Fixing Medicare

Our view: Soaring senior health costs must be confronted

July 28, 2008

When it comes time for the presidential candidates and Congress to seriously debate the most challenging issues facing America, soon we hope, comprehensive reform of Medicare should be at the top of the list.

The costs of the Medicare programs that provide basic care for senior citizens are looming with no relief in sight. Social Security, Medicare and Medicaid spending accounted for almost $1.1 trillion in 2005, nearly half of all federal spending and an 8 percent increase over 2004, with Medicare leading the pack. In Maryland, Medicare spending rose 18 percent - to $7.3 billion - from 2002 to 2004. And with the 77 million-strong baby boomers poised to retire, costs are expected to explode. Spending these amounts might be acceptable if all that money went to provide excellent care, but the opposite is true. An enormous share of Medicare spending is lost because of inefficiencies and fraud, while the quality of care is poor compared with what is offered in other developed countries. Amazingly, much better care could be achieved with new strategies that would achieve significant savings. Here is a sampling of Medicare reforms that could make a difference:

* Pay doctors stipends to proactively treat patients, based on their age and medical conditions, instead of making payments for each test and treatment - a change that could significantly improve care while reducing spending on unnecessary tests and equipment. (Doctors are ordering roughly $40 billion worth of unnecessary medical imaging each year, experts estimate.)

* Decrease hospital readmissions or unnecessary hospitalizations; it could also improve care while saving at least $12 billion a year.

* Reduce health insurance administrative costs to the average level of other countries, which would save billions more, as would increasing physicians' use of electronic medical records.

* Improve management controls to reduce the $60 billion lost each year to Medicare fraud by physicians, therapists and other suppliers of medical services.

Past efforts at Medicare reform have been diverted by powerful special interests, including health insurers, the American Medical Association and others that help perpetuate a dysfunctional system. But with an estimated $36.3 trillion in unfunded Medicare obligations, comprehensive reform can no longer be deferred.

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