• The public needs to wise up about Medicare spending

    A recent report in the New England Journal of Medicine paints a discouraging picture of public awareness about Medicare spending. Robert Blendon and John Benson find, among other things, that people generally don’t understand the role Medicare plays in the federal budget deficit—which matters, since the legislators responsible for reducing that deficit tend to care about reelection.

    The entire piece is worth reading, but I wanted to pull one passage in particular (emphasis added, internal citations removed):

    [W]hen given a dozen possible causes for rising Medicare costs that have been suggested either by experts or in the media, the majority do not identify any one of them as the most important. However, the three most often cited reasons relate to poor management of Medicare by government, fraud and abuse in the health sector, and excessive charges by hospitals. The lowest ranked reason was the cost of new drugs and treatments being offered to seniors.

    I’m going to set aside the most often cited reasons and focus on that last nugget: only six percent of those surveyed think new treatments—new technology—are a major force behind spending growth. Now seems like a good time to return your attention to a chart Austin pulled together last year:

    So yeah, there’s a consensus that technology is kind of a big deal.

    But you don’t have to take my word for it. Check out this TEDx talk by Amitabh Chandra, a health economist from Harvard. He highlights two examples of tremendously expensive treatments that Medicare covers, despite yawning gaps in evidence for their effectiveness. Actually, in the case of Avastin, there is evidence: the FDA revoked approval for the drug, ruling that it’s not “safe and effective” for the treatment of breast cancer. Medicare covers it for that indication anyway.

    It won’t be easy to reconcile hard truths about the costs of new technology and spending containment with public fear of “rationing.” A majority of those surveyed think that Medicare already rations care by withholding useful treatments and prescription drugs (they’re wrong).

    The authors conclude:

    [T]wo points are important. It would aid the long-term resolution of these issues if there were a nonpartisan, broad-based public education campaign launched focusing on how Medicare works financially. Second, it would be advantageous if discussions of the financial sustainability of Medicare could be separated from public debates over reducing budget deficits or enacting tax cuts. Until these concerns are better addressed, the gaps in perception are likely to remain.

    Update: I’ve clarified my point about Avastin’s revoked FDA approval: it was revoked for breast cancer (remaining approved for other cancers) but Medicare still covers it for breast cancer.

    Adrianna (@onceuponA)

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    • I would very much like to see a “non-partisan, broad-based public education campaign” about Medicare get underway. I do Medicare counseling and am constantly amazed at how little most people know about the program or their own coverage. It’s really rather depressing at times.

      As for discussions about financial sustainability, it seems to me part of the problem is the lack of transparency about costs. Very few people know what a particular procedure or medicine actually costs; many don’t even know how much they are being billed. Nonetheless, most everyone seems pretty sure they’re paying too much or that they get paid too little, depending upon which side of the equation they’re on.

    • Where is your fact checking? Avastin is a life saving drug with many uses. The FDA only reversed on its use in breast cancer, not the entire approval.

      Also, this article should have reviewed more recent data – like the analysis CBO just released looking at the contributing factors to the slowdown in FFS Medicare spending. The growth trends in med tech and drugs actually contributed to that slowdown, albeit marginally. The studies cited in your contribution chart only run through 2007, and only in one study. I’m not disputing that innovation costs are a component of spending, but let’s focus proportionately on the contributors to overall spending – facility and provider costs, in addition to the items used in/by those groups.

      • I’ve updated the bit about Avastin to capture the breast cancer nuance, which I should have been clearer about.

        News that Medicare spending growth has slowed is good, but it’s still growing. The CBO report you mention cites the Smith et al paper incorporated into Austin’s graph, as well as this paper from Amitabh Chandra on the point that technology is a key driver of spending increases. It does suggest that declining development/deployment of new technology could play a role in slowing growth, but that actually quantifying its impact on spending changes beyond the scope of the paper (page 38).

        I don’t think that the CBO paper offers much useful perspective to add to this, nor does it diminish the importance of new technology—drugs and other treatments—as a factor related spending growth, which the public isn’t grasping, if these surveys are any indication.

    • I agree with Observer. Calling out Avastin is un-necessary, misleading and inaccurate. Furthermore, translating ‘technological advances’ to ‘drugs’ completely neglects the larger cost of care issues as well as the fact that drugs do not account for the majority of the healthcare dollar spent in the US.

      • Actually, if you read health policy on a regular basis, you should know what she meant. While I sympathize with the desire to want to assume that you are writing for a knowledgeable group of readers, not everyone follows health care on a regular basis.

    • Great post, but, as others point out, Avastin is not a great example. For another indication (age-related macular degeneration, off-label), it is actually cheaper than its close relative (Lucentis, also made by Genentech).

      OIG says, ” We calculated that if Medicare reimbursement for all beneficiaries treated with Avastin or Lucentis for wet AMD had been paid at the Avastin rate during calendar years (CY) 2008 and 2009, Medicare Part B would have saved approximately $1.1 billion and beneficiaries would have saved approximately $275 million in copayments.” https://oig.hhs.gov/oas/reports/region10/11000514.pdf‎

      But that doesn’t change the important message of this post at all.

    • “A majority of those surveyed think that Medicare already rations care by withholding useful treatments and prescription drugs (they’re wrong)”

      That statement is not true. Medicare does ration certain care, they just don’t seem to do it in a very rational way. See the Medicare Therapy Caps instituted in 2011 and continuing in 2013. An elderly stroke patient can easily rack up $1,800 in combined physical and speech therapies in one or two months and be effectively cut off from further treatment that could keep them improving and out of more expensive nursing homes. However patients getting proton therapy get tens of thousands more than standard treatment without any proven extra benefit. Seems like the decisions for rationing follow based on who has the more powerful lobby, but the reality is that there is rationing going on.

    • The UK has the NICE program which seems to do a good job of determining which treatments and diagnostic procedures are useful.
      (http://www.nice.org.uk/)
      Of course, it will always be attacked by those who stand to lose income by its decisions.
      I think it’s time for something like this in the US.

    • Adrianna Terrific article with lots to consider especially following my first reading of the NEJM article. I would agree with Deb regarding an education campaign.

      My background is medical advertising and communications with a big dose of medical education (CME). The data is clear on where the gaps in knowledge reside and with what groups that targeted well designed educational campaign would change current perceptions. The one rub is the fact misinformation use by political parties to gain support will fight with what is needed.

    • I dont see how you reconcile:

      a) attempting discussions of the financial sustainability of Medicare and separating them from public debates over reducing budget deficits or enacting tax cuts, and…

      b) >50% of folks in the survey indicate they are less likely to vote for a congressional candidate if they suggest “a.”

      Why wouldn’t a trailing candidate play the Medicare card? Its pure gold.

    • health care is a system managed by congress, state legislatures, presidents and governors, employers and union health plans, big pharma, device companies, health insurance companies, hospitals and independent practice physicians who set their own prices

      the “people”. the “health care consumers” are powerless… less significant than pawns….with no voice… they receive services, increasingly pay premiums, have out of pocket costs, have illnesses…

      people are at the mercy of the powerful entities who game the system to their advantage

      there is no better example than than the cleverly named medicare advantage plans driven by marketing and sales programs that aim to convince people that their best interests are served by a third party medicare management plan which provides a few low reimbursement optical, dental, and gym membership trimmings and manage their medicare health benefits for them….what a cash cow for health insurers….like getting something for nothing

    • It’s impossible for the intelligent medical or dental consumer to monitor and respond to prices. I’ve had to sue dentists and doctors and file FOIA requests just to get the Medicare allowances for procedures by CPT.

      Everyone recommends that you find “good doctor” or “good dentist,”but there’s really no way to vet them, since their professions have state blessing to hide the ball, and even a doc or dentist reprimanded or even criminally convicted can easily re-establish his practice in the neighboring state.

      What is indispensable is a real market in health care. We don’t need monitoring of Walmart, Target and Sears, because the market incentivizes them to do the legwork of providing information about offerings and pricing, as well as the sins of their competitors.

    • Just received this from the California Health Care Foundation:
      Health Care Costs (1960-2011): Who Pays?
      http://www.chcf.org/publications/2013/09/data-viz-hcc-national
      You can move the slider and see each year since 1960… a nice graphic.
      Interesting that between 1980 and 2011, Medicare as a % of Hospital has gone from 26% to 27% and Medicare as a % of Physician services has gone from 17% to 22%.
      Total spending in the same 30 year period has gone up about 10x (from 217B to 2279B)
      Both hospital care and physician services have decreased as a percent of total spending.
      Not sure where “technology” fits into this graph… it’s probably buried in both hospital and physician services. Prescription drugs doubled from 6 to 12% as a share of total spending so that could account for “technology”… although drugs are not usually what I think of as technology.

    • so, which technological changes in medicine over the past 70 years would you like to start doing without?

      • proton-beam therapy, for one

        • sure, it’s expensive now, and we don’t have decisive evidence that it’s better, but what if the price drops drastically 10 years from now and we also find that it is a better technique after all?

          meanwhile, if we lived in a sane world, we’d have single payer, or a national health system, and all hospitals would operate under global budgets, much like your local fire department does. but we don’t live in a sane world. we live in a world where medical is bought and sold as just another commodity and “markets” solve all pricing problems. in this world, hospitals would be stupid to NOT offer expensive elective procedures to bring in needed revenue.

    • If anyone who wanted to could get a job that paid a living wage, and rent clean, adequate, safe housing;

      If the FDA prevented Frankenfood Giants ADM, Monsanto et al. from making viruses and insects and pesticides that look like produce for people to buy, eat, and be poisoned by, and corrected 50% of the junking up of “food,” and the government gave people an expanded EBT program so that they could afford to eat REAL food;

      if smoking tobacco — since tobacco smoke is poisonous and full of cyanide, arsenic etc. — were made illegal and violations were heavily fined, with support for nicotine addicts trying to quit;

      if air and water quality were restored at the expense of all the dumping exhaust systems and processes like fracking now pouring toxins into our lungs and permanently poisoning whole systems of groundwater;

      if contraceptives were made available and birth control were praised as responsible behavior;

      if medicine began to dialog with vitamin- and supplement-sophisticated orthomolecular and other alternative medical people, learn nutrition and prevention;

      if we fired the predatory insurers and hospital profiteers and went to single-payer and gave doctors time to LISTEN to patients;

      if there were steadily graduating fines for deliberate broadcast of lies about health care and other efforts to defeat democratic education and discussion;

      health would transform in this country and health costs would plummet.

      Otherwise, if we dump endless social injustice fallout onto the health care system, we can hardly complain if the price continues, as the superrich get nuttier, greedier, and more brutal, especially the Kochadile reptile swarms, to mushroom and mushroom.

    • As an outsider, I would like to point out the idiocy of a health care system that requires its users to study up on its internal workings in order to get appropriate care. Even worse, the people who are expected to undertake this education are over the age of 65, may not have much formal education, may not have a strong working knowledge of English, and may not be in very good health – why else would they have to be educated about getting health care beneits?!

      Imagine if the IRS refused to accept tax returns for anyone over 65 unless they attested that they had studied up on the tax code and regulations and prepared their tax returns without assistance from anyone.

    • It seems like everyone who studies health reform has a favorite target for Medicare over-spending, and I am no different.

      I have found it hard to discover just how much Medicare pays in total on specialized care. I am an amateur in this field and do not have much time to do more than surf the Net.

      Anyways, it would be desirable to know the total Medicare spending on:

      – Joint replacements

      – Late stage cancers

      – Heart surgeries

      – Any other organ transplants

      – End of life intensive care

      – Niursing home care for 28 days following some discharges

      – Dialysis and related hospital admissions

      I think this would be more valuable than just ascribing higher costs to technology.

      My suspicion is that postponing death uses up about 70% of Medicare spending, vs day to day health care for seniors.

      This does not mean we have to stop heroic medicine. But we ought to start discussing how much we can pay for it.

      Bob Hertz, The Health Care Crusade

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      • “My suspicion is that postponing death uses up about 70% of Medicare spending,”

        define “postponing.” one more year of life? two more years? five more years?

        from http://conversableeconomist.blogspot.com/2013/02/trends-in-end-of-life-care.html

        “We spend about 25-30% of Medicare spending on patients who are in their last year of life, according to Gerald F. Riley and James D. Lubitz in their 2010 study, “Long-term trends in Medicare payments in the last year of life” (Health Services Research, April 2010, 45(2):565-76). They also find that this number hasn’t changed much over the last 30 years”

      • Medicare spending has been divided by Dartmouth into 3 main buckets, which is a pretty useful way of thinking about it:

        Evidence based care: 12%
        Preference sensitive care: 28%
        Supply-sensitive care: 60%

        Evidence based care is, well, pretty self-evident.
        Preference sensitive care refers mostly to elective surgery, such as knee replacement and angioplasty for stable coronary angina. About 10 surgeries account for a good 3/4 of the spending in the preference sensitive care category.
        Supply-sensitive care refers to everything else, but especially the care of the chronically ill and dying.

        Here’s why this is particularly germane to conversations about bringing down costs: restricting access to elective surgery will not hit the bulk of waste in the system, and the bulk of spending, which is devoted to the care of the chronically ill and dying.

    • I have no doubt that some expensive treatments extend life by five years or more.

      That still does not necessarily mean we can afford them. The elderly person whose life is extended does not spring up and pay higher taxes.
      Instead they draw more Medicare and more Social Security until another expensive disease intervenes.

      Given the wild hostility to any mention of death panels, we are not going to change this aspect of Medicare very soon.

      What I have advocated instead is a much more careful audit of the most expensive procedures…….

      if a transplant supposedly costs $500,000, why?

      Are there huge hidden profits in the drugs? Huge overcharges for intensive care?

      The problem is very rarely the doctors.

      Bob Hertz The Health Care Crusade

    • I dp npt have the wisdom tp describe the care of the chronically ill and dying as ‘wasteful.’

      I do however have the common sense to describe the fees paid for this care as bloated and excessive.

      Why does intensive care get billed at $4000 a day? Pure historical mumbo jumbo.

      The fees for the dying are a kind of financial healing for hospitals.

      Cap all reimbursements at $1500 a day, no itemized billing, and force hospitals to adapt. Germany did this 30 years ago.