Medicare Turns 40

In July 2005, Medicare celebrated its 40th anniversary. In 2004 the federally financed and administered program provided health insurance for more than 40 million people over 65 years of age or permanently disabled at a cost in excess of $300 billion dollars. That is almost one out of every five of the $1.6 trillion eagerly consumed by the U.S. healthcare industry overall.

  To its supporters Medicare is a model of what government can do to better the lives of its citizens. To its detractors the program, with its admittedly voracious appetite for consuming federal resources, is a prime candidate for privatization. In the last few years two major issues have dominated Medicare politics; first, the controversial prescription drug benefit scheduled to come on line in 2006; and second, forecasts of insolvency no later than mid-century as a result of inflating costs and tens of millions of baby boomers reaching their 65th birthday.

  A third issue, given far less prominence by both policy makers and the media, is the continued failure of Medicare to assure good quality and efficient medical services for its beneficiaries. According to the Commonwealth Fund, many states with low quality care perversely receive the most money from Medicare. For example Louisiana has the distinction of having both the highest spending per Medicare beneficiary ($8,000+) and the worst quality of any state. In New Hampshire, which has the highest quality, Medicare spends approximately $5,000 per beneficiary or 40% less than Louisiana.

  To mark the anniversary, The Washington Post published a series examining Medicare’s record in overseeing the safety and quality of the services it covers. The author took a hard look at the two non-federal organizations charged with that responsibility; the Joint Commission on the Accreditation of Health Care Organizations (JCAHCO) and the Quality Improvement Organizations .

  To their credit, those who created Medicare recognized the need for setting and enforcing quality standards for the thousands of hospitals slated to receive tax dollars to care for the elderly. So, in 1965 they turned to JCAHO, a not-for-profit organization created in 1951 by, among others, the American Hospital Association and the American Medical Association, to independently evaluate hospitals. Accreditation by JCAHO is required before a hospital can be paid by Medicare.

  Today, JCAHO takes in $113 million annually, mainly from hospitals that pay large fees to be accredited so they can receive Medicare dollars. Accreditation means a hospital has successfully passed a JCAHO inspection once every three years. Inspections are traditionally announced well in advance, although JCAHO promises to begin “surprise” visits next year. And, a subsidiary of JCAHO consults (for a hefty fee) with hundred of hospitals each year to help them to get a passing grade on their inspection. These “crib” courses bring in another $10.5 million to JCAHO each year.

  Over the years little connection has been shown between JCAHO accreditation and any guarantee of the safety and quality performance of a hospital. For example, the Redding Medical Center in California was fully accredited after a 2002 inspection – shortly before it was discovered that surgeons there had been performing hundreds of unnecessary heart surgeries on unsuspecting patients. Medicare spends almost $300 million annually to assure the quality of care provided by doctors, hospitals and nursing homes by contracting with 53 Quality Improvement Organizations (QIOs) scattered across the country. QIO boards, according to Gilbert M. Gaul, the writer of the Post series, are “dominated by doctors and health providers” and “operate in secrecy with little oversight or accountability.”

  Sadly, for 40 years Medicare and Congress have seen fit to invest no more than $1 or $2 out of every $1000 it pays to the medical industry to assure safety, quality and efficiency. Until this attitude changes, Medicare beneficiaries remain in harm’s way. What makes the status quo even more frustrating is that the researchers found 30-40% of Medicare spending is wasted on inappropriate or unnecessary care. That means more aggressive oversight of the health care industry by the federal government would be a “win-win” for both taxpayers and patients.

Arthur A. Levin MPH, Center for Medical Consumers © August 2005

 

 

 

 

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