Medicare And Medicaid Turn 50

50 years ago Lyndon Johnson president said no longer will hold Americans be denied the healing miracle of medicine. No longer will illness crush and destroy the savings they have so carefully put away over a lifetime. With those uplifting words the bill that created Medicare was signed into law as Medicare celebrates the half-century mark there is no denying it is a successful and popular program 55 million Americans are currently on Medicare and a Kaiser family foundation poll found that the approval rating among users tops 90%. A changing demographics have many fearful for Medicare's future as the older population prepares to outpace the number of working Americans who contribute to Medicare. Joining Mayor David signed regional administrator for the US centers for Medicare and Medicaid services and David welcome to the program. Thinks it's great to be here. Susan Channing also joins us she's codirector of the Institute of health law studies at the California school of Law. It's good to be here. David thinking back to the debate we recently had over the affordable care act was the Medicare legislation difficult to get through Congress? It was a challenge because the medical community physicians at the time were very concerned that this would lead to the government controlling the way medicine was packed this and if you think at that time when you had the Soviet Union and the threat of communism in so far as I could see that maybe that was a concern we would not have today but I think that was a big part of that in the challenge of the integration because of the civil rights that would come along with the financing created concern for certain healthcare providers. This was a big victory for the advocates of Medicare. Absolutely. Now Medicare and Medi-Cal as we call on California the health insurance for lower income Americans was part of the legislation had to do to get linked. The two were linked to something called the three layer cake the original Medicare plan was really hospital insurance a concern that people lost insurance because of a hospital stay cost at that time and so the idea of medical insurance which became part the not entirely supported by the physician community at the time was linked with aid to the state who previously had a different grant program and so the idea was the speaker of the house at the time saw the opportunity to solve the much larger healthcare problems than just hospitalization for the seniors and given the landslide election and the majority of the Democrats had they went big and when the spirit or a breast with a three-part program. David give us a sense of how many people in San Diego County are enrolled in Medicare? It's about 467,000 Medicare I do not have the Medi-Cal number in front of me it's probably higher. Especially now right. As we see in California in the US Medi-Cal is a bigger program -- Medicaid nationally that Medicare is important and we celebrate that today. Especially with the expansion under Obama care how in states that have approved that we California let more people are on Medicaid now. That's correct because anyone who meets a income criteria could be in the program. Susan what was the healthcare system like for seniors before Medicare. Did illness crush and destroy the savings of a lifetime as president Johnson said. I think for some people the older people who were ill I think that is certainly true only about half of seniors had health insurance prior to the passage of Medicare now it's 2% of seniors so is a huge difference. One reason seniors were a good group to try to get universal health care for is that they really did not have access to health insurance easily any other way many of them are retired and so they were not eligible for employer-sponsored insurance and private health insurance did not want to ensure them because actually they were not good risks. Basically once you lost your healthcare work you are looking at the entire retirement perhaps not covered by health insurance. Absolutely and especially low income elderly who are relying on Social Security and did not have much else in the way of income to be able to purchase health insurance. David you alluded to this amended ago but tell us more about what Medicare is credited with when it comes to transforming medical care in the US you talked about the integration part that came along with the Medicare law back in 1965. Out of that work? Because of the recently passed Civil Rights Act any program or institution that got federal dollars had to meet the requirements of the Civil Rights Act and so even to this day when we look at a facility for certification the office of civil rights goes out and does a questionnaire and inspection to make sure they don't have a discriminatory practice obviously an education was significant as well. There were a couple other piece is important to the impact of Medicare on healthcare in the United states. One is a business of certification previously there was no standards for what was a hospital or nursing home for an institution to participate in Medicare and Medicare it has to meet federal standards they finance the states to do federal inspections they oversee the sample of the inspections because in the early days were putting money into nursing homes and they were burning down so bringing up the standards of the health facilities to a common standard was a very difficult and expensive thing to do it took a lot of time and then a final point I think is the fact that seniors now had an insurance card in their pocket and the ability to pay for services led the healthcare industry the pharmaceutical industry to focus on the diseases in the chronic problem seniors face like arthritis, diabetes wears previously medicine did not focus on their problems as much and often times they would going to the hospital for a long time and pass away because there were no treatments for the problems that elderly people have. That's fascinating Susan Medicare in 2015 looks different than it did in 1965. Can you give us the highlights of how the program has changed over the five decades. One of the things that has happened is that people are living longer life expectancy is longer than it was in 1965 so that not only means there are more seniors who are eligible for Medicare but that there are older seniors there are people who really are elderly and those are the people who probably have the most amount of need for health insurance because they have high health care costs. They have multiple chronic diseases that sort of thing. That is certainly one difference is that they have a much bigger population and we have a sicker population in that at least at the high-end of the older and. Secondly there has been populations that have been added to Medicare that the benefits added to Medicare. In 1972 Medicare was expanded beyond the people over the age of 65 to include people under the age of 65 who were eligible for social sick charity disability benefits and people with and stage kidney disease. In 2003 Congress passed a prescription drug asked that ensures seniors for outpatient prescription drugs and there have been changes in the way the insurance is handled in the beginning insurance was just traditional and Medicare the federal government essentially paid the bills. Now we also have a private portion Medicare where private insurers offer Medicare benefits using managed care. Now is his benefits grew David the programs expense also grew. Medicare is said to cost more than $500 billion a year now it is 14% of the US annual budget. One of the criticisms of the program has been its inability to negotiate with hospitals and other entities prescription drug companies for instance to try to maintain cost. Is that, do you see that is one of the problems with the program. If we look at it in the major parts of the program both in the case of hospital services, physician services use Medicare as a leader in managing this problem so Medicare had the innovation of developing a payment system where hospitals were paid a specific fixed bundle for the services they provide to a person with particular problem in the private industry followed that not caused the one big drop in healthcare cost we saw prior to the one after 2007 so that is an area where Medicare's a price taker Medicare sets the price at hospitals get to do their services. In the care of Medicare part 3 early on 1998 we went from paying reasonable and customary to a Medicare fee schedule based upon value unit so every physician in a particular community is paid the same for the same service. That was revolutionary at the time that has been adopted by other insurers as a standard to measure payment so they're all so that was initially -- had success in managing the cost of physician services but the physician community responded by simply producing more services so that they become a challenge. Prescription drugs on the other hand the Congress chose a rather different direction and said we are going to pay a premium to private prescription drug plans and then it will be for them to negotiate with the drug companies which they do in that program did come in at lower than the budget it was anticipated to hit. Besides the rising cost Susan what are the other challenges Medicare faces to the system you streamlining. I think that is probably one of the criticisms of the design the insurance design of Medicare that make sense and that a lot of proponents like people who have supported Medicare advocating for. Medicare has a very strange insurance design that really does not look much like any insurance design where accustomed to look at today it doesn't look like a employer insurance private insurance. There are a lot of benefit In Medicare like for instance long-term care. That probably could be filled and have it make sense. There are a lot of out-of-pocket costs for Medicare beneficiaries because Medicare only covers a portion of the cost of care and I think if those benefit gaps and the need for supplemental policy you know some sort of supplemental policy further relief for. It some other way of dealing with that so perhaps some insurance design that looks a little bit more like private insurance designer like an employer-sponsored insurance design that covers all of the benefits of Medicare beneficiaries should be entitled to with some sort of caps on their out-of-pocket cost. Susan Medicare used to be the third rail of American politics in other words politicians did not caretaker without her Social Security because American seniors like that an American seniors voted. That untouchable aspect has been challenged in recent years has been at. Yes that is certainly the political aspect of this. The idea and there is been a big shift in Medicare from being a totally public program to be a public and private program and I think there are those advocates of privatizing are doing more privatizing of Medicare then we are actually doing and I do not know I can't remember for five or six years ago when Paul Ryan introduced the idea of a premium supported voucher system so been of care beneficiaries would receive essentially a voucher for a certain amount of money and they could purchase their own health insurance rather than Medicare supplying this health insurance so I think there has been a real move -- effort by a group of people for privatizing should but it has not been very successful I think Medicare is still as you said at the beginning of the program a very highly approved program of 90%. And seniors voted you said so I think it will be very hard to move in this premium support direction I think there are things that can be done to reform Medicare from within like we talked about before but I think going to approach your premium support system would be a really big an unusual move. David one of the reasons the politicians have been coming up with these various ideas of vouchers are a means test or something of that nature is because of the idea that Medicare and Medicaid are not financially sustainable programs. As part of this study there were a sizable number of Americans, younger Americans who did not think that Medicare would be available for them when they reached age 65 so are these programs sustainable? Now just recently the Medicare trustees report came out and showed that the trust fund is solid until 2030 that does not mean things won't be done between now and 2030 to make it go further I think the notion of sustainability applied to a federal program is misleading. A federal program is not like a Forrester notion the government changes all the time and programs change. People like her healthcare we have never had any reduction in benefits than Medicare we have added benefits and that will not change those people want the benefits in the future and perhaps more benefits I am certain we will find a way to pay for those benefit the question is what other things always spend less money on so today we use the on the Medicaid side education and other things being crowded out by the increasing cost of Medicaid for the states. That's a concern but I do not think it means we will not have the program in the future I think it means will have a greater tax burden or we will not have some other things because we have decided we like to have a lot of healthcare. Are there ways that politicians are the NFL making Medicare more affordable in the future -- I mean more sustainable in the future ways to maintain this money this allocation so it does not get dissipated. In the short run we have done that so from 2000 to 2008 we had a growth rate of 5% in the Medicare program and in 2013 I was less than 1%. We do expect it to pick up in the future but the majority of the growth and cost is not the aging or the increased number of beneficiaries that the new and expense of services and how we handle those in hope by creating more sophisticated methods of paying providers you may know the secretary has given us the goal take it to having 80% of our payments in the next few years based upon quality measures so I think we're moving toward an efficient system that pays more for value than simply the volume of services and that has shown some ability to moderate costs going forward. I will end up there and I want to thank my guess I've been speaking with David Stein regional administrator for the US centers for Medicare and Medicaid and Susan is the codirector of the Institute of health law studies at the California Western school of Law thank you so much. Thank you for having us.