Myth 24. Medicare is the model of efficiency and fairness.
Sunday, October 18, 2009 at 5:36PM Medicare is immensely popular, has very low administrative costs, is already a working model,… it is said: Why not just have Medicare for all?
At one time, calling Medicare “socialized medicine for the elderly” caused stunned silence in the Congress. Now, if one opposes “socialized medicine,” at least one listener is bound to dare you to say you’re opposed to Medicare.
Government may bumble at almost everything, but in a handful of areas it does better than the private sector, writes Nicholas Kristof. He lists firefighting, police protection, and health care. Also postal service and education (NY Times 9/3/09).
And even if government is inefficient, he writes, at least it is fair. It doesn’t cancel your coverage if you get sick.
Here’s a reality check on Medicare:
- It is structured as a Ponzi scheme. Or should we call it a Madoff scheme? Its unfunded liabilities—an estimated $38 trillion—are unpayable. Promises made to Baby Boomers, who were forced to pay into the system throughout their working lives, simply cannot be kept. Their money is gone, just like that of Madoff’s “investors.”
- Its low administrative costs are a mirage. See Myth 2.
- It is sustained by the general fund and by cost-shifting. Medicare Part B premiums pay only about 25% of the cost; the rest must be made up from the general fund. In addition, Medicare underpays hospitals and physicians, and costs are shifted to private insurers. The hidden tax on private insurers to subsidize Medicare and Medicaid amounts to $89 billion/year, or $1,788 per average family in a PPO plan (Grace-Marie Turner and Joseph Antos, Wall St J 9/11/09).
- It is unfair to both patients and physicians. Payments to physicians are often so paltry that patients are having increasing difficulty in finding a physician who can afford to see them. Coverage of prolonged serious illness is poor; seniors who exceed the allowed number of hospital days are on their own. Neither is Medicare a model for comprehensive coverage of non-catastrophic costs. Seniors pay 50% of their medical bills out of pocket, and most buy supplemental coverage (ibid.).
- The system is rife with fraud. An anti-fraud campaign went into high gear with the passage of the Kassebaum-Kennedy, Health Insurance Portability and Accountability Act (HIPAA) of 1996. Hundreds of millions of dollars were made available to prosecutors, along with huge penalties and new tools: a fraud hotline, bounties of up to 30% of amounts collected, and money laundering charges, on which the accused can be convicted without being convicted of any underlying fraud. This amounted to a post-hoc criminalization of medicine. Still, despite allocating $1.13 billion for “program-integrity” and enforcement activities in 2008, government-wide “improper payments” allegedly amounted to $72 billion that year, writes John Iglehart (N Engl J Med 7/6/09). “[I]n our freewheeling society driven by capitalism, there is a strong distaste in many quarters for overzealous investigations,” Iglehart opines. While physicians may be ruined or even imprisoned over alleged coding errors, the threshold for investigating a Medicare carrier is $200 million (Theresa Burr, J Am Phys Surg, winter 2003). The Government Accountability Office found that CMS enrollment and inspection procedures were so poor that it routinely granted billing privileges to fictitious companies with no clients and no inventory (GAO-09-838R Posthearing Questions; 2009).
- Government care costs much more. The passage of Medicare led to an immediate, enormous jump in spending. Between the introduction of Medicare in 1965, and 1970, real hospital expenditures jumped 23% , reports Linda Gorman (Library of Economics and Liberty 6/1/09). Since 1970, Medicare’s per-patient costs have risen 35% more, and Medicaid’s 34% more, than all other medical care in America. This analysis greatly underestimates the cost of government care by counting all Medicare prescription-drugs purchases as part of private care; not adjusting for billions of dollars in cost shifting from Medicaid to SCHIP; and counting care purchased privately by Medicare and Medicaid patients (including Medicare copayments and Medigap premiums) as private, without counting those patients as recipients of private care (Jeffrey H. Anderson, New York Post 7/18/09).
- Medicare taxes impose uncounted costs. Among the hidden costs of government programs is the deadweight cost of taxation. The taxes that finance Medicare impose costs on society in the range of 30% of Medicare spending (Michael Tanner, Cato Policy Analysis #642; Aug 6, 2009).
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Reader Comments (2)
The "unfunded mantate" ...($38.Trillion) . which is the cost of the already spend medicare program.... amounts to $300,000 for every man woman and child in the USA...... Do the math. How are the Obamacrats going to FIX that with taxation ???
They can't - they will instead, allow seniors to die early and hopefully with as little publicity as possible. Medicare cuts will be inflicted on the people who have PAID for it all their working lives .... That will be the reality......and down fall of Obama's socialization programs.
Back when I used to bill Medicare for seeing Medicare-eligible psychiatric patients, there was a stead stream of them visiting doctors' office whether they needed to be seen or not. It appeared to me (the outsider for purposes of this event) that going to medical appointments was their hobby. The physician-patient contact was the most likely time for one of these generally elderly people to have a highly educated person with a high I.Q. show a tremendous amount of keen interest in this patient's major and their minor complaints and suffering. The doctors were often people who were a lot younger than these patients were (I was in my forties) and sometimes even rather charming and/or attractive. One aspect of Medicare medicine, therefore, was seeing a given patient far more frequently that his or her medical condition might dictate if he or she were paying out of pocket for care, and seeing that patient at a very significantly discounted pay rate. I remember a kind of gaiety on the parts of some patients, suggestive of the possibility that they were out on a pleasant morning or afternoon errand, and quite a few evinced a moderate affect of entitlement. Some of them seemed convinced that somehow they had come to own my services.
In training, psychiatrists are taught that when a patient pays nothing for his or her treatment, there is no treatment because getting treatment for free makes it impossible for the patient to value the treatment. The psychiatrist is told repeatedly that when he or she gives time and skill away for free, such giving is in itself deviant --in that there is a "gain" to the physician created by his or her supposed magnanimnity, and also in that the patient is put in debt to the psychiatrist. Countless example are furnished in some psychiatric literature of termination of treatment being the only therapeutic event in that treatment.
Another irony is the setting in which the Medicare patient pays little or nothing for treatment, and is then prescribed a drug which did not show superior efficacy over placebo in FDA trials and does have unmentioned but very harmful side effects.
(So much of psychiatric care these days is furnished by non-psychiatrists who have not been subjected to these caveats against free care, but if giving treatment away comes intrinsically with problems, ignorance of the problems will not cause them to evaporate.)
Some of the morally hazardous psychological dynamics of packaged, pre-paid medicine for patients who are not always even ill may thus benefit from focused critique.