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The dilemma of rising medical costs and the future of Medicare

2011-07-08

Medicare costs, as part of the universal increases in medical expenses

The total yearly cost for the Medicare program is inevitably rising as more and more people are covered by this most efficient of medical insurance programs.

In addition, there has been a steady inflation of costs, averaging about 5% yearly since before the Reagan administration.  The cost of medical care as a percentage of GDP has also risen virtually every year, from 8% to 16%.  Medical costs have been rising rapidly for many years despite all efforts to stop them, including draconian cuts in reimbursements to doctors and hospitals.

Why have costs risen so rapidly?  What can be done to check this apparently inevitable increase before it overwhelms the ability of people and government to pay?

First, there have been increases in every category of expenses.  Whatever is causing this has a universal reach.  Second, there have been increases in most categories of profit, from pharmaceutical companies to insurance companies to physician’s income.  Hospitals, however, have not participated in the profitability rises, even as their expenses and charges inevitably increase.

Third, there have been dramatic changes in treatments.  New drugs, new diagnostic devices, and new therapeutic modalities have all been introduced, with higher prices attached to all new products and services.

Fourth, there have been many occurrences of fraudulent expenses, from obvious things like fake pills manufactured by criminal enterprises to gray areas such as the use of multiple expensive diagnostic modalities by physicians.  Criminals and money grubbers have had the perception that medical care is a gold mine to be exploited for personal enrichment.  This applies to students who choose medicine as a well-paid career no less than it applies to entrepreneurs who set up store front operations to supply medical therapeutic devices based on orders from patients who have sold their insurance card numbers to venal clerks at “Medicaid mills.”

Clearly, a broad reach for medical reform is needed.  It will be necessary to make judgments as to what percentage of GDP should be spent on medicine.  Finally, it will be necessary to make ethical decisions based on the issue of futility for end of life care, quality of life, drugs such as Rogaine, cost-effectiveness, compensation for patients injured by malpractice, and many other ethical issues.

An example of the contrasting costs and benefits to be found with drugs includes the cases of Avastin and Lipitor, two new drugs that are still “on patent” and thus have mini monopolies on the therapeutic drug market.

What benefit does a drug for cancer that costs $88 thousand have?  It may stop tumor growth for one to five and a half months.  But it doesn’t lengthen life or improve the quality of life.

What benefit does a pill for cholesterol have that costs $10,000 for a lifetime supply?  It may prolong survival for three to five years and delay the onset of stroke and heart disease, thus improving quality of life at the same time that it extends life.

These are examples of the controversies facing those who would cut medical expenses.  They will be explored thoroughly in the communications to follow.

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