[TheMercenary]

I have no idea where it is going but there are some interesting points in this article from the NYT today.

March 3, 2008
News Analysis
About Those Health Care Plans by the Democrats ...
By ROBERT PEAR
WASHINGTON — While Senators Hillary Rodham Clinton and Barack Obama fight over who has the better health plan for the uninsured, they say little about a more immediate challenge that will confront the next administration, whether Democratic or Republican: how to tame the soaring costs of Medicare and Medicaid.

The two programs, for older Americans and low-income people, cost $627 billion last year and accounted for 23 percent of all federal spending. With no change in existing law, the Congressional Budget Office says, that cost will double in 10 years and the programs will account for more than 30 percent of the budget.

Economists and health policy experts say the federal health programs are unsustainable in their current form, because they are growing much faster than the economy or the revenues used to finance them. The Medicare program is especially endangered; its hospital insurance trust fund is expected to run out of money in 11 years.

But the need for cutbacks is not a popular theme for political candidates wooing voters who want more care at a lower cost.

The Democrats do not say, in any detail, how they would slow the growth of Medicare and Medicaid or what they think about the main policy options: rationing care, raising taxes, cutting payments to providers or requiring beneficiaries to pay more.

Nor do they say how they would overcome the health care industry lobby, which has blocked proposals for even modest reductions in Medicare payment rates.

Instead, scores of lawyers and lobbyists are continually urging Congress to expand Medicare coverage of specific drugs, medical devices, tests and procedures.

The leading edge of the baby boom generation becomes eligible for Medicare in three years. The number of beneficiaries, now 44 million, is expected to reach 49 million in the first term of the next president and then climb to 55 million by 2017.

Those numbers, while daunting, are less significant than other factors.

Peter R. Orszag, director of the Congressional Budget Office, said, “The bulk of the projected increase in spending on Medicare and Medicaid is due not to demographic changes, such as increases in the number of beneficiaries, but to increases in costs per beneficiary.”

And what is driving those costs?

“Most of the long-term rise in health care spending is associated with the use of new medical technologies,” the budget office said in a recent report. It suggested that more selective use could save substantial amounts — a prospect that alarms manufacturers of some medical devices.

“Medical technology has saved and improved countless lives by reducing disability and death rates from cancer, heart disease and other conditions,” said Stephen J. Ubl, president of the Advanced Medical Technology Association, a trade group.

Spending on Medicare and Medicaid tends to increase in tandem with health spending generally.

“Federal health spending trends should not be viewed in isolation from the health care system as a whole,” said David M. Walker, the comptroller general of the United States.

When Medicare and Medicaid squeeze payments to doctors and hospitals, health care providers often try to increase charges to other patients, Mr. Walker said. To rein in the costs of Medicare and Medicaid, he said, it will be necessary to slow the growth of health costs generally.

For several years, an independent federal panel, the Medicare Payment Advisory Commission, has recommended that Congress reduce payments to private health plans. Those payments are about 12 percent higher, on average, than the cost of caring for similar patients in the traditional fee-for-service Medicare program.

Insurance companies, working with satisfied customers and lawmakers who want to preserve access to such plans, have successfully resisted the proposal.

To help pay for their coverage plans, Mrs. Clinton and Mr. Obama both say they would roll back the “Bush tax cuts” for the wealthiest Americans. But major provisions of the tax cuts, adopted in 2001 and 2003, are already scheduled to expire at the end of 2010. Democratic lawmakers, moreover, have committed the savings from the elapsed tax cuts several times to other pet programs, like eliminating the alternative minimum tax.

Some experts say the only real way to tame health care costs is by limiting access to expensive treatments or by requiring affluent Americans to pay for more of their health care.

Medicare has generally not taken costs into account in deciding which services to cover. If officials even suggest that Medicare should deny payment for an expensive treatment that could produce a small improvement in a person’s condition, they are accused of rationing care.

Researchers at Dartmouth Medical School have found large variations in the amount of hospital care and other services that people with the same condition receive in different parts of the country. In some regions, where doctors favor more intensive treatments, Medicare spends much more without getting better results for patients.

This research “suggests that about 20 percent of Medicare spending could be eliminated with no adverse effects on health,” said Prof. David M. Cutler of Harvard, an adviser to the Obama campaign. Identifying that 20 percent would be “very difficult,” he acknowledged.

President Bush says high-income people should pay higher premiums for the Medicare drug benefit, and at least some liberals are willing to discuss the idea.

“We can go further in setting Medicare premiums at higher levels for affluent beneficiaries without unraveling the universal nature of the program,” said Robert Greenstein, executive director of the Center on Budget and Policy Priorities. But, he insists, “we should also eliminate billions of dollars in overpayments to private Medicare plans.”

The Democratic candidates do believe they can wring savings out of an inefficient health care system that spent an average of $7,400 a person last year, far more than any other country.

Mr. Obama says his plan can achieve “tremendous savings” by making the health care system more efficient. Mrs. Clinton says her plan will save more than $50 billion a year with “efficiency reforms.”

To this end, Democrats and some Republicans are coalescing behind proposals intended to improve care while lowering costs. These proposals call for greater use of health information technology, including electronic medical records, programs to manage the care of people with multiple chronic diseases and research to compare the effectiveness of different treatments.

Senator John McCain of Arizona, the presumptive Republican nominee, describes Medicare as a “fiscal train wreck.” He voted against adding a prescription drug benefit to Medicare in 2003 because, he said, it added huge costs to a program going broke.

Mr. McCain says he, too, wants to cover more people. But he has not explicitly embraced the goal of universal coverage, saying he worries more about costs.

Public opinion polls show broad support for federal action to cover the uninsured. But Robert D. Reischauer, a health policy expert and president of the Urban Institute, said, “It will be difficult for Senator Clinton and Senator Obama to retain popular support for their plans once the details are specified.”