Two Fatal Flaws in Health Reform Resuscitation

Relying so heavily on Medicare and Medicaid to provide the funding simply can’t work.

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Salvage efforts are underway for the president's health reform package, put into a stall by the recent surprise election of Republican Sen. Scott Brown in Massachusetts, which disrupted the one-vote margin that would have passed the legislation last month. On the one hand, President Obama seems conciliatory; a proposed televised summit in late February would allow key members from both sides of the aisle to hear from those who have different ideas. On the other, he does not seem willing to scrap the health reform bills that were a year in the making and would radically restructure both the financing and delivery of healthcare. Last week, Secretary of Health and Human Services Kathleen Sebelius delivered the message that the administration would not budge from its comprehensive approach to lowering costs and covering the uninsured, since the "pieces of the puzzle are too closely tied to one another."

She has a point there. The Obama­care puzzle, a centrally driven plan that requires at least a trillion dollars to succeed, counts on a combination of taxation, fines, penalties, and cost savings; a reallocation of major resources within the current health system; and a willingness among doctors and patients to accede to substantial new government controls. Regardless of how workable the administration's grand design appears to be on paper—about 4,000 pages of paper—it will fail if all of these big puzzle pieces are not in place. Most obviously, are the needed resources there for the tapping? There are at least two giant reasons that I think the puzzle is now imploding on its own, and neither has anything to do with political partisanship. And no televised show of hand-holding will make one whit of difference.

The first fatal flaw: leaning on Medicare. Obamacare counts heavily on its ability to drain off money from Medicare—which, by the administration's own accounting, is slated to go into bankruptcy in seven years even as it is. It seems like a heavy dose of voodoo eco­nomics to expect that this program, with its ranks just starting a big swell because of aging baby boomers, has the capacity, no less the will, to cough up half a trillion dollars to pay for half of the cost of health reform. Much has been made of the savings to be found in ending fraud and abuse, but success there would in no way be sufficient to prevent a hike in Medicare payroll taxes on working Americans (who would not be pleased), higher Medicare premiums for beneficiaries, and a big bite out of the medical care our elders now receive.

Health reform proposes to save lots of government money by keeping seriously and chronically ill old folks from being readmitted to the hospital too frequently, a major source of Medicare expenditure. Sounds good, but it is easier said than done, both medically and ethically. Political pundits who would have you think that a hospital admission should cure the disease and that a readmission is a sign of doctor or hospital failure know little about the nature of the formidable degenerative diseases that affect the hearts and lungs, bones and brains, and immune systems of the elderly. Patients who can be tuned up with a few days in the hospital and return home better, even if it's more than once, are not candidates for hospice. Where else are they to turn? Washington is threatening to cut reimbursement to the doctors and hospitals with higher readmission rates, or label them as poor performers, without analyzing the circumstances. It won't work.

[Why health reform is too tough on hospital readmissions.]

Another source of money is slated to come from ending Medicare Advantage, a popular but costlier option that covers 10 million elderly in privately managed healthcare organizations that provide pharmaceuticals and impose small or no copayments. Though the savings here are sure to be realized, they come at the risk of citi­zen discontent. Especially so when some elders, namely Floridians, are exempt. Who was the hero who saved Advantage for the 1 million elderly in the Sunshine State? It was their own Sen. Bill Nelson, who made that loophole the price for his health reform "Aye" vote.