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How to Reform Medicare: Doctors Debate


Medicare is expected to go bankrupt around 2017. Yikes. Even so, politicians can't seem to agree on how to reform it.

To help us understand the debate better, we asked two doctors who are also political experts how they think Medicare should be reformed. One brings a conservative view, the other a liberal one.

Interestingly, for perhaps the first time in our debates, both doctors found something to agree on. (See their rebuttals at the end of the debate.) Could that be a glimmer of hope on the horizon? We'll see—sooner or—well, um, pretty soon actually.

Share your opinions on how to reform Medicare in the comments section at the end.

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How to Reform Medicare: Liberal Opinion

Although the practice of medicine has changed significantly since the 1960s, the way Medicare pays for its services hasn't. Three reforms in particular would save money, improve quality and make Medicare a more streamlined experience for the patients it serves so faithfully.

First, most of the cost of Medicare goes toward treating complex chronic diseases like heart disease, hypertension, stroke, mental illness and cancer. Treatment is often fragmented, requiring multiple doctors, each dealing with only part of the illness. Right now, none of those doctors are paid to make sure they're working together as a team. As a result, patients often don't receive good instructions on how to care for themselves, don't have someone checking in on them after they're released, and too often wind up right back in the hospital. That's inefficient, costly and miserable for the patients.

newsletter-graphicWhat we should do instead is pay doctors for chronic diseases through bundled payments for "episodes of care" that cover all the patient's needs for their condition and reward quality and collaboration.

Second, Medicare's prescription drug benefit was a good idea, but costs too much. We don't use the power of negotiation to get the best prices from drug providers, we don't allow safe importation of cheaper drugs from Canada, and we don't encourage the use of generics, which often are much cheaper but yield as-good results. We should be doing all three.

Last, we know that many of the factors driving up costs inside Medicare are the exact same factors outside of Medicare. The cost for public and private health care is equally out of control. The best way we can help make Medicare more fiscally sound is to make health care more affordable and more accessible across the board.



How to Reform Medicare: Conservative Opinion

When Medicare was enacted in 1965, the first paragraph of the legislation promised that the government would not interfere in the practice of medicine. Obviously, that promise has been broken. Yet in spite of increased government control, the quality of care is suspect, the cost of the program is unsustainable and the current Medicare physician payment system calls for a 35-percent cut in reimbursement to doctors in the next few years.

Medicare reform should begin by moving away from the current system of defined benefits, where the federal government not only decides the health benefits America's seniors should receive, but also sets the price for over 7,000 individual physician services. New Medicare beneficiaries should be given the option of receiving a defined contribution of funds they could use to buy into the private insurance program of their choice. For example, if they are happy with the insurance plan they had with their job, they could use the funds to carry that plan into retirement.

Physicians who agree to make their individual quality and cost data available should be allowed to "balance-bill" Medicare beneficiaries—that is, charge them above what Medicare will reimburse. With the necessary information, patients can then decide whether a particular service from an individual physician is worth the price, providing physicians with a strong incentive to provide high-quality care and driving the demand for better quality and cost data.

Americans are working longer and living longer and the Medicare program needs to provide for the disparate individual needs of today's seniors. The decisions made by these individual patients and their doctors drive Medicare. By placing the proper incentives at this level, Medicare reform can begin to control its staggering costs, promote quality and restore the promise of the original legislation.


Hands pulling rope

Dr. O’Shea’s

I agree completely with the need to lower costs and improve quality in Medicare as well as all sectors of the health-care system. There is no simple solution to the problem.

I still hear very little in the current reform proposals about empowering patients by giving them ownership of their health-care resources and the incentive to demand quality and price transparency from providers. In addition, regulating the pharmaceutical industry will reduce spending, but the reality is that it comes with the price of reducing future research and development on potentially life-saving drugs.

Dr. Lewis’s

As a doctor, I believe in listening to the evidence, and so I agree with Dr. O'Shea's call for more transparency with quality and cost data in Medicare. Effectiveness research will also help doctors make better-informed decisions about treatments.

But the evidence shows that his idea of privatizing Medicare won't work. Through Medicare Advantage, we've already experimented with paying for some beneficiaries' care through private insurance and learned that it costs us $11.4 billion in extra payments each year. Making Medicare less cost-effective by involving more HMOs isn't the answer.


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Last updated and/or approved: December 2011. Original article appeared in July/August 2009 former print magazine. Bio current as of that issue. This general health-care information is not meant as individual advice. Please see our disclaimer.

Comments (2)add comment
Private Polices go up the fastest
written by Jennifer Bollen, MD , August 05, 2009 , August 12, 2009

"if they are happy with the insurance plan they had with their job, they could use the funds to carry that plan into retirement."

That would drive up the cost for everyone else in the pool and result in adverse selection. I would never work for a company that has anyone who has retired vs one like Boeing, Ford, IBM or any large firm.

In our state individual polices (for 300,000 people) just went up between 18% and 40% so if you think consumers have any negotiating power you are living in a fantasy land.

In the interest of public disclosor how much does a surgeon gross and net a year and how much of that money came from government funds (CMS, + patients who are public employees, school teachers, police etc)

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CMS pays 400k for Doctors to become Docs
written by Mark Asplund, JD , August 05, 2009 , August 12, 2009

Nearly every single resident in the US had their training paid for by CMS to the tune of 100,000 a year. Part of that goes to them in direct payements ~ 30,000 for salary and the rest goes to the hospital that trained them.

After a 4 year residency/interniship that is 400,000 a year and if you were to take out a loan in that amount it would typically cost you 4500 a month for 10 years to pay back (close to 500k).

If doctors think that they are being "underpaid" by CMS then they need to be very clear that they are simply paying back their government funded (IE taxpayers) education.

If CMS underpays by about 25% they would need to be billing over 240,000 a year just to CMS (net not gross) in order to be providing $4500 a month in services.

Specialists owe an even larger amount. I don't know a single doctor who can't make a very very good living and very few of them ever seem to grasp that they worked for a single payer system on the public dole for most of their training.

I think if doc's want to refuse to take medicare or medicaid that is fine. Just pay back the 1/2 million you already took from the system.

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