Texas Tech University Health Sciences Center
When Medicare Speaks, People Listen

When Medicare Speaks, People Listen

ceo_minuteSpeakers and writers must be careful not to make cultural references that leave the audience in the dark. I have made this mistake on numerous occasions and continue to do so. This concern is especially pronounced when talking with our medical students, where I have to remind myself that most were born after 1990, and therefore, I must choose my examples carefully.

Having said all of that, some readers will remember television commercials from the 1970s and 1980s based on the phrase, "When E. F. Hutton talks, people listen." If you don’t know to what I am referring, E.F. Hutton is a brokerage firm that has gone through several iterations over its long history. They are still in business, but this particular ad has been off the air for years. The commercials depicted a young professional in a noisy restaurant saying that his broker was E.F. Hutton, and then he would start to quote what E.F. Hutton said. At that point, all conversation ceased so that everyone could hear what he was he was about to say. Now, I am no Don Draper when it comes to judging ads, but the campaign was very memorable.

Recently, I wrote in this column about the shift of a portion of UnitedHealth Insurance’s business away from a fee-for-service payment methodology to a value-based approach. I mentioned that UnitedHealth, because of its size, is considered a bellwether for the health insurance industry. But, as influential as UnitedHealth is, it still pales in comparison to Medicare.

Therefore, when Human Services Secretary Sylvia Mathews Burwell announced in late January that the agency intends to move half of all Medicare payments away from fee-for-service to incentive-based payments by 2018, it is a big deal. Perhaps even more significant than the announced change in payments is that Centers for Medicare and Medicaid Services (CMS) is signaling that it intends to use its giant power to reform health care in this country in a major way. This change has all sorts of ramifications. People in the private sector bound to express some concern with the move because it is such a large governmental organization. I am not taking a position, but want to emphasize the monumental scale of this shift. It seems to me that, “As Medicare goes, so goes the rest of the third-party health coverage industry.”

Just how large is Medicare? In 2014, it paid providers $362 billion and covered more than 50 million elderly and disabled Americans. I have not mentioned Medicaid, which is also part of CMS and covers even more people. When an entity as big as CMS speaks, as in the old E. F. Hutton commercials, people listen.