Understanding the Ryan Medicare Plan

TO: Senator Richard Burr (R-NC)
FROM: Robert Swendiman, MD MPP
DATE: September 28, 2012
RE: The Path to Prosperity Plan

While your joint proposal with Senator Coburn (R-OK) and Representative Ryan’s “Path to Prosperity” are both constructed around the concept of premium support for Medicare beneficiaries, there are key differences that warrant your consideration. Rep. Ryan’s plan places hard limits on future Medicare expenditures, by means of fixed annual caps on spending, which may expose seniors to higher out-of-pocket medical bills over time. The Path to Prosperity also raises the age of Medicare eligibility gradually over the next two decades. These effects should be weighed carefully in light of financial risk to current and future Medicare enrollees.

Cost Containment. Rep. Ryan's plan allows private insurance companies to compete with traditional fee-for-service (FFS) Medicare, mitigating cost growth through competition. The Path to Prosperity also establishes a new “Medicare Exchange,” overseen by the Centers for Medicare and Medicaid Services, where seniors can choose among a range of insurance plans (with traditional Medicare included as a choice). In the Exchange, the second lowest bid will determine the exact amount of federal premium support to individuals, estimated at about $7,500 per person in 2023. All plans must offer actuarially equivalent benefits to traditional FFS Medicare, though it is important to note that these benefits will not necessarily be the same. Individuals who choose higher cost plans will have to pay the difference in premiums, and those who pick the lowest cost option will receive a rebate.

In contrast to your proposal, the Seniors’ Choice Act, Rep. Ryan would limit the annual per capita premium support to match growth of nominal (adjusted for inflation) GDP plus 0.5%. If premiums rise faster than this rate, seniors will have to cover the excess expenses out-of-pocket (with some adjustment for income). This lower cap contributed to the loss of the bipartisan support of Senator Ron Wyden (D-OR), because it shifts more costs to seniors in the future. He had originally cosponsored a similar plan with Rep. Ryan, employing a 1% cap. In March, the Congressional Budget Office (CBO) evaluated Rep. Ryan's proposal against current predictions of Medicare spending. Using its “extended alternative fiscal scenario,” which more accurately predicts the political climate than an evaluation with no changes in current law, CBO estimated that traditional Medicare expenditures would increase from 3.25% of GDP today to 7.25% by 2050. In comparison, Rep. Ryan’s proposal would cut 2050 spending projections by a third, with Medicare representing only 4.75% of GDP.

With passage of the Affordable Care Act (ACA) in 2010, the Medicare Board of Trustees estimated an extension of the Medicare Trust Fund’s solvency from 2016 to 2024. Repeal of ACA, as proposed by Rep. Ryan, would reverse these dates; however, his plan would provide significant long term savings, and few believe Medicare would ever be allowed to “go broke” in the short run.

Financial Risk to Seniors. The primary concern with these hard caps on federal subsidies is that premiums will rise faster than nominal GDP plus 0.5%. Over the past few decades, the annual cost of health insurance per capita has risen approximately 2% per year faster than GDP growth. While competition within the Exchange and incentives for diminished utilization would help private plans lower costs, CBO in 2011 predicted that this scheme would still raise out-of-pocket costs for seniors over time. This is true for two reasons: first, private insurance plans have higher administrative costs and provider payment rates compared to traditional Medicare; and second, the federal premium support will grow proportionally smaller as medical inflation continues to surge.

CBO admits that its predictions contain significant uncertainties, and partisanship has steered the rhetoric concerning the merits and limitations of this approach. However, one thing is clear: with rapidly rising costs, along with fiscal uncertainties that surround the health care industry in general, the potential risk of cost-shifting medical expenses to seniors is real. This hard limit on spending is the fundamental difference between your Seniors’ Choice Act and Rep. Ryan’s Path to Prosperity.

Access to Care. Both your proposal and Rep. Ryan's plan would increase the Medicare eligibility age to 67, although the latter takes a more gradual approach. Medicare beneficiaries who are eligible prior to 2023 would remain in traditional FFS Medicare. Starting that year, the Medicare eligibility age would increase by two months each year until it reaches age 67 in 2034. CBO analysis projects that raising the Medicare age would cut total Medical spending in 2035 from five percent of GDP to 4.7%, a net savings of about $150 billion. However, many unemployed seniors would bear the cost of insurance themselves in those last two years, likely finding themselves either paying for expensive plans in the individual insurance market, or uninsured.

The Bottom Line. Like many current proposals, Rep. Ryan’s plan does little to change the underlying drivers of rising costs in the health care industry. The Path to Prosperity does, however, have a very strong emphasis on reducing federal Medicare expenditures, though it appears to expose seniors to more out-of-pocket costs in the future. These issues should be considered simultaneously when weighing support for this plan.

Breaking Down the New York Soda Ban

In my Ethics and Political Philosophy class, I had the opportunity to contemplate the following prompt... Recently, New York City made international headlines by banning sodas and other sugary drinks larger than 16 oz. from being sold in restaurants, on the street, etc. Can this sort of paternalism be justified in terms of political morality? Take a stand and defend it.

While pundits debate whether the now famous “soda ban” will improve the general health of the New York City citizenry, the merits of this law are defensible without employing arguments regarding social harm. With over a third of Americans categorized as obese, this legislation encourages residents to make health-conscious decisions regarding their diet (albeit in an unapologetic fashion). However, for this clear example of state paternalism to be justified, it must satisfy several conditions: the choice must be inherently “irrational;” there must be a demonstrated lack of information present; true choice must not be limited; and the state’s restriction must prevent serious and irrevocable harm.

We must first agree that choosing to become morbidly obese would be irrational. This is by no means an argument of aesthetics, but rather one of self-preservation. Research has proven that obesity is directly linked to high blood pressure, diabetes, heart disease, etc., and most Americans do not find these debilitating conditions desirable. These diseases are extremely costly, and they severely impair an individual’s quality of life. Excessive consumption of high-caloric beverages is a major contributor to the obesity crisis. Soda is not the only form of “empty calories,” but it is an obvious target for improving public health. As a physician in training, I was taught numerous ways of counseling patients about weight loss. First trick of the trade? Eliminate “liquid sugar,” which patients can do without changing the foods they eat. The proof? An extra-large Coca Cola from McDonalds is about one fifth of a person’s recommended daily caloric intake.

Some say, “Everyone knows sodas are bad for you.” I would suggest that advocates of this statement spend a few days in a family doctor’s office, where they will see just how wrong this assertion is. There is much confusion about how diet can affect our health, and even more denial about seemingly straightforward scientific data. But there are also structural reasons for the lack of good information about healthy choices. In the present case, the “default” size of sugary drink options at fast food chains is often 20 ounces. This is promoted as “normal,” and generally there are no choices smaller in the value meal. Such a marketing strategy immediately biases the consumer towards making an irrational decision; a “normal” person does not need over 200 calories in a drink at each meal (in the 1950s, the only drink size McDonalds offered was 7 ounces… have our bodily needs changed that much?!). While the soda ban does add a new limitation, consumers were already limited by their default options. Under the new soda ban law, consumers will have to make an active choice to opt out of the healthier option, back to the unhealthy, former status quo.

Yet, even if excessive consumption is irrational, and even if consumers have all the information needed to make an educated decision, isn’t how much soda I drink still my choice? Absolutely, and it is imperative to understand that consumers’ fundamental choices have not changed. At establishments affected by the soda ban, a citizen who wishes to drink 40 ounces of soda will still be able to purchase 40 ounces of soda (by purchasing two 20 ounce drinks). True, the transactional cost may rise, but choice has not been limited; the purchaser’s options have simply changed. In addition, large sodas will still be sold in grocery stores, vending machines, and at any institution that does not receive a health grade. Dairy drinks, fruit drinks, and alcoholic beverages will be, for all intents and purposes, spared. And the size of “diet” drinks will not be regulated in any capacity.

Some argue this legislation will not curb obesity rates in New York City. However, whether or not the ban works does not affect the original justification. Others argue that this ban sets a dangerous precedent. If the size of soda cups should be regulated, why not the ban sale of any burger over half a pound? Or ban the purchase of more than a hundred French fries at a time? I understand this concern, but this argument misses the point of the New York City legislation. Our country needs to be having this conversation. Obesity is killing this nation, both financially (in terms of health costs) and literally. New York City is not banning the consumer from drinking 600 calories; the law simply empowers consumers to ask themselves, should I drink 600 calories? We can still answer an emphatic “Yes.” But so long as people choose irrationally, one can argue that public policy can and should foster positive and educated decision-making. This law is not a limit on personal freedom; it provides a forum in which Americans can make healthier choices. The soda ban does this while still tipping its hat to political morality.


(see conditions as described by Thompson in Political Ethics and Public Office and Thaler and Sunstein in Libertarian Paternalism is not an Oxymoron)

Guest Blogger - Dr. Stephen Buie

Dr. Stephen Buie is a Psychiatrist at the Pisgah Institute in Asheville, NC, who was invited to speak to this year's class of first year medical students at UNC during their White Coat Ceremony. He graduated from UNC-Chapel Hill undergrad, as well as the medical school, and now works as the Psychiatry clerkship director in Asheville for the longitudinal clerkship. He was my mentor last year, and will be my first "guest blogger." Enjoy!

When you see a white coat, what is your first thought? To you as a medical student you might think I can't wait 'til I get one of those! The white coat signifies reaching your goal to be a physician. A long white coat means that you have become faculty! Oh my! I'm not going to talk about what Freud would say about the long coat vs. the short coat.

When your patient sees a white coat, what is their first thought? It might cause enough anxiety to raise their blood pressure, causing the white coat syndrome. In my specialty, psychiatry, it is the men in the white coats who are coming to take you away!

So, why do physicians wear white coats? When I was asked to give this talk, it occurred to me that I had no idea where the white coats came from. As I first started reading about it, the answer appeared to be that doctors began wearing white laboratory coats to appear more scientific.

Doctors in the 1800s were struggling to establish credibility in the eyes of the public. There were not many effective treatments available and often the doctor's role was one of informing the patient and family what condition the patient suffered from and what the likely course of illness would be. They provided assistance when possible and comfort as they could, but many times they were limited in what they could do and sometimes their interventions made things even worse. But, as I read more about it, a much more interesting story emerged.

Until the late 1800s, physicians wore black clothing, which was pretty much what all the men wore in those days. They cared for their patients and performed surgery in the same type of clothes they wore out on the streets. Surgeons in those days wore dark surgical frock coats. A dirty surgical coat was seen as a sign of the surgeon's experience. They allowed blood and pus to accumulate on their clothing and would not wash or change coats day to day or from dissecting lab to operating theater. They thought the emission of pus from a wound was a good sign that the dead tissue was being carried out of the wound. The smell that accompanied their dirty frock coats was referred to as "that good old surgical smell."

On your program there is a painting by Thomas Eakins entitled The Gross Clinic with all the surgeons and students wearing dark clothes. Gross was not a description of how bad it smelled or even what the patient's mother is thinking over behind the surgeon as she sees her son operated on.

Rather, Samuel D. Gross was the name of the surgeon standing there, bloody scalpel in bare hand, holding forth to the operating theater full of students watching with rapt attention. Those are your professional forebears from 1875. Dr. Gross was the Chair of Surgery at the Jefferson Medical College in Philadelphia and one of the most eminent surgeons in this country. The patient had osteomyelitis of his femur. For the parents, that is a bacterial infection in his thigh bone and is very difficult to cure, even in these days of antibiotics.

In England, a quiet revolution had been under way for about ten years before this painting. A young surgeon named Joseph Lister read the writings of Louis Pasteur describing how bacteria cause putrefaction of wine and beer.

Lister had the realization that bacteria could also cause putrefaction in surgical wounds. He began using a solution of carbolic acid to sterilize his surgical equipment, to wash his hands prior to operating and even to spray on the wound itself. He studied the rates of postoperative infections and survival and published a series of five papers in Lancet from March to July of 1867. His fame spread and surgeons in Britain and Europe began adopting his techniques that saved lives and reduced post surgical infections.

His approach was not so widely accepted in the US. In fact, Dr. Gross invited Dr. Lister to come to the United States to lecture in order to refute his claims about the antiseptic technique.

Lister came to present at the International Medical Congress which was held in Philadelphia in 1876. The congress met as part of the Centennial Anniversary of the signing of the Declaration of Independence.

Lister came and gave a three hour discourse on his methods and outcomes. The American audience was not impressed. The president of the International Congress was quoted as saying, "Little, if any faith, is placed by any enlightened or experienced surgeon on this side of the Atlantic in the so-called (antiseptic) treatment of Professor Lister."

There was one enterprising young man who attended that lecture and saw an opportunity. Robert Wood Johnson of the future company Johnson and Johnson decided to develop and mass produce sterile sponges and dressings and other surgical supplies based on what he heard Lister present that day. He later published a book titled Modern Methods of Antiseptic Wound Treatment which was the first handbook of sterile technique published in this county. Of course in the spirit of free enterprise there was a complete listing of Johnson and Johnson products in the back of the book.

The American surgical establishment persisted in their ways for the next several years until their beliefs were rocked by a national tragedy, the assassination of a president.

James Garfield was elected president in 1880. He was considered by many to be the finest orator of his age. He was a progressive man, advocating for the end of the patronage system in government and for the full equality of slaves freed by the civil war.

Only 4 months after he took office, the president was shot in the back by a delusional assassin. The bullet fractured the 11th and 12th ribs, fractured a vertebra without damaging the spine and came to rest deep inside the left side of his back.

Unfortunately for the President and for the nation, the surgical team who cared for him had not adopted Lister's antiseptic technique. Within an hour of the shot, they were probing the wound with unwashed fingers and silver probes trying to find the bullet to remove it. They introduced bacteria into the wound with every procedure. The President lived for 80 days after the shooting and finally died of overwhelming infection. Autopsy revealed multiple pus-filled cavities. The presiding surgeon, Willard Bliss, refused to accept the findings of the autopsy, insisting that the President died of a broken back. Several prominent physicians of the day believed that the medical care he received killed the president, rather than the gunshot wound.

The public outcry following Garfield's death gave new credence to young physicians who had been advocating for Lister's antiseptic technique. As part of this movement toward the antiseptic approach, surgeons began wearing white surgical garb. The second painting by Eakins, The Agnew Clinic, was painted in 1889, 14 years after The Gross Clinic. The distinguished gentleman to the left, Dr. Hayes Agnew, was a professor of surgery at the University of Pennsylvania. The sterile instruments are stored in a container you can see between Dr. Agnew and the surgical team. In an interesting twist of fate, Dr. Agnew was one of the surgeons assisting in the care of President Garfield after he was shot.

Following Garfield's death and the public outcry about his medical care the antiseptic technique became widely accepted. In 1888, Johnson and Johnson published Modern Methods of Antiseptic Wound Treatment, which helped revolutionize wound care in this country. Two authors of the book: Dr. Hayes Agnew and Samuel W. Gross, son of Samuel D. Gross of the Gross Clinic painting.

So, what do we learn from this brief history?

Lister's research bridged laboratory and clinical science. He took the findings from Pasteur's basic research and applied them in the surgical suite to the benefit of countless patients. His studies helped begin a more scientifically based era of medicine. As physicians developed more scientifically based treatments the white coat became a symbol of our profession. But we must keep in mind both the light and the dark sides of that symbol. The same drive for excellence that has led to you sitting here, beginning your medical school education, can lead to a false sense of knowing more than you really do. It can lead you to feel superior. It can lead to a mind closed to new information. Dr. Gross was one of the leading surgeons of his time and was responsible for many surgical innovations, but he was unable to see past his own beliefs about the truth and so was unable to accept Lister's findings. So, the first lesson is to remain humble in your knowledge. Remain truly a scientist, always willing to test your hypotheses and holding no truth to be sacred.

A second lesson is that science guides us, but does not rule us. Objectivity and reliance on science can be carried too far. Our randomized, double blinded, placebo controlled studies can't cover all of the situations you see in a clinical practice. You will always have to make judgments about the individual who is sitting in front of you. You have to be comfortable making decisions based on probability rather than certainty.

When we say the word antiseptic, what do we think of? For those of us in the medical profession, we think of cleanliness and decreased infection rates. In our general culture antiseptic also has the negative connotations of being sterile, unfeeling, cold, analytical, and aloof. We can become so enamored of our scientific knowledge; so focused on the mechanisms of disease that we lose sight of the human beings we are treating. So strong is the pull of scientific fact and desire for certainty that it is almost impossible for this not to happen.

Often, the emotional side of the work we do is painful and we retreat behind our white coats of scientific certainty. Patients are reduced to their medical conditions so you don't have to feel their suffering. You find yourself thinking of the MI in the heart tower or the ALS on neurology. So, we must act with science as our foundation, but remember that in its practice, medicine is an art.

Which leads me to the third lesson, which is about compassion. If you get to really know your patients as people, you will be have more compassion for them. If you think about how you would talk about one of your family members in the hospital, you would never refer to them by their diagnosis. It wouldn't even occur to you to do so.

I imagine that you are all compassionate individuals and that compassion was one of your motivations for entering medical school. But at this point, yours is an abstract, untested compassion. Patients sometimes are angry, frightened, drunk, high, belligerent, and physically aggressive. They may curse you, spit on you, walk out on you, throw up on you and perhaps worst of all, refuse to follow your recommendations.

Medical training is exhausting so you often have little emotional reserve yourself. Yet, you are expected to be friendly and caring at all times. In the worst cases we let our emotional reactions cloud our judgment and affect our care of those patients.

Sarcastic comments are made about the patient who came in to the emergency department with a suicide attempt or about the massively obese woman who is hypertensive and diabetic and who just won't lose weight. Or the opiate addict who comes in asking for pain medications.

As a student you will hear residents and attendings make humorous, sarcastic and sometimes cruel comments about patients. Every year at the beginning of the year we hear our third year students in Asheville talk with shock about how patients are talked about in rounds at the hospital. Now granted, they start the year on surgery and Ob-Gyn, so that biases the sample, but we all have talked that way at some point in our training or later when we are stressed or frustrated.

It is much better to channel your feelings into sarcasm than to let it effect your care, but I encourage you to see this as a phase you will go through but grow out of. You grow out of it by increasing your ability to feel compassion.

In my experience, compassion is perhaps one of the more difficult skills to learn. Some people are easy to feel compassion for, but feeling compassion for your difficult patients often does not come easily. I am convinced that compassion is a skill that can be developed along with the skills of taking a history and performing a physical exam or a mental status exam.

When you find yourself angry or resentful with a patient and wanting to make a sarcastic remark about someone, acknowledge that within yourself. Practice not saying anything about a patient that you wouldn't say straight to their face. Learn as much about them as you can within the limits of your time with them. One thing I've noticed among the senior teachers of the medical students is that they are much less likely to engage in this sort of banter. My experience is that after you get to know patients over several years and understand the reasons behind their behaviors you feel much less judgmental toward them. Once you have had that experience with a few hundred patients you reach a point where you are less judgmental even from the beginning of your relationship with a new patient.

So, when you put on your white coat, let it remind you to be humble in your knowledge; scientific but artful; and to be compassionate toward even your most difficult patients.

I wish all of you the best in moving forward with your careers in this wonderful, amazing profession that you have chosen and look forward to meeting some of you in Asheville in another couple of years.

Why Am I Here?

I have occasionally asked myself this very question over the past few weeks. Mostly, I need to ask myself this because my entire year here is about perspective. In what ways can medicine improve and how can other disciplines inform me to be part of that change? It is easy to get lost in the non-medical grind (ambling around a new city or studying for tests that seem to have little application to a patient’s gouty feet), but the classes and extracurricular activities here do relate back to medicine quite well. It’s just up to me to find those connections and run with them. So, for the fall semester, these are the core classes filling up my weekdays…

• MLD 101: Strategy, Structure, and Leadership. Easily one of my favorite courses, every Tuesday morning I enjoy a jambalaya of leadership development. The class is almost 100% case-based, with very little true lecture to get in the way of the practical application of topics. One day we practiced negotiating a deal to buy property from a national coffee chain threatening to block the ocean view of our “homely” Bed and Breakfast, and then this week we’re organizing T-shirt drives for the homeless.
• DPI 201: The Responsibilities of Public Action. An introduction to political philosophy, this course gives me the opportunity to reflect on how government and health care intermingle, and what the ethical implications of this relationship are. Most rewarding will be the writing I get to do throughout the course. I will be blogging here about the rights of government via paternalism in health care, whether or not health care is a “right,” and personal responsibility in patient care. Awesomely, our professor wants us to write our papers in the format of blog posts (can we say fate?), and the class will actually set up its own blog in the process. I will post all my arguments here (the first will be on the New York soda ban in a few weeks).
• API 201: Quantitative Analysis and Empirical Methods. Intro to statistics. If I didn’t love sensitivity and specificity as a second year med student, it’s time to start. This class will greatly enhance my ability to assess the medical literature and design research projects. Other than that, it’s just more math…
• API 101: Markets and Market Failure. This is a fancy-shmancy course title that really means I’m taking Econ 101… again. Given that I almost failed this class in college, I am here for redemption. As a second semester freshman in college, I showed up to the first class and the last class, and then took the final for 100% of my grade (results = poor). Mom and Dad, I am happy to report I have only missed ONE Economics class since the start of school, and that’s because I was at a conference in Chicago (finally a legitimate excuse). My only defense of my actions in college was that I thought the 9 o’clock start time infringed on my rights as an 18 year old. It did.
• SUP 500: Introduction to Health Policy. Fantastic course so far, taught by two health policy experts with a lot of DC clout. I’ll write three memos this year, and I’ll post them all. More to come on this course as it progresses. This is obviously the most applicable to my medical training.
• The Center of Public Leadership. With the Dubin Fellowship, every Wednesday night we sit amongst the other scholars to work on leadership development and personal growth. So far our experience has been unreal, and it has confirmed my decision to come to Kennedy. We’ve had public speaking workshops, speeches by eminent leaders in different fields, and of course, bacon-wrapped scallops, lobster, and corn-on-the-cob at David Gergen’s house on the Cape. This week I will be leading a medical ethics case conference for the Dubins, as each of us has an opportunity throughout the year to learn from each person’s life and area of interest (the case I will present actually was posted earlier on this blog - Ethics Committee). We also meditate once a month.

It has been a whirlwind tour so far, and additional extracurriculars will keep me busy. I look forward also to working as a member of the Advisory Council for Rural Surgery (through the American College of Surgeons) for my thesis work (more to come on that as well). I can tell already that the year will go by waaay too quickly.