Medicare turns fifty next week. It was signed into law July 30,
1965 – the crowning achievement of Lyndon Johnson’s Great Society. It’s more popular than ever.
Yet Medicare continues to be blamed
for America’s present and future budget problems. That’s baloney.
A few days ago Jeb Bush even suggested phasing it out. Seniors
already receiving benefits should continue to receive them, he said, but
“we need to figure out a way to phase out this program for others and move
to a new system that allows them to have something, because they’re not going
to have anything.”
Bush praised Rep. Paul Ryan’s plan to give seniors vouchers
instead. What Bush didn’t say was that Ryan’s vouchers wouldn’t
keep up with increases in medical costs – leaving seniors with less coverage.
The fact is, Medicare isn’t the problem. It’s the solution.
Its costs are being pushed upward by the rising costs of
health care overall – which have slowed somewhat since the Affordable Care Act
was introduced but are still rising faster than inflation.
Medicare costs are also rising because of the
growing ranks of boomers becoming eligible for Medicare.
Medicare offers a way to reduce these underlying costs – if
Washington would let it.
Let me explain.
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 almost two and a half times the average of other
Yet the typical American lives 78.1 years – less than the
average 80.1 years in other advanced nations. And we have the highest rate of infant mortality of all advanced
Medical costs continue to rise because doctors and hospitals
still spend too much money on unnecessary tests, drugs, and procedures.
Consider lower back pain, one of the most common ailments of our sedentary society. Almost 95% of it can be relieved
through physical therapy.
But doctors and hospitals often do expensive MRI’s, and then refer
patients to orthopedic surgeons for costly surgery. Why? Physical therapy
doesn’t generate much revenue.
Or say your diabetes, asthma, or heart condition is acting up.
If you seek treatment in a hospital, 20 percent of the time you’re back within
It would be far less costly if a nurse visited you at home to
make sure you were taking your medications, a common practice in other advanced
nations. But nurses don’t do home visits to Americans with acute conditions because
hospitals aren’t paid for them.
America spends about over $19 billion a year fixing medical
errors, the worst rate among advanced countries. Such errors are the third major
cause of hospital deaths.
One big reason is we keep patient records on computers that
can’t share the data. Patient records are continuously re-written and then
re-entered into different computers. That leads to lots of mistakes.
Meanwhile, administrative costs account for 15 to 30 percent of
all health care spending in the United States, twice the rate of most other advanced
Most of this is to collect money: Doctors collecting from hospitals
and insurers, hospitals collecting from insurers, insurers collecting from
companies or policy holders. A third of nursing hours are devoted to documenting what’s done so that insurers have proof.
Cutting back Medicare won’t affect any of this. It will just funnel
more money into the hands of for-profit insurers while limiting the amount of
care seniors receive.
The answer isn’t to shrink Medicare. It’s to grow it –
allowing anyone at any age to join.
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
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
Meanwhile, as for-profit insurance companies merge into giant behemoths
that reduce consumer choice still further, it’s doubly important to make
Medicare available to all.
Medicare should also be allowed to use its huge bargaining
leverage to negotiate lower rates with pharmaceutical companies – which
Obamacare barred in order to get Big Insurance to go along with the
These moves would give more Americans quality health care, slow
rising healthcare costs, help reduce federal budget deficit, and keep Medicare going.
Let me say it again: Medicare isn’t the problem. It’s the