Medical Tuesday Blog

Third party healthcare will always be gluttonous

Feb 9

Written by: Del Meyer
02/09/2018 2:00 PM 

On July 30, 1965, President Lyndon B. Johnson signed into law the bill that led to Medicare and Medicaid. The original Medicare program included Part A (Hospital Insurance) and Part B (Medical Insurance). Today these 2 parts are called “Original Medicare.”

The basic design of the Medicare program was modeled on the private insurance system which was in place in the 1960s. The Original Medicare had a fixed deductible for Part A Hospital Care and had a 20 percent copayment for physician services and outpatient care. 

This was a variance of basic health insurance with patient responsibility in both plans. This is critically important to maintain costs and prevent over charging since the patient was always aware of the total charge and thus in a private world maintain a modicum of control by his payment. The patients would change doctors if the charges were too high because they could freely change doctors, so their copay would be less. For example, if a physician charged $200 for an office call and another physician charged $100, the copays would be $40 vs $20. That would generally be enough savings for the patient to switch physicians and thus save Medicare an equivalent amount. The charges for surgery could be 10 to 20 times higher, and the patient’s copayment would be even more significant with a greater emphases of changing to a surgeon who charged less.

Hospital charges would not be controlled as well since there was a deductible that would be met on the first day. Had the hospital plan had a 5% or 10% copayment, hospital costs would also have been contained since the patient would always be aware of the total cost and thus request the earliest possible discharge or detailed evaluation of a secondary medical problem which relatively unimportant. Because there were no continuing costs to a prolonged stay, we frequently had patients request a delayed discharge for personal reasons.

Because of this frequent delay, Medicare had to implement an expensive utilization review system of placing a Registered Nurse at each nursing station to monitor the hospital stay of every patient on that ward. For instance, we were consulting on an orthopedic patient whose fracture had healed sufficient for discharge on a December 23. This was not convenient for his wife who had a number of guests scheduled for a Christmas dinner. She said many unkind things to the medical and nursing staff for being so inconsiderate. She thought it should not be difficult to delay the discharge by three days. From Medicare’s viewpoint, at $2,000 a day for post op convalescent hospital care which was no longer needed, amounted to essentially a $6,000 request for eldercare. Medicare was successful in “ejecting” this patient to her home on December 23. Thus, entitlements are always gluttonous. It required essentially a policing force of RNs and social workers to decrease or control this entitlement.

The majority of Medicare beneficiaries, about 76 percent, are enrolled in traditional fee-for-service Medicare, which allows individuals to receive services from any doctor or hospital that participates in the Medicare program. The other 24 percent (11.4 million) voluntarily enrolled in various types of private health plans, primarily health maintenance organizations (HMOs) and preferred provider organizations (PPOs) that participate in the Medicare Advantage (MA) program.

This essentially further opened the gates of gluttony which required an even larger nursing/social worker force to monitor.

Had original Medicare been allowed to continue, the costs would have been essentially contained and Medicare costs would not have doubled every decade.

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Medical Gluttony thrives in Government and Health Insurance Programs.

Gluttony Disappears with Appropriate Deductibles and Co-payments on Every Service.

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