It’s official: combined federal spending on Medicare and Medicaid has reached 4.6% of the Gross Domestic Product (GDP), up from 4.2% in 2005, and on track to reach 5.9% in 2017 and a whopping 20% in 2050. These sobering estimates come from the Congressional Budget Office, not from a fringe radical group or an ultra-conservative think tank (see Peter Orszag and Philip Elis, “The Challenge of Rising Health Care Costs—A View from the Congressional Budget Office,” New England Journal of Medicine 2007; 357: 1793-5). At this rate, just about half of every tax dollar will go to fund these two programs by mid-century. This rate of expenditure is simply unsustainable—it would drive out support for education, roads, and parks, not to mention national security. Expenditures on Medicare will have to be cut and cut substantially. The biggest challenge for the future health of the baby boomers is how to restructure Medicare to provide good care at an affordable price.
The trick will be to put the brakes on technology, because it is the development and diffusion of new medical technology that has repeatedly been shown to be the engine fueling the growth in costs (for example, see L. Lubitz, “Health, Technology, and Medical Care Spending,” Health Affairs 2005; W5: R81-R85). To control technology without stifling progress, we will need to figure out to a far greater extent than we do today just how much benefit an innovation provides and to whom. Right now physicians and patients embrace technology—and Medicare pays for it—if the intervention has been shown to be beneficial, regardless of how small the benefit relative to either its cost or to alternative treatments. The effect of this strategy is that some regions of the country spend three times as much per Medicare enrollee as other areas with no discernible benefit in any health outcome (see the Dartmouth Atlas of Health Care, www.dartmouthatlas.org).
We will also have to recognize that older people are not a homogeneous population, and technology that is beneficial for one person may not help—or may even hurt—another. Accepting that different people benefit from different approaches to care, not just because they have different values and preferences but because of their underlying health status, will require a shift in our thinking. What we will need to do is to design different “pathways of care” for older individuals depending on whether they are robust, frail, or dying. The robust should receive something like today’s Medicare program; the frail, whether suffering from physical or cognitive frailty, should get less high tech and more disease management and home care; and the dying should all have palliative care resembling today’s hospice program.
Designing new approaches to care that are tailored to meet the needs of particular patients will enable the baby boomers to have a good old age: they will be offered technology when it can make a substantial contribution to health and well-being but will not subjected to invasive and painful technology when it is of little or no benefit. This is precisely the strategy we need in order to save ourselves from financial ruin. It also happens to be a compassionate and appropriate way to provide medical care to the elderly.