It’s December and once again Congress must decide how it is going to pay America’s doctors.  The Sustainable Growth Rate, the formula the government uses to formulate the payment rate has been found to not be sustainable at all. This is only one problem with financing our healthcare delivery system but every year in December, it becomes a pressing issue. How much will the government threaten to cut doctors’ pay?  How many doctors will quit Medicare?  How long can this go on?  

Don’t expect any solution to the Medicare financing crisis any time soon.  In order to find a solution, we must start asking the right questions and we have to face a bit of economic reality. I have not heard any politician come close to an honest discourse about the economic actuality of our healthcare delivery system failure.

The nation is finally coming to understand that Medicare is “not sustainable.” It is just a fairy tale to pretend that the government can continue to pay for all things for all seniors.  And it is not honest to call Medicare just an insurance policy. Truly, the Medicare program has become a medical bank that pays for all health related “things” for all seniors including scooters and persons to clean your home if you are not able.

Any politician promising that this can continue is only pandering to assure his or her own election. “Not sustainable” does not just mean that young Americans won’t have Medicare as we have come to know it.  “Not sustainable” means that Medicare and the entire healthcare delivery system must change NOW:  for Seniors NOW, for everyone NOW.  The system is broken and we have to deliver medical care better and less expensively for everyone.

It is foolish and naïve to think that any mandate (whether constitutional or not) will fund medical care for all.  Universal insurance coverage does not change the healthcare delivery system. It does not improve access and it does not make things less expensive. Further, in every insurance market including the Medicaid market, there are about 15% who choose not to participate regardless of the cost.  In fact, the Medicaid market has been very difficult to penetrate even though the insurance is free to those who qualify.  A mandate only allows us to create another expensive, burdensome bureaucracy to chase down “violators.” 

If we more fully examine why medical care is SO expensive, we can only conclude that it is government regulations that add dollars to the expense column but nothing to the quality of care.  “Pay for Performance” programs have been an abject failure.  Programs that punish those who don’t comply don’t change habits.  More government interference does not make for better healthcare, enhance outcomes, increase the number of insured, or decrease the cost of anything. 

When Congress authored the Medicare bill back in 1965, people lived on average, to about 64 years of age.  It was never intended that the Medicare tax would actually pay for any senior’s medical care.  If there were some dollars paid out, it would only be for a very short period of time.  Now, we live longer and retire earlier.  It is nonsense to expect the government to pay for a senior’s medical needs for 30+ years when they paid into the system at a marginal rate for only 40 years. 

If America were willing to concede that Medicare should work like a real insurance system (an actuarial bet to protect the purchaser from financial catastrophe), we might be able to make things work.  The government would only be responsible for covering a medical catastrophe.  That would require that seniors purchase re-insurance from commercial insurers and we would need to turn the outpatient marketplace into a transparent competitive market.

The good news is that this would definitely make healthcare at every level more affordable and more accessible.  Moreover, it would allow the government to fund either directly or through voucher systems a real insurance program and not go bankrupt.  It would also allow for more personal choice and demand that physicians be directly accountable to their patients. 

The vision of affordable accessible high quality care can only be met without government interference.  This bite of economic reality could mean a sweet transformation into an accountable medical care delivery system but only if our legislations come to the table looking for real answers.