FRANK BERNHEISEL

On Medicare Spending

These are excepts from a New York Times article by David Leonhardt that I felt was of interest to many LCC readers:

The huge budget deficits that the [US] faces in coming decades are, above all, because of Medicare. The program will have to cover growing numbers of baby boomers while health costs are likely to keep going up. (Projected to go from five to ten percent of the federal budget.)

It won't be possible to pay the bill by cutting other programs. They're not big enough. Making big cuts to everything but Medicare and Social Security -- shrinking the military and other programs to their smallest share of the economy since World War II -- might save $200 billion a year by 2035. But by then, annual Medicare spending is projected to grow by more than $1 trillion. So any deficit strategy needs to focus on Medicare.

In the new issue of the journal Health Affairs, two doctors, both former Medicare officials, have laid out a plan to do so. It would give expensive new treatments three years to prove that they worked better than cheaper treatments, or their reimbursement rates would be cut to that of the cheaper treatments...

The treatment of prostate cancer offers a good example of the trouble with the current system.

The brief version is that the options for treating prostate cancer include three forms of radiation.

• One of them, three-dimensional radiation, costs Medicare about $10,000.
  
• Another treatment, a targeted form of radiation known as I.M.R.T., came along a decade ago and initially cost about $42,000.
  
• Lately, Medicare has also started covering a third, proton radiation therapy, for which it pays $50,000.

http://www.nytimes.com/2010/10/20/business/economy/20leonhardt.html?_r=1&emc=eta1