Medicare’s Faint, Faint Pulse

My father, who is 93, lives in Seattle. He has Medicare, but instead of using it he has his primary care done by an internist who has “opted out” of the Medicare system. This excellent physician, Garrison Bliss, is credited with starting the nation’s first “boutique” or “concierge” practice about seven years ago. His patients, young and old, pay a flat annual fee of about $1,000 for unlimited prompt access, rather than a fee for each service.

Concierge medicine is growing and has spread to California, Arizona, Florida and elsewhere, especially places where there are large numbers of financially secure retired seniors.

Why? Because Medicare, the government insurance program serving the elderly and disabled, is breaking down. Its once unlimited budget led to spectacular new treatments, conspicuous prolongation of life and improved health for millions of older Americans. But it is a victim of its own success.

With extended life spans, the number of beneficiaries mushroomed compared with how many taxable workers were paying into the program. Where there once were 20 workers supporting each retiree, now there are three or four. Soon there will be only two. Medicare must change.

For the first 18 years after its enactment in 1965, Medicare fully paid its bills by raising taxes on the public and fees to seniors, which are deducted automatically from their Social Security checks. Beginning in 1983, Congress severely cut what doctors were allowed to charge Medicare for their services to seniors. By 2001, these fee limits had dropped to between 30% and 50% of what younger, private patients were paying for similar services, although these services take longer and are more difficult to perform on elderly patients. Finally, until allowing a 1.6% increase just last week, Congress had a cap on Medicare’s annual budget increases, resulting in further cuts of about 5% per year in the amounts that doctors could charge Medicare.

The result? Many doctors concluded that they could no longer afford to see new Medicare patients. Moreover, growing numbers of doctors “opted out” of Medicare entirely. This means they can see all the seniors they want and charge as they please, but those patients have no insurance coverage for the physician’s fees. In such Medicare-free practices, doctors feel they can do the kind of quality work they were trained for rather than the assembly-line care they were forced to provide under Medicare. They are happier professionally than their counterparts.

Then there is the problem of training doctors to care for the elderly. Today, according to professional journals, there are only 9,000 certified geriatric specialists out of 650,000 doctors in the United States, and many of those have stopped practicing. Because of Medicare’s virtual monopoly -- almost all Americans over 65 use it for their health care -- and its low fees, almost no one wants to enter geriatric training fellowships. For a physician in training, even pediatrics, historically the lowest-paid field of medicine, seems a better option.

The 65-to-100-year-old population controls most of the nation’s wealth, though it is unevenly distributed. However, the Medicare system that covers even the wealthiest seniors is paid for through a regressive payroll tax on all workers, falling heavily on the young and the poor.

It is unlikely that these workers will ever see benefits themselves because Medicare is likely to collapse before they are eligible. This is why President Bush is so eager to link any prescription drug benefit to a complete redesign of Medicare.

What will come out of that is anybody’s guess, but one thing is clear. There is not enough money in the universe to pay for Medicare’s future as it is now structured. Moreover, we are stealing from the poor and working young and giving to the relatively rich, affluent retired. This is hardly fair. Thus Medicare must change or collapse.

It could become a program for the indigent elderly, as Medicaid is for the younger poor. It would be politically difficult for members of Congress to vote directly for such a change. But Congress has allowed fees to sink so low that caregivers to the middle class and wealthy opt out, bringing many of their patients with them to get the quality, personalized care they desire and can afford. A market in private health insurance for the elderly may now develop, a market that died with the birth of Medicare in 1965. Perhaps if enough prosperous seniors opt out of Medicare, more money will be available to pay for the care of poorer folks.

Except for last week’s blink, Congress has drawn a line in the sand: this much money for Medicare and no more. It is more likely to stick to its decision now that national defense and the need for economic growth are making health care seem less urgent by comparison. Government can no longer fully fund them all.