving. 20 years ago there were a dozen MRI machines in the US and getting one cost $10,000; within the next 5 years I fully expect Walgreens to have knee-scanning MRIs available next to the pharmacy counter - $20 and your knee scan gets sent to a radiologist in India for a recommendation. Same with sonic-stress-echogram of the heart - didn't exist 10 years ago, $5000/pop today, in your GPs office for $40 by 2010.

Those I think are legitimate expenditures. But you can't get from the $10,000 MRI to the $20 MRI without someone paying for the transition. I am not convinced that hurts us overall, esp given the news from General Motors this week.

Putting more money in Richard Scushy's pocket is another story I agree.

Cranky

Posted by: Cranky Observer | Mar 29, 2005 10:58:18 AM

Despite the complexity of the issue, there are a few principles which can serve as a starting point for reasoning. The first is a recognition that there are two ways to slow the increase in costs -- either by imposing rationing, or by ensuring that treatments are not marginally free to the consumer. If you accept that individuals rather than governments should be deciding whether a given treatment is justified (I'm not sure Mr. Yglesias does), you are immediately forced to the second of these methods.

Two questions follow: what should be the disincentivization mechanism, and what (if anything) should be done to redress the inequalities it will create?

Posted by: sammler | Mar 29, 2005 11:32:09 AM

It should be noted that the wasteful army of clerks which are required to administer our hodge-podge healthcare system is staffed by fairly competent, employable people who, given better health policy, could be working elsewhere doing something actually, you know, productive.

We're gonna have to run to stay abreast of the EU, China and India, yet we refuse to shed the stupid ankle weights.

And this isn't the only wasteful army we employ. How about the army whose only purpose is to scam us with sneaky credit card fees and fines? Or, how 'bout the army that scams us out of thousands when it's time to finance a car or house? How 'bout the army of "detail" men and women who walk into doctors offices to cajole doctors into prescribing certain, shall we say, more profitable cures? And on, and on.

These legal scams abound and they employ pretty smart people who should be encouraged -- by better government policy in some cases -- away from near-theft and toward productive work.

Posted by: yesh | Mar 29, 2005 12:47:09 PM

It should be noted that the wasteful army of clerks which are required to administer our hodge-podge healthcare system is staffed by fairly competent, employable people who, given better health policy, could be working elsewhere doing something actually, you know, productive.

We're gonna have to run to stay abreast of the EU, China and India, yet we refuse to shed the stupid ankle weights.

And this isn't the only wasteful army we employ. How about the army whose only purpose is to scam us with sneaky credit card fees and fines? Or, how 'bout the army that scams us out of thousands when it's time to finance a car or house? How 'bout the army of "detail" men and women who walk into doctors offices to cajole doctors into prescribing certain, shall we say, more profitable cures? And on, and on.

These legal scams abound and they employ pretty smart people who should be encouraged -- by better government policy in some cases -- away from near-theft and toward productive work.

Posted by: yesh | Mar 29, 2005 12:47:54 PM

I did NOT hit post twice. What I DID do is clicked to Eschaton while the cursor pinwheel was still spinning. Then, I came back to see if my post had arrived. So, that's a glitch somewhere.

And another thing, when I hit Matt's "read more" link, I get nothing. I have to hit refresh on his site, and hit "read more" a second time before the rest of Matt's post pops onto the screen.

Now, I'm gonna hit post once, just like before.

Posted by: yesh | Mar 29, 2005 1:05:25 PM

sammler, pounding every problem he sees with his laissez faire hammer, declares that, the consumer, not the government, knows the best treatment. I don't know what business you are in, sammler, but in my business, medicine, the customer is NOT always right. Even your sacred private insurers don't believe that nonsense.

Posted by: epistemology | Mar 29, 2005 2:13:37 PM

but in a recent Ny Times article he stated that removing wasteful spending was near impossible.

Not even remotely true. Simply removing marketing/sales costs from our current competitive insurance industry would reduce administrative expenses by about 10% (the difference between admin costs for Medicare and for the big payers). Then you take out the need for investor returns by introducing a single payer plan and voila - you've reduced costs by anywhere from 10-15%.

Keep in mind, in terms of the medical loss ratio (the percentage of premiums actually spent on medical care) Medicare and the VA are the two most efficient health care plans in the frickin' country.

Posted by: flory | Mar 29, 2005 4:55:17 PM

There is a point at which consumer choice can affect healthcare costs. That point is when the overweight consumer raises the overweight burger to their mouth as they drive their overweight car down the overwide highway.

What we're addicted to, what we have an epidemic of, is advertising, and the demented 'free-market' lunacy that was born on third base (stole a continent from the native Americans) and thinks it hit a triple.

Rearranging the deck chairs on the Titanic of American medicine is going to be about as effective as using your household plumbing to dispose of the waste from a commercial paint shop, and hoping the plumber has a really cheap way to fix the mess.

And frankly, quite a bit of this crap is entirely overblown. Our improvement in lifespan came mainly from improved sanitation and nutrition (that's right, from the fact that seniors on SS can afford to buy food), and most of the "healthcare" that long-lived seniors require consists of a few pills that are only expensive because of (drumroll) the advertising, patent monopolies, and undue influence of big drug companies in Washington D.C..

We have some real problems all right, but healthcare is generally the caboose on the train.

Posted by: serial catowner | Mar 29, 2005 5:50:06 PM

Flory,

What I should have made clear is that Cutler was referring to wasteful care , not wasteful spending. He admitted that perhaps 20 % of the care was unneccessary but thought it near impossible to weed it out. Administrative costs and profits are excesses of their own but not what Cutler was taking about.

Posted by: Quiet Storm | Mar 29, 2005 6:30:13 PM

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