No to Medicare Privatization

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Letter to the Editor by Mike Anthony – published in the Southampton Press

Since the November 8th election, the focus has been placed on public policy options in a fully Republican-dominated federal government. One of those policy areas is Medicare and the direction US House Speaker Paul Ryan would like to take the program under his “Better Way” proposals; specifically, he is interested in privatizing Medicare and using a premium support stipend directed to beneficiaries to purchase their own health insurance in the marketplace.

There is a lot to chew over regarding that proposal, but as a former teaching hospital administrator, I would like to share my concerns solely related to Medicare’s role in teaching the future physicians of America.

Medicare is critical to teaching and training physicians – will that role be jeopardized under a privatization scheme?

Medicare supports nearly a quarter of all direct medical education costs (DGME) associated with training physicians: annual costs are $13 billion of which Medicare directly supports with $3 billion in payments to teaching hospitals. These payments help pay for stipends and fringe benefits, salary for supervision, administrative and overhead costs. (Note: Medicaid also supports medical education costs.)

In addition to the direct costs associated with training our future doctors, Medicare recognizes and pays for indirect costs associated with treating an older Medicare-eligible population that are common in teaching hospitals. Accordingly, Medicare provides an additional add-on called the Indirect Medical Education (IME) payment. Through this IME adjustment, teaching hospitals receive an additional $6.5 billion annually. What is critical to understand is that private insurance companies rarely recognize these additional costs in their reimbursements.

Since New York State has a robust physician training program, and many world-renown teaching hospitals, any diminution of teaching support payments from Medicare (and Medicaid) might place at risk the teaching mission at these hospitals.

For this and other reasons, we need to strengthen and not privatise Medicare.

A key aspect of Medicare: funding medical education.  Every physician has benefited!  Including myself.  David

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About D. Posnett MD

Emeritus Prof. of Medicine at Weill Cornell Medical College
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