Medicare: the Great Facilitator

On July 30, 1965, President Lyndon Johnson signed Medicare (and Medicaid) into law. In the last fifty years, it has evolved further—adding coverage for those with disabilities, regardless of age, ditto for those with advanced renal disease; adding a hospice benefit, a prescription drug benefit; and creating a private, managed care alternative (most recently known as Medicare Advantage plans). Along the way, it has stimulated changes in the way health care is delivered to its now 40 million members by introducing prospective payment for hospital care (resulting in shorter hospital stays and the burgeoning of the post-acute industry), by promoting the integration of care across multiple sites (office, hospital, nursing home) through the creation of Accountable Care Organizations, and by beginning to pay for quality rather than volume (incentivizing physicians, for example, to prevent readmissions after patients have been discharged from the hospital). So what do we know about the impact of Medicare on patients’ health and well-being? The most recent issue of the Journal of the American Medical Association is devoted almost entirely to the effects of Medicare. The results? Older patients (and others covered by Medicare) are doing better than ever.

Mortality for patients enrolled in Medicare fell from 5.3% in 1998 to 4.4% in 2013, a sizable drop. Now just because Medicare patients did better doesn’t mean that Medicare caused the improvement. The great improvement in mortality at the beginning of the twentieth century was attributable primarily to better public health—things like clean water and improved sanitation—rather than to medical interventions, as Rene Dubos explained in his seminal  1959 book, Mirage of Health. More recently, Michael Marmot has persuasively argued that longevity is affected by the position in the social hierarchy, by which he means relative position in the pecking order, not just income or education. So while medical care does matter—there has been a marked decline in mortality from heart disease, due at least in part to new medications and coronary care units, not just to better nutrition and exercise—it’s rarely the whole story. And there’s good reason to believe that while Medicare didn’t cause the recent fall in the death rate directly, it did facilitate the decline by paying for hospital care, medications, and outpatient treatments.

Other trends are similarly impressive. Hospitalization, at least among patients enrolled in fee-for-service Medicare (we unfortunately do not collect data on patients enrolled in Medicare Advantage programs except whether they die), also declined: from 35 hospitalizations/10,000 person-years to 27 from 1999 to 2013. Hospital length of stay fell also, from a median of 5 days down to 4. And fewer people end up in the hospital during their last month of life. All this while Medicare expenditures per person fell from $3250 to $2800.

As with mortality, these other trends are associated with enrollment in Medicare but cannot be assumed to be caused by the Medicare program. But what is clear is that, as I argued in my paper, How Medicare Shapes the Way We Die, Medicare is the great facilitator. It affects what we die of, where we die, when we die, and how we die. In particular, it helps determine the procedures we have, the drugs we take, and the diseases we suffer from. It achieves this by providing a stimulus to inventors to innovate and device manufacturers to produce machines and physicians to promote them, just because the inventors, manufacturers, and physicians were guaranteed to be handsomely reimbursed for their work.  The new data suggest that Medicare does the same for the way we live when we are old. Here’s to the next fifty years!