Book: Medicare Harms Patients and Impairs Doctors

A talk with the conservative policy analyst who penned 'Medicare's Victims'

Medicare turns 50 on Thursday July 30, providing health coverage to 54 million Americans (mostly over 65).

The vast majority of Americans like the program — in a new Kaiser Family Foundation poll, 60 percent say Medicare’s working well for most seniors. There’ll even be Medicare birthday parties over the next two weeks; on Thursday, Peter Yarrow of Peter, Paul and Mary is performing at one in Cohoe, N.Y.

But David Hogberg, author of the new book, Medicare’s Victims, isn’t celebrating. A senior fellow for health care policy at the conservative National Center for Public Policy Research, in Washington, D.C., he thinks the program is problematic in many ways; some Republican presidential candidates agree.

Hogberg’s book subtitle is hardly subtle: How the U.S. Government’s Largest Health Care Program Harms Patients and Impairs Physicians.

Medicare doesn’t pay for care coordination, so there’s no incentive to coordinate care, except with the Medicare Advantage program.

— David Hogberg

“One thing that interested me is how many people think Medicare is a wonderful program because of how popular it is,” Hogberg told me. “But it’s a government program with various inefficiencies, unintended consequences and perverse incentives. I started digging into it and talking to doctors and patients and found a whole other side that rarely gets much attention. The more I talked to people, the more I was driven to write about it.”

I spoke with Hogberg at length about the Medicare problems he sees. Highlights from our conversation:

Next Avenue: Medicare is about to turn 50. What’s your view of it overall?

David Hogberg: In some ways, it’s failing its original goals, if that means helping out some of the sickest patients. I found the sickest often end up being the ones who are most likely to run afoul of Medicare’s policies and they suffer.

We have a coming financial problem with Medicare and unless there is serious reform, it will be much harder for taxpayers to pay for it. Substantial cuts will fall on sickest patients.

You say Medicare harms patients. How?

Let’s start with the disabled. They have to endure a two-year waiting period to get Medicare.


When the disabled were added in 1973, the concern was if you let people in right away, they’d dump their insurance and go into Medicare. I suspect quite a few in that waiting period struggle with health problems finding medical care they can afford.

You’re also concerned about people with Medicare’s prescription drug program — Part D — falling into the “donut hole.” Tell me about that.

Part D has an odd benefit structure, deductible and level of cost sharing. Medicare pays 75 percent and then there’s a gap where you’re responsible for 100 percent and then another level of cost sharing that’s 95 percent Medicare and 5 percent you.

My concern is the sickest patients would fall into the donut hole. They’re the ones taking the most medication. In my book I wrote about a woman who stopped taking her stroke medication because she couldn’t afford it due to the donut hole. She came within minutes of having her fourth stroke.

Why would Congress set up the benefit this way?

For my research, I interviewed [former House speaker] Dennis Hastert and asked him: ‘Why didn’t Congress reduce the donut hole and expand the deductible originally?’ He said: ‘We wanted as many people interested in the program as possible and with a higher deductible, fewer people would have been interested.’

When Obamacare started closing the donut hole, that was one part of Obamacare I actually support.

You say some Medicare patients receive unnecessary treatment. How and why does that happen?

That is probably due to Medicare price controls. MedPAC [an independent Congressional agency advising Congress on Medicare] looked at this for heart surgeries and joint replacement and the thinking was that the services were overpriced and some surgeons were doing marginal cases where maybe they shouldn’t have. I looked at colonoscopies; there’s probably a very good case they are overpriced as well.

David Hogberg Author and Medicare Victims Book Cover

And you also say a lack of coordination of care leads to undertreatment for Medicare patients, especially regarding pharmaceutical use and cancer. Tell me about this.

It can get very confusing with medications, doctors appointments and treatments. It helps to have a coordinator. Medicare doesn’t pay for care coordination, so there’s no incentive to coordinate care, except with the Medicare Advantage program. Without coordination of care, there’s a higher rate of hospital readmission.

When Medicare was established, if you were 65 or older, there wasn’t much you could do for some of these medical conditions. No one anticipated you could keep people alive for decades. Medicine has evolved, but Medicare hasn’t adapted.

Why isn’t there coordination of care?

There’s nothing preventing it, but what pressure does Congress feel to change it? The number who would benefit the most is relatively small and when Congress doesn’t see an organized movement, like there was around Part D, it’s unlikely it will make changes.

Let’s talk about physicians. How are they impaired by Medicare?

In a couple of ways. Probably, Medicare falls hardest on primary care physicians. They’re the ones most likely to leave Medicare or limit the number of Medicare patients they see.


I don’t think Medicare reimburses physicians’ visits adequately. A committee advises CMS [Centers for Medicare and Medicaid Services] on where to adjust price controls and it’s dominated by specialists. Physician visits tend to get short shrift.

A second reason is the massive coding system Medicare uses. The primary care generalist has to be familiar with more codes and that means spending a lot more time coding and the overhead for that falls harder on them than on specialists.

The last thing is that we’ve had a ridiculous system where every year or two, cuts for physicians’ Medicare reimbursement would come up in Congress. So physicians would realize: ‘I better bill Medicare as much as I can because when the cuts come, I’ll suffer.’ It was a constant problem for physicians until Congress repealed this with the Medicare doc fix and replaced the system with the Medicare Incentive Payments System or MIPS.

MIPS will judge doctors on quality metrics; how well patients score on quality measures, how healthy they are and how many resources doctors use to treat patients. If you do well, you get a bonus. If you don’t, you get penalized with a cut to your fees.

What do you think of that?

Doctors with healthy and moderately ill patients will score best; they’ll use the least amount of resources. So they’re more likely to get bonuses than if they treat a lot of sick people and use more resources. So there’s now an incentive to avoid treating sicker patients.

You also write about Medicare’s restrictions on Physician-Owned Specialty Hospitals. What are they and what is the problem?

These are hospitals where physicians have ownership stakes; they treat heart issues, joints and general surgery. The big hospital lobby felt this was unfair competition and pushed Congress to ban them or get Medicare funds cut off.

Obamacare grandfathered the existing hospitals in but said after 2010 there would be no Medicare reimbursement for new ones and put in place regulations making it almost impossible for existing Physician-Owned Specialty Hospitals to expand.

To me, competition among hospitals is a good thing and this is a case of Medicare being used as crony capitalism.

The big irony is that Obamacare created a hospital value-based purchasing program and depending on how a hospital did, it would get a bonus or penalty, and in 2012, when the first bonuses came out, nine of the top ten were Physician-Owned Specialty Hospitals. So Obamacare just prevented growth of the types of hospitals that seemed to provide the best quality. In the long run, I don’t see how that’s good for patients.

Are these problems because Medicare doesn’t have enough money?

The problem isn’t that there’s not enough money in Medicare, it’s that it’s misallocated. Congress and CMS decide how the money is spent. I argue we’d be better off with a system that gives Medicare beneficiaries control over Medicare funds.

RIchard Eisenberg, editor at Next Avenue wearing a suit jacket in front of a teal background.
By Richard Eisenberg
Richard Eisenberg is the Senior Web Editor of the Money & Security and Work & Purpose channels of Next Avenue and Managing Editor for the site. He is the author of How to Avoid a Mid-Life Financial Crisis and has been a personal finance editor at Money, Yahoo, Good Housekeeping, and CBS MoneyWatch. Follow him on Twitter.

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