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August 18, 2011

Bucshon: Medicare must change to survive

Brian Boyce The Tribune-Star

TERRE HAUTE — The prognosis for Medicare as Americans know it might be terminal, and officials remain at odds about a solution.

Eighth District U.S. Rep. Larry Bucshon hosted an informational roundtable discussion about America’s health care program for the elderly Wednesday evening. The events room inside Indiana State University’s Cunningham Memorial Library contained about 30 residents as an expert panel discussed the topic. Verbal questions were not taken from the floor, as Bucshon explained the 11⁄2 hour discussion was for informational purposes. But paper was provided to attendees on which they could write questions and have the congressman send them back a reply.

While officials and citizens alike might disagree on remedies to the health care issue, Bucshon said the stark numbers are beyond question. Medicare, one of the most successful programs ever initiated by the federal government, will be out of money in 2024 unless direct action is taken, he said. In just 13 years, the Medicare trust fund will be depleted, and the country’s income isn’t nearly enough to support the costs, he added.

Today, between 30 million and 40 million Americans are on Medicare, he said, pointing out this number will exceed 70 million by 2030. The average citizen contributes about $100,000 to the program during the course of their lifetime, but draws about $300,000 in benefits, largely due to an increased life span, he said.

“And that’s only going to accelerate past 2024 if we don’t change things,” the Republican congressman said, stating that President Barack Obama has even acknowledged entitlement reform is a necessity. Meanwhile, the House GOP has a plan to handle the program contained within its proposed budget, but there is contention between the parties on solutions, he added.

Panel member Robert Guell, Indiana State University professor economics, said the 2024 date is actually optimistic, noting that Medicare could run out of funds as quickly as six years from now depending on a variety of factors. The key, he said, is to find a plan and stick to it, instead of changing policy every few years.

Bucshon said the government is preparing another round of Medicare “cuts” to providers, meaning physicians and hospitals accepting those patients will be given less money next year than now. The government has been cutting payments to providers for years and still goes in the red, he said, adding Medicare owes the country’s general fund more than $370 billion as it’s bailed out annually. If the cuts continue, Bucshon predicts more physicians will quit accepting Medicare patients as it is simply not worth the expenses. Left unchanged, the program is on pace to pay less than Medicaid, and those patients too face difficulty in finding physicians who will accept them, he said.

“That’s a huge problem. It’s a stepping stone that’s hard to get past,” said the congressman, whose private-sector career began as a heart surgeon.

Panel member David Wulf of Templeton Coal said he and other Chamber of Commerce members fear these Medicare cuts will continue to pile up by way of a “cost-shift” onto employers.

Union Hospital Chief Financial Officer Wayne Hutson agreed, explaining that hospitals lose millions providing care to Medicare and Medicaid patients. The only way they can afford to do this is by shifting those costs onto individuals with private insurance. Medicare has been a losing payor since the government went to a Diagnosis Related Group (DRG) model in the 1980s, he said. In this model, the program tells providers what they’ll pay for each DRG, regardless of length of stay or depth of procedures, he said.

Bucshon noted a number of problems with the manner in which Medicare is run, offering the example that the program provides reimbursement for expensive hospital stays but not for some in-home care. The in-home care would be cheaper, he said, and the result is that Medicare ends up paying out more money because people choose to simply stay in the hospital longer.

Meanwhile, “waste, fraud and abuse,” need to be combated at every level of the program, he said, explaining that over time, the difference between America’s income and expenses is in the trillions.

“The unfunded liabilities of these programs are astronomical,” he said.

Still, the country should be wary of too much government control, he warned, describing the system used by Canada and England as “two-tiered” with “haves and have-nots.”

“That is not a model for the United States,” he said, citing rationing and waiting lists as those with money choose to come to America to get services unavailable at home. The costs might be controlled for citizens, but the ensuing lack of access makes the system unacceptable here, he said.

Guell said a serious “culture change” is in store for Americans as end-of-life costs will drive decisions about expensive operations. The amount of money it costs during the last month of a person’s life eventually will become a factor in treatment decisions, he said.

He and Wulf briefly discussed the financial impact of personal choices such as smoking and obesity, and Guell pointed out that from an economists’ standpoint, smoking is a cost-saver. If cigarettes didn’t kill off as many people as early as they do, the long-term costs of maintaining them would be higher than what America already pays, he said, calling it a “gruesome” reality.

Hutson predicted that today’s seniors will manage to muscle the safety of their existing benefits at the expense of providers. Questions remain about the long-term impact for America’s youth though, all agreed.

Panel member John Perry of Terre Haute Savings Bank offered a parting comment, pointing out that he was alone on the panel as a card-carrying Medicare recipient. Still, the age-old rule that “there’s no such thing as a free lunch” applies now as much as ever, he said.

Brian Boyce can be reached at 812-231-4253 or brian.boyce@tribstar.com.

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