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House Committee on Ways and Means Hearings - April 15, 2008
Statement of Jonathan B. Weisbuch
Thank you for the opportunity to submit a statement to your informational hearing, Health Subcommittee Advisory No. HL-23. Since my graduation from NYU Medical School in 1963, this country has struggled to provide health care to all its residents. Medicare and Medicaid were initial steps, but continue to leave huge gaps that have not been closed. Now is the time to make the major changes that will set the system right.
Plans currently promoted by Senators Clinton and Obama are insufficient. Their plans rely on an insurance industry which profits by denying care, and a Medicaid program for “medically indigent” that promotes the myth that a health system for the poor can be separate, but equal.
Preserving a profit system continues the benighted notion that medicine operates under the rules of Adam Smith, Milton Friedman and the economics of the market place. This cultural error produces waste, inefficiency, and unnecessary human morbidity and mortality. It encourages the outright greed we now find in hospitals, physician practices, the medical equipment and pharmaceutical sectors, and the insurance industry. The business model is driven by profits and competition; a medical system should focus on preventing disease, using science to diagnosis and treat patients, and providing humane care when cure is no longer possible. Profit does not enter the equation. Quality care and profits frequently conflict; nothing in the business vocabulary speaks to serving human needs where no economic benefit accrue to the corporation. The cultural misconception that medicine is a business, not a profession, must be eliminated from any reform.
Similarly, Medicaid, focused on serving the “medically indigent,” has produced 50 state systems, all of which are different. Eligibility is variable, coverage is not transportable; individuals are subject to means tests, and may lose coverage for themselves or their children when income exceeds a minimal level. States invariably have difficulty covering their medical costs, reducing eligibility, services, and the fee schedule. A special system for the poor must be eliminated. Congress must adopt a universal program that assures that everyone has coverage that is equitable and accessible in every region of the country; is based on common standards of care, practice and quality; and is reimbursed by fees agreed upon by all parties. Administration costs should be a low percentage of total expenditures.
The one program in the United States that could meet these objectives, if expanded and modified, is Medicare. It is true that the VA system provides the highest quality care at the lowest cost of any large system in this country; but proposing a program, fully owned by government, is inconsistent with the independent nature of medical practice. The VA should be preserved until the new health reform achieves the level of quality, cost and patient satisfaction that exists in the VA. Until that time, however, the Medicare model will suffice for non-veterans. The New Medicare should eliminate Parts C and D, and modify Part B in lieu of a service model that expands primary care and prevention, supports quality improvement, and spreads all costs across the entire system. The New Medicare should pay hospital costs on a per diem rather than a DRG basis; and should encourage the use of high technology only when clear outcome improvements to health are demonstrable. The differences in care and cost that exist between regions are unconscionable. The New Medicare should also include mental health and dental services, rehabilitation, and community care.
Expanding Medicare to include everyone can be accomplished in three years. The age for eligibility for adults could be lowered annually by 15 year increments; for children, providing coverage for those 0-1 in year one, then up to 10 in year two, and to 20 in year three would achieve universal coverage with minimal strain to the current system. Patients now covered by insurance would maintain their current patterns of care; those without coverage or a medical home, would be given the opportunity to choose one. Adding 16% to every primary care practice in the country might be a short term burden to the system; but if primary providers were given a large increase in their fee schedule, they could be willing to add one hour to their day to meet the demand. Over three to five years, the increased primary care fees might draw physicians into primary care specialty training, helping to equilibrate what is now a disproportionate number of specialists in the American system.
A significant outcome of this change, apart from the fact that everyone will be covered, is that all providers will know the fee schedule for a particular service. Today, insurance carriers all have different fees, Medicare and Medicaid differ, and fees paid to some providers of care differ from those paid to others for the same service. This promotes inefficiency and efforts to beat the system; it encourages dishonesty. Adjustment in the fee schedules will take time, hard work; and must include representatives from all segments of the system to be equitable and acceptable.
Payment for the new program will require transferring premium dollars now paid by employers for private insurance into the Medicare Trust Fund, as each eligible age group moves from private insurance into the New Medicare program. The coverage for pregnant women and children would be paid in part by transferring the family coverage premiums into the Trust Fund, and the rest from the federal monies now used by Medicaid for deliveries and other pediatric programs like SCHIP. The New Medicare should allow states to retain their portion of Medicaid dollars, a benefit of nearly $200 billion, funds sorely needed by the states.
Under this scenario, the insurance industry will remain active for three years, diminishing in size each year. Corporate costs for health benefits will remain approximately the same, since the monies now purchasing private insurance for each age group will be transferred to the Trust Fund as that age group becomes eligible. Family coverage will be transferred to the Trust Fund. As premiums shift to the Trust Fund, corporate staff now used to choose insurance programs, examine utilization, determine benefits, and respond to personnel complaints, can be reassigned. Other insurance costs that cover worker health benefits will decline over time: Workers’ Compensation, vehicle insurance, pension health benefits, etc.
Corporate premiums will not cover all health costs, however, since current costs also include patients’ out-of-pocket costs. These point-of-service fees will be eliminated for patients, but will have to be covered by a small increase in personal income taxes.
No new finances will be required to pay for the New Medicare, sufficient funds already exist in the system to meet the $2.3 trillion cost. Corporate premiums generate about $900 billion. Out-of-pocket costs today approximate $1,500 per individual, or $450 billion. The payroll tax going into the Medicare Trust Fund to cover the elderly, approximately $500 billion, will continue; and may decline in time as the system becomes more efficient in preventing the morbidity of those entering the 65 year old window. The Federal portion of the $350 billion now spent by State and federal general revenues for Medicaid will be added to the Trust Fund, and the state portion retained by each state. Most of the categorical funding now coming from HHS, such as Ryan White, Maternal and Child Health funds, special disability monies, etc. will all be rolled into the Trust Fund. These monies will allow the New Medicare to operate without a means test, without exclusions for pre-conditions, without the need for annual state legislative action, without the need for any definition of eligibility based on the Federal Poverty Line, and without the 30% overhead and profits now drained from the system. The only new “tax” is the income tax on individuals to offset the out-of-pocket costs now paid at the point of service. The New Medicare program will function as did the old, with minimal administrative overhead, saving clinicians and hospitals hundreds of billions of dollars in billing costs now required to keep up with the current paperwork.
In three years everyone in the US will be covered. Preventable deaths in the uninsured, failure to use preventive services, individual bankruptcies for catastrophic illness, and the failure to provide adequate health care to prisoners, will all be eliminated. Initially, everyone will be covered under the same rules now governing Medicare; but these rules will have to change, so that by year 5, the entire system will have common service guidelines. Some service exclusions will exist, including cosmetic surgery, experimental treatments and those without scientific justification; but, the approved set of services will include all the care needed to promote health, to cure and care for disease. Profits will no longer drive the process, rather the care giving concept outlined by Hippocrates 2500 years ago will prevail. The pharmaceutical industry, the medical equipment industry, private transport services, etc., will provide services to the program under competitive bids. Fees and reimbursements will be based upon the cost to provide care and a relative value scale. Incentives may be used to encourage providers to work in underserved areas. And the system should cover public health costs up to 3% of the gross health expenditures; allowing PH to meet its legislative mandates and be prepared for mass events.
HB 676 submitted by Congressman Conyers, and over 100 cosigners, would achieve these objectives. Everyone would be included, the states would be relieved of their Medicaid burden, companies providing health benefits would experience a decline in their costs.
Medicare Trust Fund problems would be resolved as large additional revenues from individuals and corporations are added, increasing the risk pool with large numbers who use limited medical services. With an entire nation covered by one common payer, the actual cost of care per individual will decline as many exploit prevention services, utilize early diagnosis and treatment, and reduce inappropriate use of hospital emergency services.