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TechnoratiThe Plot Against Medicare
The plot against Social Security failed: President Bush's attempt to privatize the system crashed and burned when the public realized what he was up to. But the plot against Medicare is faring better: the stealth privatization embedded in the Medicare Modernization Act, which Congress literally passed in the dead of night back in 2003, is proceeding apace.
Worse yet, the forces behind privatization not only continue to have the G.O.P. in their pocket, but they have also been finding useful idiots within the newly powerful Democratic coalition. And it's not just politicians with an eye on campaign contributions. There's no nice way to say it: the NAACP and the League of United Latin American Citizens have become patsies for the insurance industry.
To appreciate what's going on, you need to know what has been happening to Medicare in the last few years.
The 2003 Medicare legislation created Part D, the drug benefit for seniors — but unlike the rest of Medicare, Part D isn't provided directly by the government. Instead, you can get it only through a private drug plan, provided by an insurance company. At the same time, the bill sharply increased payments to Medicare Advantage plans, which also funnel Medicare funds through insurance companies.
As a result, Medicare — originally a system in which the government paid people's medical bills — is becoming, instead, a system in which the government pays the insurance industry to provide coverage. And a lot of the money never makes it to the people Medicare is supposed to help.
In the case of the drug benefit, the private drug plans add an extra, costly layer of bureaucracy. Worse yet, they have much less ability to bargain for lower drug prices than government programs like Medicaid and the Veterans Health Administration. Reasonable estimates suggest that if Congress had eliminated the middlemen, it could have created a much better drug plan — one without the notorious "doughnut hole," the gap in coverage once your annual expenses exceed $2,400 per year — at no higher cost.
Meanwhile, those Medicare Advantage plans cost taxpayers 12 percent more per recipient than standard Medicare. In the next five years that subsidy will cost more than $50 billion — about what it would cost to provide all children in America with health insurance. Some of that $50 billion will be passed on to seniors in extra benefits, but a lot of it will go to overhead, marketing expenses and profits.
With the Democratic victory last fall, you might have expected these things to change. But the political news over the last few days has been grim.
First, the Senate failed to end debate on a bill — in effect, killing it — that would have allowed Medicare to negotiate over drug prices. The bill was too weak to have allowed Medicare to get large discounts. Still, it would at least have established the principle of using government bargaining power to get a better deal. But in spite of overwhelming public support for price negotiation, 42 senators, all Republicans, voted no on allowing the bill to go forward.
If we can't even establish the principle of negotiation, a true repair of the damage done in 2003 — which would require having Medicare offer seniors the option of getting their drug coverage directly, without involving the insurance companies — seems politically far out of reach.
At the same time, attempts to rein in those Medicare Advantage payments seem to be running aground. Everyone knew that reducing payments would be politically tough. What comes as a bitter surprise is the fact that minority advocacy groups are now part of the problem, with both the NAACP and the League of United Latin American Citizens sending letters to Congressional leaders opposing plans to scale back the subsidy.
What seems to have happened is that both groups have been taken in by insurance industry disinformation, which falsely claims that minorities benefit disproportionately from this subsidy. It's a claim that has been thoroughly debunked in a study by the Center on Budget and Policy Priorities — but apparently the truth isn't getting through.
Public opinion is strongly in favor of universal health care, and for good reason: fear of losing health insurance has become a constant anxiety of the middle class. Yet even as we talk about guaranteeing insurance to all, privatization is undermining Medicare — and people who should know better are aiding and abetting the process.
Copyright 2007 The New York Times Company
9 Comments so far
Show AllWhy are so many people surprised that the insurance companies are raping consumers? This is what happens when you put the power to make decisions about healthcare into the hands of people who MAKE MONEY BY NOT PROVIDING SERVICE. Think about it. And now we have the best government their money can buy.
Krugman missed a gargantuan issue in his article: If the 2003 Medicare Drug Benefits are not repealed, they are going to bankrupt America. After this legislation was passed, the BIPARTISAN Government Accountability Office gave a rebuttal to the Bush administration BS cost estimates. It added THIRTEEN TRILLION DOLLARS in just one year to our long term, unfunded fiscal commitments. For the Pharmaceutical Corporations, HMO's and their legion of lobbyists that got this legislation passed, it is a win - win proposition. Win number one is this is essentially corporate welfare, hand outs to multibillionaire multinational drug corporations and HMO's. If this bankrupts the government, the obvious next step would be privatizing all medical services.
And the GAO has issued subsequent reports estimating the total longterm unfunded fiscal commitments as over FORTY-THREE TRILLION DOLLARS. In another report, it clearly stated that the current pace of spending cannot be sustained, and if continued will bankrupt the federal government.
And if you think this is just a liberal stimulated issue,read what the conservative Heritage Foundation has said, that Bush is the one that is ultimately signing these bills, and therefore the one to blame
And if anyone wants a quick and easy fix to the medication problems, just allow Americans to buy Candadian prescription drugs freely over the internet. Since the defenders of these huge corporations are constantly citing capitalism as a rationale, you can use capitalism and real competition to drive prices down as a rationale for Canadian pharmaceuticals in the US. I'm sure the sdo called capitalist corporations offering life saving or preserving drugs at over 100 percent profit won't mind a little competition.
The question is how can the general public eventually be victorius against the powerful consortium of insurance, pharmaceutical and hospital companies. Even though the vast majority of Americans have always supported the idea of universal health coverage, it is still politcial suicide for a Democrat or a Republican to run on such a platform.
When someone like Dennis Kucinich comes out in favor of popular ideas such as universal health coverage or immediate withdrawal from Iraq, the media either dismiisses them as a radical or worse...they ignore them. Instead we hear about how much each potential candidate has raised for their election runs. Yet the huge coffers are actually an indication of how much they are being sucked into corporate dependency. In reality we should throw our support behind candidates who can boast minimal campaign funds (no corporate sponsorship) as proof of their intentions and independence.
Is there any hope of such an enlightment occuring in our lifetime? Hmmmm.
Gore Vidal once said that insurance companies are the piggy banks for the large corporations. Recently I was thinking that one third of my income goes to taxes and insurance, and certainly the insurance feels like legal extortion. Property tax, homeowner's insurance, car insurance, car registration, sales tax, telephone tax, income tax... the rates in Florida for home insurance, depending on type of home are a monopoly. There is no place to shop around for "other" coverage. I know individuals who have had medical troubles and been denied coverage, and some who paid all their lives and when they needed help, were told "their condition" was not covered. Add the lack of government negotiating fair prices on drugs for the elderly against the more ugly sin of extorting money from impoverished third world people (NAFTA and "intellectual property" related rules of trade) who could buy generic drugs much cheaper, but would be "violating" trade rules. These bloated big pharma semi-human beings just see their profit margins, not the lives lost or decimated. More and more, as our representative democracy becomes a political pay-per-view, it seems the workers are fast becoming the slaves of old Egypt ("let my people go!") and the pharaohs, the corporations that decide on all the things that so directly impact our lives. Freedom, democracy, justice, liberty, the pursuit of happiness? Guess we'll need to trade for them on Ebay at best.
One of the biggest scams perpetrated by Bush's Medicare debacle is the gift he gave to Big Pharma by forcing seniors to buy their drugs at exorbitant prices here, rather than the much lower rates Canadians pay for the same medications.
Since the GOP neocons weaseled their way into the AARP and eviscerated it -- essentially turning it into an organization that peddles insurance rather than fight for older Americans, there is no large citizen-based organization opposing these Republican 'gift our campaign contributors and gouge the taxpayer' programs.
Once Asia decides to stop funding Bush's wars and the loans dry up, both Republicans and Democrats will 'bipartisanly' cut all social programs to pay back Bush's running up of the debt.
Then, just think, seniors won't have to worry about Medicare anymore; they'll be too busy figuring out where their next meal is coming from. I certainly hope they've cleaned the pet food of toxins by then.
Peabody Coal used to have a steam shovel so big I think they called it the "Mountain Killer". Right now, Corporate America, acting through "our" political class is a bigger steam shovel for transferring the wealth of this country to the Richfilth than Peabody ever dreamed. The monsters will run that steamshovel until we have nothing. Then, healthcare like education will be a matter for the Richfilth and no one else. In a feudal society, peasants don't get healthcare or education, they are 'fungible' as our former Reichsmarshall Rumsfeld once said about our soldiers. In an Oligarchy we are all fungible.
Peace.
This representation is not totally accurate. If, under fee for service Part C Medicare (No insurance co), the government spends $800 per person per month. An insurance company may be able to "charge" or spend only $600 (including profit) per person per month to provide the same Medicare coverage. The $200 savings would be retained/shared by both the insurance(75%) company and the gov (25%). The insurance company would then use the $150 portion of savings to offer additional health benefits to the insured beyond what Medicare covers. The gov never pays out more than the $800 average it would have originally spent if the insured were covered under traditional fee for service Medicare.
There are "actual" savings and additional benefits for the insured by contracting with insurance companies. The scam is (the author does mention this) that the gov should be in a better position to contract for reduce rates such that it would only have to spend the $600 or less. By orchestrating regular fee for service to run in an inefficient manner, the gov creates a "superficial" problem whereby insurance companies can exploit the high cost program, run a more efficient operation and make a profit with the same amount of money.
These private Insurance companies are in it for profits, to hell with excellent care for the people. Medicare is loosing ground fast, the big boys at the top of the ladder are living the high life. We need universal health care for everyone. It is a shame the direction this country has taken, it is loosing it's soul, for profits. Money has replaced the integrity of caring about humanity. Thankyou Paul for keeping up with the crap that this Administration has manipulated to enable corporatism. It's not about the people it's all about the money!
Plain language like Mr Krugmans from a real progressive politician much like FDR would have described the 'Plan D' as a back door for private industry to the little man's or women's pocket.
Thanks to Paul Krugman for throwing this issue into the faces of Democratic hopefull politicians.