Tom Scully Tutorial & Diagnosis of Medicare Program

By Gregg A. Masters, MPH

washington journal scully on medicareAn excellent ‘tutorial’ of sorts on the Medicare program is provided by Tom Scully, former Bush era (2001-2004) administrator of the Centers for Medicare and Medicaid Services, who opines on the Medicare and Medicaid Acts of 1965.

He discusses President Lyndon Bain Johnson’s vision of the bill and looks at the present state of the program including his preference for ‘means testing’, the role of Medicare Advantage and issues associated with the expansion of Medicaid via the Affordable Care Act.

Scully also fires a shot over the bow of the The National Committee to Preserve Social Security and Medicare claim via ‘Top 10 Reasons Americans Love Medicare‘ questioning the relative ‘efficiency’ of the program compared to it’s commercial equivalents or fee-for-service (‘traditional’) Medicare.

7.  Medicare is efficient. Only 1% of traditional Medicare’s spending is overhead compared to 9% for private insurance and 6% for privatized Medicare (aka Medicare Advantage plans).

Scully notes:

Yeah, I think that’s completely and totally wrong… I’m trying not to be partisan and be objective on this. But look  Medicare is a wonderful program. It’s incredibly efficient….but basically what Medicare is it’s a single payer system where the Government pays every doctor in Toledo and every hospital the same thing. So the problem is as you have in any system – in the history of any economy in the world – when you fix prices, is volume…. so what you get is competition over volume….which is what they are incentivized to do…  

Regarding CMS, on the ‘efficiency’ claim Scully notes, perhaps in a moment of hyperbole:

I love CMS. The employees are great. They have no clue what’s going on in the healthcare system…it’s just by design that they don’t.

The video segment is courtesy of Washington Journal with original source link here. For a chronology of Medicare see: ‘Medicare Turns 48‘ courtesy of AARP.

For additional Scully insights see: ‘Care Innovation Summit: A Very Sober Assessment!

NOTE: If only Scully type rationality were native to the ‘don’t confuse me with facts’ oppositional Republican mindset of some these days, we’d be more about fixing problems than blame – just saying.


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  1. Great post Bill.

    I would caveat only one aspect of your on-point commentary. The impulse on the front end since many can not see a scaled glide-path nor what the realistic milestones let alone the ‘end game’ looks like is the temptation to focus on the ‘OG&E’ piece, i.e., the organization, governance and equity questions which pull in – you guessed it – the lawyers and consultants.

    While OG&E is a key consideration, too often the emphasis is on structure vs. building a culture of trust towards an uncertain future of change. The ‘triple aim’ sounds good, but to many it’s a lofty and unattainable goal operationally given current and more often than not conflicting incentives and decades of practice inertia.

    So while structure is key and who ‘leads’ the effort prime, ultimately it’s the people in the mix that matter. The capital partner needs relinquish control to mission driven primary care doctors, let them manage the relationship with their specialty colleagues and bring the hospital along with a morphing series of changed workflows. They’ll both get religion as referral patterns change and savings targets materialize.

    Thanks for the excellent post!

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