Senator Coburn on Medicaid: Let the Market Decide

Eli Y. Adashi, MD; Sen. Tom A. Coburn, MD


June 13, 2011

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Eli Y. Adashi, MD: Hello. I am Eli Adashi, Professor of Medical Science at Brown University and host of Medscape One-on-One.

Joining me today is Sen. Tom Coburn, a practicing family physician and a legislator, now in his second term as the junior Senator from Oklahoma. A former 3-term member of the House of Representatives, Dr. Coburn brings significant legislative experience to a national healthcare scene in great flux. As one of 3 physicians in the Senate, Dr. Coburn plays a key role in all matters healthcare. Welcome. It's wonderful to have you.

Sen. Tom A. Coburn, MD: It's great to meet you.

A Doctor on the Hill

Dr. Adashi: Those of us who marvel at your multiple accomplishments cannot help but wonder if you are still seeing patients, and for that matter, delivering babies.

Sen. Coburn: I stopped delivering babies the summer before last. I had a really interesting last case, but I stopped simply because I wasn't doing enough, and as you know, you start losing your skills. I'm still doing my continuing medical education and occasionally getting to see patients on a Monday morning.

Dr Adashi: That's terrific. Last Thursday you introduced a new bill that is designed to deal with the future financial solvency of Medicaid. Could you perhaps share with our viewers the central ingredients -- the high points -- of that bill and what drove you to propose this alternative in the mix that is currently on the Hill?

Empowering the States

Sen. Coburn: Along with Sen. Burns and Sen. Chambliss, I introduced the Medicaid Improvement and State Empowerment Act.[1] Basically the reason we introduced it is that it asks the questions, "Can we do Medicaid better? Should Medicaid be the same program in Ohio or New York as it is in Oklahoma? Are the demands the same? What are the variables that affect a patient on Medicaid?"

We know a lot of things about Medicaid, and number one is that most people have trouble getting access. We promise people coverage and we give them a Medicaid card, and then they can't find anybody to care for them. That's the first problem. Number two, we know the outcomes aren't as good even when you adjust for the different social strata and conditions, so that's really not very much of a promise if we're going to have a state-assisted Medicaid program. The idea behind this is to transfer the decision-making flexibility and capability of helping patients to the people who will care more about them than we do, which is their state, and allow that flexibility and creativity to flourish in the individual states. For example, Arizona has a complete waiver. They are spending less than the country's average on Medicaid, but they have everybody on Medicaid in an HMO [health maintenance organization]. There are positive and negatives things to that, but basically everybody has a medical home. North Carolina has a waiver; they have a medical home for everybody on Medicaid, and they have made tremendous strides in terms of outcomes and prevention.

What we want to do is let the real experiment begin with other peoples' ideas and send that money to the states and say, We're not going to let you go down, but wherever you want to go forward in terms of caring for your patients who are impoverished or need help, then go your way."

Can't Afford to Take Medicaid

Dr. Adashi: I couldn't help but note that there was a provision in the bill that would compensate providers at an improved higher level. Is this driven by your earlier comment that access to physicians has been limited?

Sen. Coburn: Yes. We know right now, from a couple of studies, that in primary care, whether it's internists, pediatrics, or family practice, 40% of them will not see a Medicaid patient. It's not because they don't want to. Basically, it's down to 2 reasons: (1) They can't afford to anymore, given that such a large percentage of their practice is Medicare, and (2) When patients are seen by specialists, only 35% of the specialists will see a Medicaid patient. The whole idea is that if you want to say, "We're going to help you," but then we're going to limit your ability to get there through an economic means, why don't we let the market decide what's available and what's accessible in Oklahoma or Ohio or Virginia? But let's let those market rates determine that.

Our problem in healthcare, Dr. Adashi, is that it costs too much. One out of 3 dollars spent in healthcare isn't helping anybody. If we're going to spend $2.6 trillion this year on healthcare and $850 billion isn't helping anybody, we ought to start thinking how to change the mix to where we have new ideas and maybe more local control rather than centralized bureaucratic control from Washington. That bill also repeals the increased number of people going into Medicaid. The original part of the Affordable Care Act said that 16 million new people would go into Medicaid. It's now estimated to be 25 million. I would just say that that's a false promise that Washington can't keep. If you enroll 25 million new people in Medicaid, they are not going to be seen. They are going to have to go outside of Medicaid to get care.

Dual Eligibles and the Disabled

Dr. Adashi: I also noted what I think is an important exclusion you inserted -- namely, to forgo the application of some of these new regulations to dual eligibles and to the disabled. What went into those considerations? What drove you to make those exclusions?

Sen. Coburn: First is they are a specialized class. Second is they are an expensive class. If you are sending it to the states, what we do recommend, or what we give as an option, is a managed care option for those individuals. In the states that have had some experiments on this, they actually save a lot of money when they individualize the care rather than institutionalize the care for these individuals. We have a capped entitlement, which means we are going to control the amount of money that is going to be spent. We didn't want to cap the entitlement on that group of people, and we don't know enough yet to know -- if you could do that -- what would be a fair amount. We know in the other areas, but in these areas we don't. For the dual eligibles -- the very poor (those who are on Medicare and Medicaid), those who are disabled, and on Medicaid -- we said, "Let's let the states experiment with how best to handle that, but here's the money."

Medicare As We Know It...

Dr. Adashi: Let's move to Medicare. I understand that you are in the midst of preparing new legislation that would address that institution's long-term solvency as well as, perhaps, operational characteristics. You are bringing to that table your experience with the cost-reduction commission and your recent involvement with the so-called "gang of 6." What, as you think about Medicare today, is your prescription, if you will? What general principles have you formulated in your own mind that would drive the bill that you are hopefully going to introduce?

Sen. Coburn: A couple of things are important. The first is to recognize that Medicare as we know it today is an impossibility 5 years from now. Just 5. We do not have the money to keep the commitments under the present system 5 years from now. It won't be there. To create an expectation that Medicare is going to be stable without changing it is patently dishonest. There is no way we have the money to afford to have Medicare to continue as it is.

What do we know about Medicare? We know that there is at least $80 billion worth of fraud in it a year. Some of it is physicians; most of it is not, but some of it is. The system is designed to be defrauded. Why do we see such a greater amount of fraud in Medicare than we do in private-sector insurance? One percent vs 10%-12%-15%-18%. Why the differential? What do we need to do to change that? So that's one thing.

Number two is how do you incentivize preventive care and disincentivize overutilization? We have a lot of that. How do you make it equitable in all parts of the plan? As I've become a senior, one of the things I've recognized that I had seen in my patients for years is that you think about your health more and you think about the future more. One of the things that happens as a consequence of aging and how we focus on our health and our future is that we are really vulnerable to pay out dollars that don't buy us much back. We want that security. We want everything over here tied up in terms of our healthcare. Consequently, the American people are exposed to a significant amount of money either through Medicare or a supplemental insurance policy but probably not in a positive way. How do you tell a senior, "Here's the max exposure you have every year, so you can quit worrying about it"? I did this with tons of my senior patients. I had them bring me their insurance programs. I said, "Let's just talk about this. You may have an untoward event, but you're paying $560 a month for this supplemental policy. Why don't you just take that money and put it in the bank? Here's your exposure, and after 2 years, you're way ahead of the game." I talked probably 85% of my patients out of supplemental insurance because they really get poor value, unless they are really sick or have chronic conditions.

Dr. Adashi: You are referring to Medi-Gap?

Sen. Coburn: Yes, supplemental policies. If we have a government-run program, why do they have to buy another program to take care of what Medicare doesn't cover? Why don't we create the expectation that people know what it will cover, they know what the max is, and put a maximum exposure for every senior in this country? How do we incentivize prevention? How do we disincentivize overutilization? How do we make sure we don't overutilize certain services, like home healthcare? Home healthcare is a wonderful benefit, but it's also markedly profitable for the agencies that are doing it -- same thing with hospice. How do we get that balance back? It goes back to what's wrong with healthcare. What's wrong with healthcare is that it costs way too much, first, but the reason it costs way too much is that everyone thinks someone else is paying the bill. As long as we have that disconnect, we're going to have a difficult time controlling costs, whether it's in the private sector or the public sector.

Where's the Revenue?

Dr. Adashi: It seems reasonable to assume that there will be some cost-reduction measures in the bill. What can you tell our viewers about the prospect of a revenue component as well in this plan, if any?

Sen. Coburn: There is no question that our government has a revenue problem, partly because our economy has not fully recovered. I don't think we have to go there. I use this example: People tell me that American citizens aren't smart enough to buy their healthcare. I don't buy that. I've delivered a lot of Amish babies. We have a large Amish community north of my hometown. They don't have insurance, but they are the best purchasers of healthcare I know because they want to know where every dollar is going. They want to know where they can get something done cheaper. They're questioning whether they need to have it done. Consequently they buy their healthcare for about 40% less than everybody else, because they are great, avid consumers. That's what we need. As a professional, it's really good if a patient questions why they need a test.

The other thing we need, and it refers to our profession, is to be a whole lot more responsible with how we direct where money is spent. There is a finite amount of money in this country for healthcare. We've reached the max. We're not going any higher. One or 2 or 3 things are going to happen: For seniors, it's going to get rationed if we don't change it to a better model, which means somebody besides you and your physician is going to be making the decision about what your healthcare is going to be. We can't stay competitive worldwide, and we certainly can't afford a continued doubling or tripling of the inflation rate in healthcare compared with everything else; we just can't do it. We have to figure out how best to do it, and I think it's reconnecting people with making the decision, trusting that if it's in their own best interest financially, they'll make different choices.

Dr. Adashi: On that note, sincere thanks to Sen. Coburn and you, our viewers, for joining Medscape One-on-One. Until next time, I am Eli Adashi.


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