Medical Device Daily Executive Editor
ARLINGTON, Virginia — The Third Annual Leadership Summit on Medicare on Monday boasted a roster of some of the leading voices on the subject. But none of these luminaries promised an easy road between now and 2080, when the biggest financial headaches for Medicare and Social Security will have slipped into the past.
And these voices all appeared to agree that the most commonly proposed solutions will do little more than nibble at the edges of the problem.
Gail Wilensky, PhD, an economist and senior fellow for Project Hope (Millwood, Virginia), said that the April 23 trustees report on Medicare and Social Security included "a sliver of good news" in that the Medicare hospital trust fund will remain solvent one year longer than previously projected, lasting until 2019 instead of 2018, "but we shouldn't take it too seriously."
Given that the national parties are gearing up for the presidential election, she said that 2007 "is probably the least propitious year" for Congressional action.
Wilensky said that faster-than-GDP growth of Medicare "has been with us for 40 years" and that a combination of a smaller benefit package and greater revenues from taxes will likely form the backbone of any resolution to the impending crunch.
Some of the sensible next steps, she said, will include "changing and realigning payment incentives for providers" and giving patients a reason to take costs more seriously.
Wilensky said that doctors who practice good, cost-effective medicine "receive no rewards, but are actually likely to be penalized" under the sustainable growth rate mechanism (SGR).
"We can wonder if 67 is really the right age [for retirement] as opposed to 70," but any effort to keep Americans on the job that extra three years will likely require some incentives, Wilensky said.
Cecil Wilson, MD, board chairman of the American Medical Association (AMA; Washington), said that "the physician perspective about cost must include observations about quality. The reason for the founding [of AMA] was quality," and he called that a tradition "that we continue today."
The question is, "what have we done lately?" he said, answering that by citing the association's participation in development of more than 170 evidence-based physician performance measures.
"We believe the first step to fixing Medicare is to repeal the flawed" SGR, Wilson said, adding that Medicare Advantage plans are reimbursed 112% for each beneficiary, compared to patients in traditional fee-for-service.
"There really is something wrong with this picture," he said.
AMA, according to Wilson, supports a transitional approach to SGR repeal and calls for a 1.7% increase to doctors for Part B in 2008. Any repeal of SGR should be accompanied by a mechanism that ensures appropriate use of care, including analysis of physician practices by type of service and episodes of illness in addition to a closer look at regional variances in practice patterns, all of which could be addressed "by targeted interventions" to bring wasteful practices in line.
"For us, it's the difference between using a scalpel and a meat cleaver," Wilson said.
Peter Orszag, director of the Congressional Budget Office, said if trends hold, Medicaid and Medicare will rise from 4.5% of the economy to 20% in 2050, consuming an amount of money half the size of governmental spending today.
But he said that the sheer presence of the baby boom cohort is not the entire picture. "Aging is a factor," he said, "but by far the most important variable is how rapidly healthcare costs rise relative to per-capita income," a trend not tied to any single demographic.
"It is very unlikely that you are going to be able to slow cost growth substantially" in the public sector, Orszag said, when the private sector is experiencing the same problem.
Orszag also noted the impact of regional spending patterns.
"The kicker is that the higher-cost regions aren't generating better health outcomes than the lower-spending areas. If you fracture your hip, there's little ambiguity" as to what will happen, whereas back surgery evinces a lot of variation because follow-up and physical therapy regimes are not standardized."
"I think this underscores [that] there is some potential" for comparative effectiveness studies to blunt some of the excess spending, he said, noting that the Institute of Medicine (Washington) is of the opinion that "a quarter to 30% of healthcare costs are arising in situations where we know what should happen."
Robert Reischauer, PhD, president of the Urban Institute (Washington) and vice chairman of the Medicare Payment Advisory Commission (MedPAC), said Medicare "will, over the course of the next 70 years, go from about 3% of GDP to about 11% of GDP," an increase, he said, that "is not peculiar to the Medicare program."
"We are, in a sense, condemned to solving the healthcare problem in America" with a focus on the public sector.
He said that savings are available in part by making premiums more sensitive to income and by raising the age of eligibility. But he added that all of the fixes discussed at the meeting "will come nowhere near to dealing with the problem that we face."
"I have made a career in Washington betting that nothing will happen," Reischauer quipped, but adding that at some point, "you have to be optimistic." He said he based his optimism on the idea that a shortage of healthcare personnel will require the development of "more efficient, less wasteful systems."
In response to a question about whether CMS should refuse to do business with doctors whose practices do not align with standards of care and run up extraordinary tabs, Wilensky said this "would be possible, [but] not something that Congress has expressed an interest in."