Mr. President: Why Medicare Isn’t the Problem, It’s the Solution
Editor’s Note: We’re happy to reproduce here Prof. Reich’s arguments in favor of “Medicare for All”, the “Duh!” option for any civilized nation, that is, universal, publicly administrated and guaranteed health care. Articles like these can serve to give good ammo to those who are trying to fight the good fight, convince the confused, and counter the constant pro-business propaganda that envelops all social discourse in the United States. Liberals, however, and the public in general, should not forget that the President and his advisers hardly lack the intelligence, ideas, or facts to know damn well what the correct option is. Their wrong-headed, often criminal, choices in public policy are not dictated by ignorance but by lack of political will, or, as is the case with Obama, was the case with George Bush 2, and was true for practically every individual who got elected to the top job in the nation for generations, by simply serving the interests of a puny constituency that owns them: the nation’s plutocracy. —P. Greanville
By Robert Reich, Robert Reich’s Blog
13 April 11
I hope when he tells America how he aims to tame future budget deficits the President doesn’t accept conventional Washington wisdom that the biggest problem in the federal budget is Medicare (and its poor cousin Medicaid).
Medicare isn’t the problem. It’s the solution.
The real problem is the soaring costs of health care that lie beneath Medicare. They’re costs all of us are bearing in the form of soaring premiums, co-payments, and deductibles. Americans spend more on health care per person than any other advanced nation and get less for our money. Yearly public and private healthcare spending is $7,538 per person. That’s almost two and a half times the average of other advanced nations.
Yet the typical American lives 77.9 years – less than the average 79.4 years in other advanced nations. And we have the highest rate of infant mortality of all advanced nations.
Medical costs are soaring because our health-care system is totally screwed up. Doctors and hospitals have every incentive to spend on unnecessary tests, drugs, and procedures.
You have lower back pain? Almost 95% of such cases are best relieved through physical therapy. But doctors and hospitals routinely do expensive MRI’s, and then refer patients to orthopedic surgeons who often do even more costly surgery. Why? There’s not much money in physical therapy.
Your diabetes, asthma, or heart condition is acting up? If you go to the hospital, 20 percent of the time you’re back there within a month. You wouldn’t be nearly as likely to return if a nurse visited you at home to make sure you were taking your medications. This is common practice in other advanced countries. So why don’t nurses do home visits to Americans with acute conditions? Hospitals aren’t paid for it.
America spends $30 billion a year fixing medical errors – the worst rate among advanced countries. Why? Among other reasons because we keep patient records on computers that can’t share the data. Patient records are continuously re-written on pieces of paper, and then re-entered into different computers. That spells error.
Meanwhile, administrative costs eat up 15 to 30 percent of all healthcare spending in the United States. That’s twice the rate of most other advanced nations. Where does this money go? Mainly into collecting money: Doctors collect from hospitals and insurers, hospitals collect from insurers, insurers collect from companies or from policy holders.
A major occupational category at most hospitals is “billing clerk.” A third of nursing hours are devoted to documenting what’s happened so insurers have proof.
Trying to slow the rise in Medicare costs doesn’t deal with any of this. It will just limit the amounts seniors can spend, which means less care. As a practical matter it means more political battles, as seniors – whose clout will grow as boomers are added to the ranks – demand the limits be increased. (If you thought the demagoguery over “death panels” was bad, you ain’t seen nothin’ yet.)
Paul Ryan’s plan – to give seniors vouchers they can cash in with private for-profit insurers — would be even worse. It would funnel money into the hands of for-profit insurers, whose administrative costs are far higher than Medicare.
So what’s the answer? For starters, allow anyone at any age to join Medicare. Medicare’s administrative costs are in the range of 3 percent. That’s well below the 5 to 10 percent costs borne by large companies that self-insure. It’s even further below the administrative costs of companies in the small-group market (amounting to 25 to 27 percent of premiums). And it’s way, way lower than the administrative costs of individual insurance (40 percent). It’s even far below the 11 percent costs of private plans under Medicare Advantage, the current private-insurance option under Medicare.
In addition, allow Medicare – and its poor cousin Medicaid – to use their huge bargaining leverage to negotiate lower rates with hospitals, doctors, and pharmaceutical companies. This would help move health care from a fee-for-the-most-costly-service system into one designed to get the highest-quality outcomes most cheaply.
Estimates of how much would be saved by extending Medicare to cover the entire population range from $58 billion to $400 billion a year. More Americans would get quality health care, and the long-term budget crisis would be sharply reduced.
Let me say it again: Medicare isn’t the problem. It’s the solution.
Robert Reich is Chancellor’s Professor of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. He has written thirteen books, including “The Work of Nations,” “Locked in the Cabinet,” “Supercapitalism” and his latest book, “AFTERSHOCK: The Next Economy and America’s Future.” His ‘Marketplace’ commentaries can be found on publicradio.com and iTunes.
Comments (from original thread). See if you can spot the capitalist troll.
# NCMike 2011-04-13 08:13
Insurance premiums and copays are costs that individuals bear; they do not add to the deficit. Even in instances where people don’t pay their medical bills, the costs get transferred to those that do (higher premiums, rising prices for services). Stating that the average lifespan is less than other nations does not prove inadequacy of our health care system. There are a multitude of reasons for this, the biggest being obesity. Americans are largely heavier than citizens of other nations and that leads to serious health conditions. Our administrative costs are higher because of government regulation and our legal system. Precautions have to be taken to avoid lawsuits and to comply with a gargantuan regulatory structure. A universal system would lead to rationed services. It is the only way to cover everyone and get costly treatment for them all (look what other nations do). Not to mention that innovations in health care would cease. Companies could not make money bringing new drugs and equipment to the market, so they would stop doing so. America is the leader in new drugs and treatments because our system allows for people to take risks. Our system is not perfect but expanding Medicare is a sure fire way to financial ruin and decreased quality in medical treatment. There are other alternatives.
# LiberalLibertarian 2011-04-13 09:43
Did you gag when the Insurance Companies stuffed that pant load down your throat?
None of your bilge made any sense nor did it actually address the critical point brought up by Prof. Reich.
# NCMike 2011-04-13 13:27
Where did I support insurance companies? Stop jumping to conclusions. Medicare does not cost less; it shifts the costs to the private sector. At the end of the day, someone has to pay. When Medicare and Medicaid reduce the rates, insurers get billed more, and they then pass that cost on to consumers. If there is no one to shift the burden to, then services and staffing will have to be reduced. You also omit that in one instance private individuals and corporations pay the bill and in the other the federal government pays the bills for everyone.
# soularddave 2011-04-13 19:12
You need to go back and read the article again, sir. The point made over and over, is that many of the costs are ELIMINATED. The billing is direct, and there is none for the unnecessary profit generators like unnecessary MRIs. Medicine just coats less. Medicare payments from workers and taxes on the population are LESS than insurance premiums that are no longer due. When you see a specialist or leave the hospital, there is NO PAY WINDOW.
# Paul 2011-04-13 10:08
NCMike, you make some assumptions here that are ludicrous. Other countries have regulatory systems, maybe not quite as GOOD as ours but they are there. As for rationed services, services are rationed here much more than in countries with universal coverage. You ignore the fact that in order to even be able to get treated in the US, you have to have cash or insurance coverage up front. I know this for a fact because I have had to watch as 3 different family members died due to lack of treatment because the hospitals refused to treat them without a deposit of $75,000, which they did not have.
# NCMike 2011-04-13 12:54
Paul – you are either not telling the truth or are not accurately portraying the situation. It is required by law that anyone with a life threatening situation be at least stabilized. Medical care must be provided to stabilize a person, any treatment beyond that may be denied without compensation.
# Paul 2011-04-13 10:08
This is a continuation of my comments. The system said it was too long.
This leaves the US with the most draconian of rationing in that only those with money get treatment. How in the world do you find this superior in any way. As for companies and innovations, you claim that America is the leader in new drugs and treatments, which it is not. If you will do a quick and cursory check on the Internet, you will find that the majority of medical advancements are now made in foreign countries by foreign corporations. Of course, this begs the question of what is a foreign corporation, since almost every corporation with the wherewithal to make any medical advancements is an enormous multinational corporation. Finally, you contradict yourself. You say we have a “gargantuan regulatory structure” stifling innovation and that precautions have to be taken to avoid lawsuits. Then, you turn around and say our system allows people to take risks. It can’t be both ways. What are these other alternatives of which you speak?
# NCMike 2011-04-13 13:31
Attempting to avoid litigation is not the same as avoiding litigation. Nothing prevents someone from filing a lawsuit; once filed, no matter how frivolous, a defense has to be set forth. Look deeper into the numbers. Look at who has the the better numbers for success at treating the truly deadly diseases. Compare apples to apples. The US has more costly medical treatment because it has better results.
# Observer 47 2011-04-13 11:16
“America is the leader in new drugs and treatments”? Where did you hear THAT?
# maddave 2011-04-13 13:03
You nailed it, Sir! As a retired 30 year Navy Man, I have the world’s best medical care: Medicare (primary) & Tricare for Life (secondary). Both systems are run by the U S Government and neither has an overhead even approaching the 30%-of-net premiums logged in by commercial health care companies . . . which, incidentally, is a misnomer. Our private “health care providers” are NOT providers at all. They are strictly for-profit brokerages that slice profits from both ends of the loaf by denying as many procedures as possible for patients and beating up on the true providers for drastic discounts on such procedures as are allowed . . . and those such savings ARE NOT passed on to patients in diminished co-pays.
Since I pay a max of $9.00/month per prescription, I’ll never have to decide whether to “afford” my food or my pills.
Basic dental health care is a low-pay option, too, and my wait to see top-rated physicians is no different from that experienced by Mr. or Mrs. Got-rocks, the self-insured plutocrats.
Yes, Sir! Medicare-for-all, if enacted, would be an economical step upward. It would save lives and was the outcome anticipated under President Obama’s 2008 mandate!
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