Medicare, Medicaid 50th Anniversary

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Medicare and Medicaid, which provide health insurance to the elderly and those in need, celebrates 50 years of existence July 30th. David Sayen, the regional administrator for Medicare and Medicaid, will talk about the two insurance programs.

TED SIMONS: Coming up next on "Arizona Horizon," it's the 50-year anniversary of Medicare and Medicaid; and we'll find out how driverless cars and other new technologies will impact cities and states. Those stories next on "Arizona Horizon."

VIDEO: "Arizona Horizon" is made possible by contributions from the Friends of Eight, members of Your Arizona PBS station, thank you.

TED SIMONS: Good evening and welcome to "Arizona Horizon," I'm Ted Simons. A lawsuit against Arizona's expansion of Medicaid is set for a court hearing tomorrow. This after the case was delayed until the state Supreme Court ruled that lawmakers who filed the suit indeed had legal standing to sue. Lawmakers argued that the assessment used to fund the expansion of Medicaid was a tax and thus needed a two thirds majority to pass the legislature. Supporters countered that the assessment was not a tax and only needed a legislative majority to pass. It's been 50 years this week that Medicare and Medicaid were enacted to provide help to the elderly and those in need. David Sayen is a regional administrator for Medicare and Medicaid and has flown in from his office in San Francisco to tell us more about the two programs and their history. Good to see you again thanks for joining us.

DAVID SAYEN: Thank you.

TED SIMONS: Medicare and Medicaid, what were they originally designed to do?

DAVID SAYEN: Really, to first take care of people who were older, back in 1965, A person that was over 65 was twice as likely to be in poverty as they were today and more than half had no health insurance. So a hospital stay or an illness could be financially devastating. At the same time states were struggling to take care of people who were medically indigent who were poor, and this federal program of Medicaid was created to provide support to the state.

TED SIMONS: So that was the problem it addressed. Has that problem been answered?

DAVID SAYEN: I think the core problem has. The rate of uninsured for people over 65 has gone from more than 50% to less than 2%. We have very few people facing that. The life expectancy of someone turning 65 is five years longer today than it was when the program started. That's not entirely perhaps attributable to the program, but it's a very big part of it. On the other side of the coin in the case of folks with Medicaid, obviously there are more folks in Medicaid than Medicare today, and it's the primary source of health care for a lot of people who otherwise simply wouldn't be able to afford it.

TED SIMONS: I know that the racial barriers in health care were addressed by both Medicare and Medicaid, talk to us about that.

DAVID SAYEN: The significant thing was at the time the program was enacted, a number of segregated hospitals in the South refused to - they said they wouldn't take Medicare because they didn't want to comply with the title 6 requirements. But what we found is that in that period of 1960-68 the hospitalization rate for black folks went up 61% compared to 38% for whites, so clearly a tremendous access was there that wasn't there before.

TED SIMONS: Opponents at the time, we can get to opponents now, but at the time, what were they concerned about?

DAVID SAYEN: There was a really large concern and a campaign with Ronald Reagan as the spokesperson about socialized medicine. The medical community and physicians were concerned about the government having control over their work. The law was written to specifically say that nothing in the law should direct the practice of medicine. The purpose of the program was to ensure people from financial harm they would face if they were ill.

TED SIMONS: Some of those concerns, were they addressed, did they materialize?

DAVID SAYEN: I wouldn't say they materialized, in the sense that the program directed physicians what to do. But Medicare and other insurers together, by virtue of the things that they cover, has an impact on how medicine is practiced. In Medicare we have physicians in each of the states make decisions about what we'll cover and what should be added.

TED SIMONS: Those were the critics back then. Now critics say Medicare, Medicaid, basically not financially sustainable. Is that a valid argument?

DAVID SAYEN: Well, in terms of Medicare, the trustees' report that was just recently published said the program of the trust fund is solvent until the year 2030. That's pretty far in the future. Most of us aren't planning our financial life that far ahead. I think that's a good thing. The important sign is, well, in the first half of the 2000s we had Medicare growing at 5% and 6% per year. Last year it grew less than 1%. We're seeing a slowing of this unsustainable growth. If we continue to improve quality and keep the growth in control, then we have a program that is sustainable.

TED SIMONS: Do we know why that drop happened?

DAVID SAYEN: Well, there are a number of things in the health law that changed the incentives that we use to pay, so that we're looking at results rather than just incentivizing more services. And I think the whole medical establishment knows that people are looking for value. So we're seeing more and more therapies that are better and more cost-efficient than what we had in the past.

TED SIMONS: Before we get to that, I was going ask about future generations, but let's talk about the baby boom generation. The impact of the baby boom generation on Medicare especially. Talk to us about that, and again, does that pose problems for sustainability in the future?

DAVID SAYEN: Well, it's interesting. You know, there are countries that have a much older demographic than us. The Japanese for example have a great deal more old folks than we do. Yet studies have shown that the health care costs of the country are barely related to that issue. The real challenge of growth going forward is that we continue to have new therapies new, procedures new, drugs that are very expensive when they're initially created. We have to find a way to make those innovations available to people in a cost-effective manner. The fact that people are getting older, we can manage that. What we need to do is find a way to manage the cost of new and expanding services.

TED SIMONS: Will management also include things like benefit cuts, increased deductibles, maybe changing the age qualifying rates? Are those possibilities?

DAVID SAYEN: Those are things that could be done but I don't hear anybody talking about those things. The many people who have ideas about how to improve Medicare, and we can always improve any program, are mostly focused on ways to make the program more efficient and ways to have the health care providers do a better job and use the services more efficiently. And most importantly, to teach caregivers, patients and families how to manage their health better and make better decisions about their health care.

TED SIMONS: That kind of information is often included as well as in the Affordable Care Act. Talk about the Affordable Care Act and it's impact on Medicare and Medicaid.

DAVID SAYEN: Really significant is Medicare has always been a great driver of innovation in health care. Medicaid created the prospective payment system for hospitals that the industry uses now. Medicare created the physician fee schedule the rest of the industry uses and now we have new models like the patient centered medical home with the focus on primary care and prevention. We have preventative services and screening services we didn't have before. A lot of people taking advantage of those things. We accountable care organizations, there are several in Arizona, where we make an arrangement with group was doctors and physicians to work toward quality targets efficiency targets and there's a financial bonus for them. The idea is to have a win for the taxpayers and a win beneficiaries and doctors.

TED SIMONS: I know some talk about fraud and say it's been a problem, will always be a problem. What's being done to address the problem?

DAVID SAYEN: I think what we see in various iterations of legislation is that the Congress understands that we've always been able to recover about $7 for every dollar we invest in program safeguards to prevent fraud, and we greatly increase that investment in the Affordable Care Act. The strike force with the Justice Department and RIG has a 95% conviction rate. I think the Congress in the future will continue to see this is an area to invest. If you and I could invest in guaranteed 7 to 1. I think we would invest. Taxpayers will invest more and more by having the folks there that can root it out.

TED SIMONS: Last question, we're heading into the political season and lot of folks will be using Medicare especially as something to he is expound upon and talk about and run their campaigns with. I've heard Jeb Bush say it's an unsound health care system and that's probably the nicest thing from the candidates so far. When you hear that, how do you respond?

DAVID SAYEN: Well, I'm not in that political space. I'm a career government guy. What I would say is we have a plan, the program is on a sustainable track until 2030. But no program is the final answer and it'll change. By the time people that are young today in Medicare, perhaps it'll be different, maybe it'll be better. Sure, there's an opportunity for change but I think we're on a pretty good course for right now. I think most folks would agree with that.

TED SIMONS: And health care itself will likely change, practices will be a whole different ball game.

DAVID SAYEN: Exactly, right.

TED SIMONS: Good to see you, thanks for joining us.

DAVID SAYEN: thank you.

David Sayen:Medicare and Medicaid Regional Administrator

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