Fwd: qotd: Contrasting the rollout of Medicare and Obamacare

_______________________________________________
Quote-of-the-day mailing list
Quote-of-the-day@mccanne.org
http://two.pairlist.net/mailman/listinfo/quote-of-the-day

-------- Original Message --------
Subject: qotd: Contrasting the rollout of Medicare and Obamacare
Date: Thu, 2 Jan 2014 09:05:27 -0800
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



Health Affairs Blog
January 2, 2014
Medicare's Rollout vs. Obamacare's Glitches Brew
By David Himmelstein and Steffie Woolhandler

The smooth and inexpensive rollout of Medicare on July 1, 1966 provides
a sharp contrast to the costly chaos of Obamacare.

We won't rehearse the chaos part here, just the costs.

As of March, 2013, federal grants for Obamacare's state exchanges
totaled $3.8 billion. Spending for the federal exchange is harder to
pin down because funding has come from multiple accounts, including: the
$1 billion Health Insurance Implementation Fund; DHHS' General
Departmental Management Account and General Departmental Management
Account; CMS's Program Management Account and the Prevention and Public
Health Fund. CMS estimates fiscal 2014 spending for the
federally-operated exchanges at $2 billion. So it's safe to say that
the costs of getting the exchanges up and running, and (hopefully)
enrolling 7 million people in the program's first year will exceed $6
billion.

Bear in mind that the exchanges won't actually pay any medical bills,
just sign people up for coverage. So billions more in overhead costs
will show up on the books of the private insurers and state Medicaid
programs that will actually process medical claims.

Back in 1966, Medicare started paying bills for 18.9 million seniors (99
percent of those eligible for coverage) just 11 months after Pres.
Johnson signed it into law. Overhead costs for the first year totaled
$120 million (equivalent to $867 million in 2013). But that figure
includes the cost of processing medical bills, not just the enrollment
costs.

Moreover, Medicare and Medicaid (which was passed at the same time)
displaced several smaller federal health assistance programs, saving
about $376 million on their overhead costs (2013 dollars).

Signing up most of the elderly for Medicare was simple; they were
already known to Social Security Administration, which handled
enrollment. To find the rest, the feds sent out mailings to seniors,
held local meetings, and asked postal workers, forest rangers and
agricultural representatives to help contact people in remote areas.
The Office for Economic Opportunity spent $14.5 million to hire 5,000
low income seniors who went door-to-door in their neighborhoods.

Despite predictions of chaos, and worries that the newly-insured seniors
would flood the health care system, there were few bottlenecks.
Hospitals continued to operate smoothly and no waiting lists
materialized. The only real "glitch" was that many hospitals in the
Deep South initially refused to integrate their facilities – which
Medicare required for certification and payment. But by the end of the
first month, 99.5 percent of hospitals had signed on.

Obamacare's start-up has been rocky because complexity is "baked in" to
the design, just as simplicity was "baked in" to Medicare. Obamacare's
exchanges must coordinate thousands of different plans, with premiums,
co-payments, deductibles and provider networks that vary
county-by-county; Medicare offered a single, uniform plan. The
exchanges must calculate subsidies for each applicant after first
verifying income, family size and immigration status; Medicare offered
free hospital coverage, with a minimal ($22) uniform premium for doctor
coverage. Instead of setting up a new bureaucracy to collect premiums
from millions of enrollees and funnel them to private insurers, Medicare
relied on the existing payroll and income tax system to garner funds.

Obamacare's byzantine complexity reflects the contortions required to
simultaneously expand coverage and appease private insurers. And
private insurers will exact a steep ongoing toll. Medicare's overhead
is just 2 percent, vs. an average of 13 percent for private plans (on
top of the Exchanges' costs, roughly 3 percent of premiums). A single
payer plan that excluded private insurers could save hundreds of
billions in transaction costs.

Medical quality improvement experts often advise hospitals to "avoid
workarounds"; fix system defects rather than force doctors and nurses to
sidestep problems like faulty equipment, understaffing, or illegible
handwritings. This advice is equally valid for health reform. To avoid
glitches and wasteful expense, design the system right; eliminate
private insurers and cover everyone under a single payer program.

http://healthaffairs.org/blog/2014/01/02/medicares-rollout-vs-obamacares-glitches-brew/

PNHP's press release:

http://www.pnhp.org/news/2014/january/medicare's-1966-glitch-free-rollout-a-sharp-contrast-with-obamacare-health-affairs


Comment:

From PNHP's press release:

"Obamacare is a giant workaround crafted to keep private insurers at the
center of the health care system," said co-author Dr. David Himmelstein,
a primary care physician, professor of public health at the City
University of New York and lecturer in medicine at Harvard Medical School.

"The simple single-payer, Medicare-for-all approach would save more than
$400 billion annually on bureaucracy, enough to give every American
first-dollar coverage. But to get those savings you have to break
private insurers' stranglehold on health care and on Washington," he
said, adding, "The glitches in Obamacare's rollout don't come from
government incompetence, but from political cowardice."