Tuesday, June 23, 2015
June 22, 2015
Making the Economy Work for the Many and Not the Few
#11: Medicare Isn't the Problem; It's the Solution
By Robert Reich
Again and again the upcoming election you'll hear conservatives claim
that Medicare -- the health insurance program for America's seniors --
is running out of money and must be pared back.
Baloney. Medicare isn't the problem. In fact, Medicare is more efficient
than private health insurance.The real problem is that the costs of
health care are expected to rise steeply.
Medicare could be the solution -- the logical next step after the
Affordable Care Act toward a single-payer system.
Please see the accompanying video -- #11 in our series on ideas to make
the economy work for the many rather than for the few. And please share.
Some background: Medicare faces financial problems in future years
because of two underlying trends that will affect all health care in
coming years, regardless of what happens to Medicare:
The first is that healthcare costs are rising overall -- not as fast as
they were rising before the Affordable Care Act went into effect, but
still rising too quickly.
The second is that the giant postwar baby boom is heading toward
retirement and older age. Which means more elderly people will need more
health care, adding to the rising costs.
So how should we deal with these two costly trends? By making Medicare
available to all Americans, not just the elderly.
Remember, Medicare is more efficient than private health insurers
whose administrative costs and advertising and marketing expenses are
eating up billions of dollars each year.
If more Americans were allowed to join Medicare, it could become more
efficient by using its growing bargaining power to get lower drug
prices, lower hospital bills, and healthier people.
Allowing all Americans to join Medicare is the best way to control
future healthcare costs while also meeting the needs of the baby boomer
and other Americans.
Everyone should be able to sign up for Medicare on the healthcare
exchanges set up under the Affordable Care Act. This would begin to move
America away from its reliance on expensive private health insurance,
and toward Medicare for all - a single payer system.
Medicare isn't a problem. It's part of the solution.
Physicians for a National Health Program
March 26, 2009
Public Plan Option in a Market of Private Plans
By David Himmelstein, M.D. and Steffie Woolhandler, M.D., M.P.H.
The "public plan option" won't work to fix the health care system for
1. It forgoes at least 84 percent of the administrative savings
available through single payer. The public plan option would do nothing
to streamline the administrative tasks (and costs) of hospitals,
physicians offices, and nursing homes, which would still contend with
multiple payers, and hence still need the complex cost tracking and
billing apparatus that drives administrative costs. These unnecessary
provider administrative costs account for the vast majority of
bureaucratic waste. Hence, even if 95 percent of Americans who are
currently privately insured were to join the public plan (and it had
overhead costs at current Medicare levels), the savings on insurance
overhead would amount to only 16 percent of the roughly $400 billion
annually achievable through single payer — not enough to make reform
2. A quarter century of experience with public/private competition in
the Medicare program demonstrates that the private plans will not allow
a level playing field. Despite strict regulation, private insurers have
successfully cherry picked healthier seniors, and have exploited
regional health spending differences to their advantage. They have
progressively undermined the public plan — which started as the single
payer for seniors and has now become a funding mechanism for HMOs — and
a place to dump the unprofitably ill. A public plan option does not lead
toward single payer, but toward the segregation of patients, with
profitable ones in private plans and unprofitable ones in the public plan.
Comment by Don McCanne
In his enthusiastic endorsement of single payer Medicare for all, Robert
Reich also renews the call for the "public option" of allowing people to
purchase Medicare through the exchanges established by the Affordable
Care Act. During the health care reform process, the public option had
wide support, but was first weakened considerably and then eventually
rejected by Congress in a power play by Sen. Joseph Lieberman.
In spite of the modest benefits of the Affordable Care Act, nothing has
changed that would alter the concerns about the public option expressed
by David Himmelstein and Steffie Woolhandler and others of us at PNHP.
At the time the public option was being considered, I wrote the
following: "The option to purchase a public plan within a market of
private health insurance plans would merely provide one more player in
our inefficient, dysfunctional, fragmented, multi-payer system of
financing health care, that is if the public option even survives the
political process. It would leave in place the deficiencies that have
resulted in very high costs with the poorest health care value of all
nations (i.e., overpriced mediocrity in health care)."
Even if Medicare were offered for purchase in the exchanges, the
premiums would not be competitive with the low-actuarial-value silver
and bronze plans with their very high deductibles, especially since the
Medicare risk pool includes higher cost elderly and disabled
individuals. If Medicare were revised to make it competitive, benefits
would have to be reduced when what we need instead is an improved
Medicare with expanded benefits.
One possibility would be to provide subsidies for those electing the
Medicare option, but either the beneficiaries' share would still be too
great, certainly making the plan non-competitive, or the public
subsidies would have to be greater than those for the private
low-actuarial-value insurance plans - an approach that would be
vigorously opposed by the all-powerful private insurers.
Besides, it is unlikely that Congress would support higher subsidies for
a public option Medicare when their agenda has been the opposite -
providing higher subsidies for the private Medicare Advantage plans,
sending us in the direction of a privatized Medicare.
Although Robert Reich proposes a public option version of Medicare as a
way to begin moving us toward a single payer Medicare for all, it is
difficult to perceive how the transition would take place. Offering an
option to purchase Medicare is a very small step that leaves everything
else in place. As Medicare Advantage demonstrates, one-third of
beneficiaries have moved in the opposite direction - from traditional
Medicare to private insurance options. That would continue as long as
Congress continues to advance policies that cater to the insurers more
than they do to the public.
Reich seems to be recommending a two step path to reform - one step
offering the Medicare option and a second step of converting to single
payer Medicare for all. Quentin Young has compared that to taking two
steps to cross a chasm. That first step can lead to a serious
misadventure, but it should not be a surprise.
at 12:58 PM