Medicare For All – The 2019 Version: Reality Check (Part 1)

First and foremost, happy new year!

I have taken a break from writing these blogs for several reasons.  One, I have been super busy with new projects.  Two, I needed a break to get a wider perspective after the U.S. midterm elections.  Lastly, I needed to figure out how to address this new wave of healthcare reform called “Medicare For All” (MFA).

First, I will admit that I have some internal conflicts.  In my earlier life in this profession, I loved providing care to those that needed the most care – our elderly.  I have managed companies that provided care collectively to 40,000 Medicare and Medicaid beneficiaries.  It was an amazing experience, and will likely be again, as we renew our business interest in that segment of healthcare as a Medicare Advantage provider of services.

I am conflicted, because I have real empathy for those who are uninsured.  In my own life experience, I have had gaps in insurance coverage that have both scared me and had a major financial impact on me.  I also know how much this revised MFA will cost.  We will talk more about that later in this blog.

One last conflict is that I turned 59 during the (U.S) holidays last year, and though retirement has not entered my mind, I will be eligible for Medicare until 2025.  That is scary and remind me of the tidal wave of retirees that will hit Medicare in the next decade.

Medicare expects a record enrollment in Medicare from baby boomers in 2024 to be exact– the peak 65th anniversary or the peak year for our generation.  Therefore, I predict the next 10 years in healthcare will be the most stressful and likely the most innovative.  Remember that baby-boomer doctors are retiring at record numbers, as well, and that will impact access to healthcare for nearly everyone.  However, that is a story for another day.

Since 1991, when I entered into healthcare in South Florida (where millions have come to retire), Medicare or Medicare Advantage has been the main concentration.  First in just traffic, and later when I was in 100% managed care, it represented equally 100% of revenues.  Collectively, those 40 medical centers had thousands of Medicare visits a month.  Additionally, I managed several ancillary providers, third-party administrators, and even served on the board of a hospital for six years.  I note this only to reference that I have widespread healthcare delivery experience.

The battle cry for a “single-payer” healthcare system in the United States goes back decades.  The most recent and loudest voice today is that of recently elected United States House of Representative Alexandria Ocasio-Cortez or “AOC”, as her fans refer to her.  I have watched her emergence into the headlines with pride as a Hispanic American, surprised as a businessperson, and with serious concern as a taxpayer.  My biggest concern as a healthcare executive, is understanding the facts and our system of care today is near the breaking point.  We cannot immolate a single payer like most countries with socialized medicine, because the demographic impact today, is crushing.  It was a totally different experience for Europe and Japan coming out of the Second World War with exploding populations and rebuilding of industries, like healthcare, from the ground up.

I have a fascination for flying, so I will use that type of analogy to explain.  Adopting MFA today in the 21st century, would be like trying to change an airplane engine while the plane is in mid-flight.  It may not be impossible; however, who would volunteer to be a passenger on that first attempt?

I could explain all the pros and all the cons, and at the end, give the reader of this blog a summary; or I could just state the conclusion first and then explain the reasoning behind it.  I have many friends and colleagues and even some critics that have literally asked me to use my 28 years of experience in healthcare (at nearly all levels as mentioned earlier) to give them my opinion.

Without a single doubt, MFA will be catastrophically crippling economically, as well as destroy the current quality of care given today, to all Americans.  Let’s amend that last part – to most Americans.  Because the rich and wealthy will always have the best healthcare, regardless of whether we have a single-payer system or not.  We can look at the examples of those wealthy American citizens and residents of many of the socialized healthcare world that come to the United States for the best care available anywhere.  That’s not nationalism; that’s just fact. Headlines have been full of such examples, since I have been reading newspapers.

I would expect that MFA will have a material and detrimental impact on current beneficiaries of Medicare.  We are already experiencing pressures in providing care to Medicare beneficiaries, for two tectonic reasons.  First, the aging physician baby boomers are either limiting their practice times or restricting Medicare access due to continued cuts in reimbursements, technology requirements, and reporting requirements.  Secondly, they are leaving healthcare in staggering numbers.  We have talked about this many, many times in our blogs.

The economic challenges are also overwhelming.  We are convinced most Americans and most employers providing care to their employees, will not want to be part of an MFA program.

Let’s look at the gross numbers (all 2018/2019);

Total U.S. Population 328,285,992
Total U.S. Insured Population 300,000,000
Total U.S. Un-insured Population 28,500,000
Total Beneficiaries in Medicare 60,000,000
Total Protected in Medicaid 73,000,000
Total Insured by ACA aka Obamacare 8,500,000
Total Healthcare paid by US Gov. Medicare & Medicaid (inc. U.S. Military) $1,500,000,0000,000
State Contributions to Medicaid (+/-) $350,000,0000,00
U.S. Per Capita (per person) $10,661.43
Total U.S. Doctors active (+/-) 1,000,000
Number of doctors over age 56 (48%) 480,000
Number of U.S. Hospitals (inc. VA) 6,210
Average EBITDA US Non-Profit 1.5%
Average EBITDA ALL hospitals 6%

Medicare for All is an attractive idea, but also a fool’s gold rush.  Medicare as a system works well, as it provides care to those that need the most and complicated care.  I have seen it and lived it.  It also is relatively efficient, with less administrative cost than traditional insurance.  The dark side of Medicare is that it generally does not pay providers the cost of care.  I have also lived this.  If the entire country’s healthcare system was paid Medicare rates, we would likely have a catastrophic failure in hospitals and a massive contraction in providers, in what is now the largest industry in the U.S. (and the world).  We will talk about the good and bad of that in the next blog.

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