March 1, 2013

Medicare, Brill's Hero, Has A Major Flaw

Like many others, we've been talking a lot this week about Steven Brill's Time magazine cover story, "Why Our Medical Bills Are Killing Us." His report details the "unholy alliance" of hospitals, Big Pharma and insurance companies. Medicare, however, emerges as the "hero" in his villian-packed account.

But Medicare has a basic flaw, a key reason our medical costs are higher than those of the next ten most developed countries combined. In the final years of life, a major mismatch exists between what Medicare covers and what people really need.

An All-Too-Typical Story: Joe's Father's Last Two Years
This example is based on a true story from a friend we'll call Joe.

An avid golfer, Joe envied his father's life. His dad retired early and -- another golf nut -- he was out on the links most every day. He was in excellent health and kept playing until he was 90, when a heart problem resulted in his spending his last two years in hospitals as doctors tried to prolong his unhappy life.

After his father died, Joe was executor of his dad's estate. Since he had access to all the records, Joe decided to analyze what Medicare had spent on his dad over the course of his life. The total came to something like $950,000. The biggest surprise: a staggering 85% of that total came from his father's final two years.

Having worked several years in The Netherlands, Joe described what would have happened if his dad had spent his final years there. When his dad's heart gave out, a panel of doctors (OK, Sarah Palin, call it a "death panel" if you want) would have met to decide whether Joe's father's situation warranted aggressive treatment or palliative care in a hospice, assisted-living facility, or at home. Joe is sure the Dutch medical team would have chosen palliative care, and his dad's remaining time on Earth would have been easier, more comfortable, and happier. Pop may even have lived just as long, or longer.

Some of the Harmful Things Medicare Will Cover in Your Final Years
Recent estimates suggest that about a quarter of Medicare payments are spent in the final year of life. Here's a partial list of what researchers have found Medicare will cover, procedures both useless and harmful:
  • Feeding tubes (which can cause infections, nausea and vomiting) rarely prolong life. Patients with dementia often react with agitation, pulling out the tubes. Then, they're often sedated or restrained.
  • Abdominal, gall bladder surgery, and joint replacement for elderly who rank poorly on a scale that measures frailty. Those procedures can lead to complications, repeat hospital stays, and placement in nursing homes.
  • Tight glycemic control for Type 2 diabetes (already present in 25% of people over 65). This treatment often requires ten years before it helps. So, without having enough time to reap the benefits, the elderly endure needless dietary limits and needle sticks.
What's Really Needed But Isn't Covered by Medicare
While it covers those useless, even harmful, procedures above, Medicare does not -- except in rare cases -- pay for long-term care in a safe, supervised place for elderly people who are frail or impaired. Medicare doesn't cover support at home for shopping, transportation, bathing, or toilet help. Let's face it: most of us would much rather spend our last days at home... not in a hospital, attached to tubes.

About 70% of the elderly will need extended care before they die. Here's a list of average costs for different types of extended care, according to the Genworth 2012 Cost of Care survey:

  • Homemaker services (Licensed) -- $18/hour. Providing "hands-on" care such as helping with cooking and running errands. This  is the rate charged by a non-Medicare-certified, licensed agency for these helpers who are sometimes called "personal assistants" or "companions."
  • Home Health Aide Servicies (Licensed) -- $19/hour.  Providing "hands-on" personal care, but not medical care, in the home with activities such as bathing and dressing. This is the rate charged by a non-Medicare supervised, licensed agency.
  • Adult Day Health Care -- $61/day. Provides social and other support services in a community-based protective setting during any part of the day, but less than 24-hour care.
  • Assisted Living Facility (One bedroom - single occupancy) - $3,300/month. (Provides "hands-on" personal care as well as medical care for those who are not able to live by themselves but do not require the constant care provided by a nursing home.
  • Nursing home (semi-private room) -- $200/day. Provides skilled nursing care 24 hours a day.
  • Nursing home (private room) -- $222/day.  Provides skilled nursing care 24 hours a day.
For data specific to your state, click here.

These substantial charges are not paid by Medicare. They are left to the elderly (and their adult children) to pay for out of pocket until their pockets are all but empty. 

Then they become eligible for Medicaid, the state-run (but largely federally funded) safety net for the poor. Since Medicare is funded by a payroll tax, it's viewed as an "earned benefit." But Medicaid is "charity" in the minds of the formerly middle class who worked their whole lives and never imagined they'd be destitute. 

Someone like Joe's dad can have Medicare pay most of his huge medical expenses in the last two years of his life because he spent most of that time being miserable in a hospital. He could instead have lived more comfortably and  happily in a hospice or nursing home at a much smaller cost. But he would have been stuck with those bills until he ran out of money. At that point, he becomes a Medicaid "welfare king."

As is so often the case when I describe our country's gigantic problems, I can imagine a path to reasonable solutions. Can our political leaders find the way? These days, it's tough being hopeful.

No comments: