Forty years after the birth of Medicare, the Washington Post investigated how the $300-billion-a-year health insurance system is serving 42 million Americans. Gilbert M. Gaul, a member of the newspaper's national investigative reporting unit, spent more than a year working on the project. His three-part series on Medicare was published in the Post July 24-26, 2005, and is available online.

Before joining the Post, where he has worked for four years, Gaul was a reporter for the Philadelphia Inquirer and the Pottsville (Pa.) Republican. He's been awarded two Pulitzer Prizes for his reporting, as well as dozens of other journalism awards.

Susan Q. Stranahan recently interviewed Gaul for the AARP Bulletin. The full interview appears exclusively here on AARP Bulletin Online.

Q. What prompted you to look into this subject?

GG: I've covered health care in one form or another for at least two decades, and I've spent a lot of time writing about Medicare in the past as a beat reporter, so I knew a reasonable amount about the program. The Medicare idea came up in late 2003, at about the time the Medicare Modernization Act was about to pass or had passed. I was thinking, "Why not look at Medicare in a big way?"

So I began refreshing my memory, trying to understand the history, interviewing people about the program and where it is today, trying to deconstruct it from an economic sense—not only where the dollars were spent but where the program was going. I was really surprised at just how enormous this program is—its scope, its breadth, its reach.

It began to dawn on me over time that I should look at Medicare through the prism of quality and the impact it has on patients, recognizing that Medicare is the largest health insurance program in the country, if not the world, and that it also has a huge impact on the rest of American medicine. I initially framed it that way, and as I went along I narrowed it down.

Q. This is a huge government program that spends huge amounts of money and affects a lot of people, but it really hasn't received much scrutiny. Why?

GG: Medicare is written about a lot, both in the trade publications and in the newspapers, but because it's so big and daunting, people are afraid of trying to analyze it in a critical way.

Q. You quote one health services administrator as saying, "The way Medicare is set up, it actually punishes you for being good." You used the term "upside-down economics." Explain.

GG: The payment system for Medicare is very complicated, but when you look at it you see a couple of things. For hospitals and in many cases for doctors, it rewards you based on each activity, or each time a patient walks through the door. It hands out the same whether you injure a patient or help that patient back to good health. That's what we mean by upside-down economics.

When you're really good, you don't get a bonus. You don't get paid any more for really doing well. That concept is called pay for performance. It is just beginning to worm its way into the system, and eventually, it'll happen in Medicare.

Q. Much of the public and political debate recently has been over the future solvency of Social Security. Yet you paint a much grimmer picture of the solvency of Medicare, quoting one expert as saying that Medicare is speeding toward a "trillion-dollar train wreck."

GG: Social Security, which has gotten all of the attention, is, in a lot of ways, easier to fix than Medicare. For Social Security, you can just raise the taxes. Medicare is much trickier. The baby boom generation is going to double the population that receives Medicare. The 42 million [beneficiaries] today will grow to 71 million [by 2030]. That's a staggering increase.

Every one of those baby boomers coming in is going to use a lot of services. It's a formula for economic disaster. On the funding side, the hospital piece of the Medicare program is supported through wage and employer taxes. Basically, today I think you have four workers for every beneficiary or something like that. By the time the baby boom wave hits, it goes down to something like 2.4 workers for every beneficiary. The funding stream is not going to dry up, but it certainly will shrink at the same time you have this huge uptick in the number of beneficiaries.

When you read the Medicare trustees' report, which spells out all the data, you can't help but be shocked by where we're headed. The unfunded liability for the system is just huge, so large it staggers the imagination—it's like $6 trillion or $8 trillion in unfunded liability in years out. Unless someone can figure out a way to rev up the economy to such a level that we'll be able to cover all that, what are you going to do?

Q. Why have Medicare's problems received so little attention on Capitol Hill?

GG: It tends to be like everything in public policy in America—you wait until you're on the brink before you try to do something. Over time, there have been a number of attempts to deal with the cost side of Medicare, and some of the efforts have been relatively successful.

[But] the flip side of this is that Medicare is a $300 billion program that is increasing every day. Think of it as Medicare Incorporated. You have hospitals, doctors, home health care, dialysis facilities, durable medical equipment facilities—each of those groups has a huge financial stake in the program. And so therefore they also each have a powerful lobby. That lobby is certainly going to have its voice heard in Congress and resist anything that cuts back payments. If you look at the history of Medicare, it's a long history of political give-and-take, tug and pull and pushing back.

Q. Of equal importance to taxpayers—and Medicare's 42 million beneficiaries—is this question, which you also raised: are we getting our money's worth out of the program?

GG: On the one hand, Medicare's been terrifically important for Americans. It's had a huge impact. Go back to 1965: many [older] Americans had no health insurance at that time. Medicare really helped those people a lot.

On the other hand, when you look at the structure of the program, there are huge variations, the upside-down economics. It's true of the entire American medical system: the amount of overuse of services, which is rewarded, versus the underuse of services. There is no way currently to control that. Until the payment system shifts, you are going to have waste, people getting hurt, some people getting way too much care and some not enough.

Q. Perhaps one of the alarming aspects of your series is the high degree of secrecy and the lack of accountability among providers and those charged with overseeing the program.

GG: In the history of the creation of Medicare, there was no way to measure the quality of care that was provided. The medical community wasn't about to give that responsibility to the government. There was grave concern among doctors that this would become a government-run health insurance program, and that was the last thing they wanted and would accept.

Medicare doesn't go out and look at these facilities. It assigns that job to the states. It pays state health departments to do the inspections and investigate the thousands of complaints that come in each year. What my reporting found was that there is so little money to actually conduct these inspections and investigate the complaints that thousands of facilities are going years without ever being inspected.

The example we used: If you're in San Francisco, where there are taco and burrito carts on the street, the city inspects them two or three times a year. But the California state health inspectors get out to see outpatient surgery centers once every 12 years currently. We found this across the board.

Medicare almost never kicks anybody out of the program. Critical information [about violations and fines] goes missing. There is not a whole lot of interest in investigating a complaint. It's almost like the patients are secondary; it's all about the providers.

They never take on the large hospitals because politically, if they try to shut them down, then people start screaming, and it's better to have a hospital open even if it's providing bad care.

Fines for violations at nursing homes are all over the place. There's no consistency in the fining, there's no consistency in the deficiencies that are cited, and even when they do fine, they really don't tell anybody about it.

Q. You write about the difficulty you had in obtaining even basic information.

GG: Medicare and the Centers for Medicare and Medicaid Services [the federal agency that oversees both programs] wouldn't talk to me. In the 14 months that I tried to work with them, they just made things incredibly difficult and seemed to go out of their way not to even provide the simplest information: number of employees, budgets, financial data. They forced me to do Freedom of Information Act requests. I ended up filing something like 77 Freedom of Information Act requests, and there are probably about 30 of them still outstanding. Some have been pending for 17 months.

Q. Then the logical question is, if an influential newspaper like the Washington Post can't get basic information, what's the likelihood that the average citizen, the family member, or the beneficiary could get it?

GG: It's pretty frightening. Medicare has extraordinary amounts of data and information for tracking trends in health care and who's a good provider, and it's all locked up in these computers. It has started these websites where you can go and look at the basic minimal measures for nursing homes, hospitals, dialysis facilities. It's a start. [But] you read these websites and you wonder how on earth the average person can understand them, let alone someone who is 70 or 75.

Q. Many of the early warning signs of poor care—such as hospitals performing unnecessary heart surgery—appear to have been available to regulators, but were overlooked or ignored. What should a savvy health care consumer do to ensure that he or she is getting the best care available under Medicare?

GG: It's a lot of hard work trying to figure out whether your doctor is good, bad or indifferent because that information is not currently available. That's incredibly hard for the elder generation, our parents and grandparents. They were brought up in a culture where doctors were gods—you just took their word.

I like doctors a lot and I admire what they do. But they don't always do the right thing. In many cases, their education is behind; in many cases, they can't keep up with the research. That's why you see so many variations in care around the country—whether you get a beta blocker when you have a heart attack is an example. Things that should be automatic in many places just aren't.

The best advice for consumers is: you've got to spend time educating yourself. You've got to get involved in your own care. If I've learned anything from this project, it is that the very best care is the care where the patient is at the center of the decision-making process, where the patient is an active player. It's where you ask questions because you're the one at risk.

Additional Related Links

State-by-State Guide to Nursing Home Performance Data

Fatal Mistakes--Fighting Back Against Medical Errors (November 2004)

Bruised and Broken: U.S. Health System (March 2003)