Medicare and Social Security Going Broke

As we see the developments in Social Security and Medicare Trust Funds a few thoughts come to mind...

What Are the Trust Funds?

Congress established the trust funds in the U.S. Treasury to account for all program income and disbursements. Social Security and Medicare taxes, premiums, and other income are credited to the funds.

How big are Social Security and Medicare?

Social Security is currently 4.4% of GDP. Medicare is currently 3.2% of GDP.

When do these entitlements start paying out more than they bring in?

In the case of Social Security, 2016. In the case of Medicare, today. Medicare is already losing money.

There are actually four separate trust funds. For Social Security, the Old-Age and Survivors Insurance (OASI) Trust Fund pays retirement and survivors benefits, and the Disability Insurance (DI) Trust Fund pays disability benefits. (The two trust funds are often considered on a combined basis designated OASDI.) For Medicare, the Hospital Insurance (HI) Trust Fund pays for inpatient hospital and related care. The Supplementary Medical Insurance (SMI) Trust Fund comprises two separate accounts: Part B, which pays for physician and outpatient services, and Part D, which covers the prescription drug benefit.

Medicare Cost and Non-Interest Income by Source as a Percent of GDP

Concern about the long-range financial outlook for Medicare and Social Security often focuses on the exhaustion dates for the HI and OASDI Trust Funds—the time when projected finances under current law would be insufficient to pay the full amount of scheduled benefits. A more immediate issue is the growing burden that the programs will place on the Federal budget well before the trust funds are exhausted.

The Medicare Modernization Act (2003) requires that the Board of Trustees determine each year whether the annual difference between program outlays and dedicated revenues (the bottom four layers of the chart above) exceeds 45 percent of total Medicare outlays within the first 7 years of the 75-year projection period. In effect, the law sets a threshold condition that signals that a trust fund's dedicated financing is inadequate and/or that general revenue financing of Medicare is becoming excessive.

Projected OASDI and HI Tax Income Shortfall plus the 75-Percent General Fund Revenue Contribution to SMI

(Percentage of GDP)

The combined difference grows each year, so that by 2016, net revenue flows from the general fund would total $369 billion (1.8 percent of GDP). The positive amounts that begin in 2016 for OASDI, and started in 2008 for HI, initially represent payments the Treasury must make to the trust funds when assets are depleted to help pay benefits in years prior to exhaustion of the funds. Neither the redemption of trust fund bonds, nor interest paid on those bonds, provides any new net income to the Treasury, which must finance redemptions and interest payments through some combination of increased taxation, reductions in other government spending, or additional borrowing from the public.

The chart above shows that the difference between outgo and dedicated payroll tax and premium income will grow rapidly in the 2010-30 period as the baby-boom generation reaches retirement age. These Trust Funds are not to be trusted... This is the greatest Ponzi scheme ever!

New methods of certification... and forming groups

I got the impression from the HIT Policy Committee meeting this morning, and the comments from David Blumenthal, M.D. National Coordinator for Health Information Technology that the certification process for Electronic Health Records (EHRs) will be changing. Blumenthal did not specify if the Certification Commission for Healthcare IT (CCHIT) which was established under the previous administration and currently certifies EHR systems now available on the market, will retain any functions along with the two new advisory committees. "The certification process is under review," Blumenthal said, adding, "There was a complicated committee structure in the past"
It seems that CCHIT will either be relaced by a new organization or be substantially changed by the HIT Policy Committee and the Office of the Nation Coordinator for Health Information Technology (ONCHIT). I hope that the thousands of hours already expended in developing certification standards for EHRs will not be wasted.
The commitee is large and somewhat unwieldy. I was glad to see that they plan to split the work between different categories and even left open the possibility that nonmembers of the committee could assist in work groups.
Much of the meeting was devoted to the formation of work groups to do the heavy lifting for the HIT Policy committee. After initally listing at least six possible groups, three were eventually decided upon. One was a work group to come up with an initial set of criteria for the “meaningful use." This group would also develop ways for the government to assist in the adoption of health IT systems. The second work group would focus on requirements of IT system certification. And the third group would address workforce development needs.
I expected them to assign a group that would give direction to the HIT Standards Committee, but not much direction was forthcoming. We will have to wait and see...

Improving EMRs

- Lyle Berkowitz, MD, FHIMSS

Improving EMRs 2009

View more presentations from Lyle Berkowitz, md.

Skipping Vista

I beta tested Windows 7 for the last couple months and I have been testing Windows 7 Release Candidate (RC) and am very please so far. If you want to try out Windows 7 you can get the Windows 7 RC download here and the license is good until June 1, 2010. You can use the PC World tool to see if your PC is ready for Windows 7. There is even an Adobe Reader for Windows 7 already.

I am running Windows 7 RC1 on a virtual machine that I have assigned 32 GB of hard rive and 1 GB of RAM. All of our clinical applications (Meditech, APTA Connect, PtCT, etc.) seem to work fine. I have had some trouble with NextGen, but using terminal services (which is how we publish this application generally) works great. For applications that will not run in Windows 7 you can use Windows 7 XP Mode, a virtualized version of Windows XP that runs on Windows 7. My experience has been that Windows 7 XP Mode is better than running XP virtualized on a Vista system.

I will be trying Windows 7 on a spare hard drive on an Optiplex desktop later this month to see if I run into any driver compatibility issues. I plan to thoroughly investigate the use of this OS on our Active Directory domain with standard hardware configurations before next year when the final version is released.

We are a Dell shop and run Windows XP on almost all of our over 500 workstations. Licenses for both Vista Business and Ultimate allow users to downgrade to XP so we have only deployed Vista on a few Information Systems (IS) machines and our CEO. We have had some difficulty with log in times and driver compatibility trying to use Vista thoughout the enterprise. Microsoft will continue to allow Dell downgrading Vista systems to XP so we will continue to purchase them. A memo leaked from Microsoft does suggest that Dell should be clear with customers about future XP support:

"It’s important to remind customers that Microsoft are still planning to retire XP Pro Mainstream support on April 14, 2009 and will only provide OS security updates beyond that date unless the customer has an Extended Hotfix Support contract. MS Extended Support for XP Pro ends on April 8th, 2014."

Obviously the Microsoft roadmap is going to push us along past XP at some point. So far I have found Windows 7 to be our best next step. I will continue testing Windows 7 and deploying XP desktops, notebooks and tablets, while watching carefully to ensure that as we build out interoperability with our EHR and develop a Health Information Exchange, we are using the most appropriate OS. I have a strong feeling we will be skipping Vista...