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Mr. President: Why Medicare Isn’t the Problem, It’s the Solution
I hope when he tells America how he aims to tame future budget deficits the President doesn’t accept conventional Wasington 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, one of the nation’s leading experts on work and the economy, is Chancellor’s Professor of Public Policy at the Goldman School 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. Time Magazine has named him one of the ten most effective cabinet secretaries of the last century. He has written thirteen books, including his latest best-seller, Aftershock: The Next Economy and America’s Future; The Work of Nations; Locked in the Cabinet; Supercapitalism; and his newest, an e-book, Beyond Outrage. His syndicated columns, television appearances, and public radio commentaries reach millions of people each week. He is also a founding editor of the American Prospect magazine, and Chairman of the citizen’s group Common Cause. His widely-read blog can be found at www.robertreich.org.
77 Comments so far
Show AllEven lowering the age for Medicare would make a major dent in the one problem everyone claims to want to solve. Currently the only thing keeping many older workers in the work place is the need for employer-provided health care. They can claim social security younger, they can cash in 401-ks and IRAs, and if they are burned out or even if they have an older retired spouse and want to retire with them, they cannot get on Medicare until they are 65. How many jobs would open up for younger workers.......................
If Obamacare had extended medicare to those age 60 and older, millions of jobs would have open up for younger workers (the group experiencing the highest rate of unemployment of any age group) and Obama would not be lying when he tells us Obamacare is a baby step forward.
Once Obama adopts Ryan's proposed expansion of his regressive Obamacare to the elderly , many of the older workers who are now delaying retirement will never retire, thereby further increasing the unemployment rate for young Americans.
Excuse my cynicism but would jobs REALLY open up for younger people or would those left in existing jobs be expected to 'produce' more, for longer hours and for less money. If we look at the total hours people currently work over and above the 40 hour week how many people COULD be employed if working hours were strictly adhered to? Now it might be very different if we had universal health care and employers no longer contributed to health insurance? Universal Health care would help solve an awful lot of problems...
Its time to stop comparing the US with "every other advanced nation" now that the Democrats and Republicans are rapidly turning the US into a third world nation.
By adopting the Republicans' corporate welfare model for Obamacare, Obama reversed the progress made by medicare during the past 45 years. Obamacare provides a platform for corrupt politicians in both parties to expand the corporate welfare model into medicare and the the few other successful aspects of US health care.
and telling Obama that Medicare is the solution, not the problem, misses the point. Corrupt politicians want to create problems, specifically the kind of problems that present good business opportunities for the corporations that finance their campaigns.
Our inefficient health care system is "the solution" for rapacious capitalists. The economies of scale brought about by an extension of Medicare to age groups under 65 would represent diminished business opportunities for the capitalist class.
The solution, then, is to stop begging our current politicians for "solutions" they have absolutely no interest in, and start supporting leaders who are not afraid to publicly diagnose our real problems (by, among other things, using honest terminology even if such terminology offends key players from the mainstream comentariat).
Robert Reich is right...."for starters, allow anyone at any age to join Medicare"....screw the corporate "health" industry and the fascist Republicans.
The "Roosevelt" Seniors are almost all gone, they are being replaced by the much more conservative "Reagan" Seniors. Oh yay!
I'm shocked, shocked to find that the market doesn't solve all problems and doesn't provide an efficient use of resources.
It's time for single payer to be at the table.
"It's time for single payer to be at the table."
It's time for every aspect of socialism to be at the table.
Why waste our time trying to graft healthy branches on to a sick and parasitic plant?
Pull up the strangling weed of capitalism and let the flower of socialism flourish.
for port_lookout
Right On!
Amen, brother.
"Pull up the strangling weed of capitalism and let the flower of socialism flourish."
As Winston Churchill said: “Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery.”
Hey Horace one of your heros, John Bo(eh)ner just less than a year ago was very concerned about cuts to our socialized health care system for old farts:
http://www.johnboehner.com/?p=1297
Tuesday, June 8th, 2010 at 12:58 pm
Boehner told The Hill that “The American people don’t want the higher taxes, higher costs, MEDICARE CUTS, and payoffs to Washington special interests. No glitzy PR campaigns are going to change that.”
So on June 8th 2010, Boner says the American people DONT want Medicare cuts, then less than a year later his party proposes them with a glitzy PR campaign!!!
Horace, you guys are so full of crap you can't keep your lies straight! LOL! LOL! LOL! LOL!
And for the third time. How can you sit here all day long keyboard sparing with people? Shouldn't you be working for the empire like a good little Eichmann instead of mentally masturbating all over this site everyday?
Spoken like a true plutocrat.
Let's deconstruct.
Since the equal sharing of misery is unacceptable, we must maximize misery for the many in order to minimize misery for a few, pretty much inbred, sociopaths.
Was that before or after "Shall we gas the Kurds?" and "Let those anarchists burn"?
[February 1920 memo] [Sidney Street]
Reich sez: "Paul Ryan’s plan ... would funnel money into the hands of for-profit insurers, whose administrative costs are far higher than Medicare.
***
With all due respect, sir, this is the course Obama has chosen for the rest of the nation. Why would he (and the Democratic wing of The Party) reverse course with Medicare?
Exactly. Ryancare is nothing but the logical consequence of Romney-Obamacare.
Reich's vision is another tired left-wing wet dream.
Medicare is on the way to bankrupting the nation. In part because science and technology have provided more and more expensive ways of treating disease and prolonging life, the cost of taking care of the elderly has skyrocketed and will continue to do so unless checked.
Medicare worked, if imperfectly, in the 1960s and thereafter because the demographics hadn't yet caught up with it. Now that we have the Baby Boom retiring, the costs are spiraling out of control. There is no "magic" solution that does not involve a massive wealth transfer from young to old, and the single-payer system and Obamacare both rely on that transfer, which as a policy matter is a seriously wrong result.
Reich thinks of bigger and bigger government as a solution to all the Nation's ills. He's deluded. Don't let him delude you.
Hey Horace, you are the deluded one.
It's time your took your head out of your ass and look around. Every, EVERY other industrialized country on the planet has either a public health insurance program accessible by all or a subsidized/heavily regulated private health insurance system.
U.S. medicare has been subsidizing the U.S. private health insurance industry for over 70 years by removing those aged 65+ from their care onto the tax payer. The health insurance industry owes the U.S. tax payer.
The population is getting older. The solution is not to gut medicare. The solution is to have everyone on medicare, paying premiums and medicare making volume purchases at a discount.
Thanks, well said. and ditto that for me to Horace!
" Every, EVERY other industrialized country on the planet has either a public health insurance program accessible by all or a subsidized/heavily regulated private health insurance system."
Correcto. But EVERY other industrialized country on the planet doesn't have a 14+ trillion dollar debt to service either. 'Splain what you're gonna do about that?
Truth is, we're fucked.
True, but don't just accept this constrained thinking imposed by, mostly, conservative politicians.
First, the U.S. government debt is not the same as an individuals' or corporations' debt so don't treat it in the same manner. The U.S. government has been in debt since 1776.
Second, why do we have 14T in debt today, mostly because of spending on wars and the bailout of financial companies while at the same time drastic, irresponsible tax cuts were implemented.
The solution is easy: raise taxes to pre-1980 levels, cut military spending, regulate and tax financial transactions and the U.S. fiscal problems will disappear.
Truth is most of that debt is based on fraudulent wallstreet activity. Reinstate, ver-batum, glass-steagall, and separate honest indebtedness from fraudulent debt, and the vast majority of this phony debt disappears. Wallstreet is not too big to fail, these fraudulent parasites are too big to be allowed to exist. Then raise taxes on the rich, and reign in the runaway MIC, make Fed Gov't the employer of last resort (or even first resort ala a unionized, WPA/CCC-type organization, with HHS dept universal healthcare, DOT-supplied car insurance, HUD-supplied housing &home insurance, and a North Dakota-style nat'l bank) to BREAK the "lockout" of the business sector, then we'll be flying right & flying high again.
"Medicare is on the way to bankrupting the nation."
Well, guess what -- some government programs don't pay for themselves. Actually, none of them do; people pay for them. So really it all boils down to two questions of national ethics:
1. Is healthcare something that governments should be concerned with at all?
2. If so, then how does one priority-rank it?
I'm assuming your answer to the first question is "no," which rather makes further discussion on the matter senseless.
Whore-ass,
Lissen up jerkweed.
I had and still have taxes taken out of my pay every check for more than 40 years paying into Social Security and Medicare and I damn well better well get the benefits
THAT I PAID FOR!
Sure, just stop driving on all those roads I paid for. And if you fly more than I do, and I fly only every few years or so, I want my money back for the air traffic controllers who help you fly and keep jumbo jets from tumbling you around airplane cabins.... Everyone who has driven on a road, in a car with a seat belt, or attended a school, has accepted the social contract called government. You pay for your part in the social contract. A failure to understand that incredibly basic meaning of what government is has made the United States a dysfunctional joke.
"I had and still have taxes taken out of my pay every check for more than 40 years paying into Social Security and Medicare and I damn well better well get the benefits."
The money you so dutifully paid in was given out just as quick to others long ago. You have a statutory right to benefits, but then again Congress can, shall we say, modify those rights. That's what's being talked about for people under 50 or 55, in the interests of "fairness" (a word you progressives love and that can mean anything anyone wants it to mean).
Right! And the private insurance industry is holding every dollar I put into it in a nice high-yield escrow account for the day _I_ need it, and only asking a modest maintainance charge for the honor of overseeing my "investment".
The benign, altruistic non-profit private insurance industry didn't, in reality, collect mega-premiums from me when I was young and healthy and employed only to leave me high and dry when I became older and ill and disabled. A private corporation would NEVER do such a thing!
You really have no idea what you are actually saying, do you?
Read your insurance policy, you twit.
Big Insurance cheats the customer. Horace the Dunderhead rudely says "Read your insurance policy, you twit" even after the customer read it. No wonder this nation is a LAUGHING STOCK !
Since you've been oin a SS jag all day, read the Social Security Act, you douchebag. It was created as a separate account from general revenues paid for by a dedicated payroll deduction specifically to keep it from being used for anything but payments to retirees. Despite any statutory fuddling, it is illegal to use it for anything else. But you insist such breeches of contract are fine as long as 636 millioniares voted to steal it.
I find it gratifying that after 4 or 5 posts within 2 articles asking you legitimate questions you have no answers but to call me a "twit". What, were those answer not in the talking-point menu you received? Better call your supervisor. Or better yet, give me the number so I can advise him to fire your incompetent ass.
Then let's see you run to unemployment. Oh wait, the "self-employed" don't qualify for unemployment insurance. Pity! How you like them laissez-faire policies now?
They're great and you should be begging for dimes on the street.
I don't need to beg. Unlike the self-righteously-self-employed, I put enough into SS over my life to collect enough to live on. But then, I'm sure you've become rich on that generous mileage deduction offered the self-employed.
You and the other socialistic losers are in favor of redistributing income and wealth because you have little or none.
And you're in favor of crony corporate "socialism" of transferring all the wealth to the wealthy and corporate elite !
Let me ask. How do the systemic forces that condemn Medicare not act on the private insurance industry? That industry is simply Medicare with no consumer oversite and higher non-medical expenses, such as profit.
So I admit I'm a clueless socialist, do elighten me. How do the market and systemic forces that act on Medicare to render it insolvent not affect the the private insurance industry? Is not scientific and technological advancement increasing private insurance expenditures for care? Is not an aging population causing excessive demand on a private insurance system?
Please enlighten me. How is a private insurance company immune from the very same forces that you describe as acting on Medicare to render it unsustainable?
It can't be that private industry can always increase premiums. Eventually their consumer base will be tapped out. It can only come through denial of care - withholding rightful benefits in order to insure solvency. In effect, breeching the damn contract! Is not what we are seeing now in the private insurance industry - the increasing premiums that lead to denial of services - that very circiling of the drain?
Or is sustainability not an issue if there is short-term profit to be made? Sure, the private insurance industry must eventiually go belly-up too, and seems to be doing so as we speak, but until that day, it'll happily extract 30 cents on every dollar, and that's no problem, as far as you are concerned? 300 billion personal bankruptcies is a capitalist wet dream, a single bankruptcy of a govt. that can, essentiral, print it's way to solvency, is a crisis?
Further, you always malign "wealth transfer", either top to bottom or young to old, when enacted by an, ostensilby, democratic government, but seem perfectly at peace with wealth transfer, from bottom to top, in the form of extortion and gambling instruments, such as insurance, when enacted by the private industry. All in all, it sure gives the impression you have a droplist of talking points to fill your postings with, but little real understanding of what you are actually saying. And you get paid for being this stupid!
Is it just me or are these "I hope Obama will ... blah-blah-blah" articles turning out to be a real turnoff against us all? On almost every blog, either I hear another boring article about how bad the GOP is or another hope-schmope article expecting Obama to "turn a new leaf". Robert Reich writes well and knows what we all know about Medicare. However, Obama and the Democrats themselves blocked Medicare for All from getting a hearing let alone a passage even when they were in full power. Why expecting anything better now? The health care system in the USA has been systematically dying out and until nobody in the USA has Medicare, we will never get a Medicare for All or even a German health care system.
"JenniferBedingfield"
All of these pseudo-pleads to Obama are meant to deceive people into not holding the democrats accountable for their blatant corruption.
We are supposed to hear all of these voices as if they are some sort of proof that the democrats are reasoning and reasonable as they point to the foaming-mouthed republicans and say, (in essence) "THEY are insane!"
The truth is that the democrats have been infected by the same predatory virus, but are able to mask the symptoms through words and demeanor, for ever-shortening periods of time.
When Robert Reich and his "stay within the pale" ilk actually call for voters to remove themselves from the proximity of both of the diseased parties, then we might take them at their word.
As it is, they are hypocrites who see what needs to be done, but will not step outside the fence to seek the cure.
They are pathetic because they lack the courage to walk away and seek their own (supposed) remedy.
Keep up the good work.
Is capitalism wasting it's final breath or its final breath?
It's wasting OUR final breath.
Grammar! The last refuge of the terminally stupid.
That would certainly explain the sudden "outrages" I have been noticing on other sites. Yes, some of them have always been against Obama and pro Independent for the correct reasons and I will trust their outrage any day. Many others have peculiar ways of feigning outrage. Who's feigning outrage? Only the end of next year will give us that answer. That most articles just say the problem but give no hint of cures makes me and probably others wonder if there is a real future in the progressive blogosphere or if this is our sandbox prison.
P.S.: I enjoy learning more of the Swedish language so that I can communicate better on Swedish forums and reach out to more Swedish people for their in depth take on health care. It sure beats trying to "reason" with the Obamabots.
Well jennifer, you may have noticed that while we are in here blathering our opinions, we aren't out on the street busting bourgeois heads.
Circe en pane, as the saying goes. Just another distrraction to keep our eyes off the curtain.
I am not sure what the point of your reply was but I was not complaining about not getting out there and taking to the streets nor do I oppose it. I was talking about our ability to communicate well on the issues. Opinions are not the problem. I just wished that like the young in Europe, we could be successful in using forums to effectively organize. Unfortunately, we are stuck at the level of preaching to the choir and nothing else.
My point was that regardless of support or opposition for taking it to the streets, while we are in here bellowing to the choir, we sure as hell are not out there tearing down the walls. There is a time for communication and education. That time is well past, we need, truly, to get out from the keyboard and start storming the Bastille.
It wasn't a criticism of you, it was an observation that the corporations have found another form of distraction to lull the masses. Rome's "Bread and Circuses". Once, they made us too tired from 16 hr/7 day work weeks. Then they gave us TV to keep us entertained and docile. Now we sit disjointed and unorganized "communicating" our ideas.
I'm all for effectively communicating, but I'm not much of an organizer. Or more accurately, I couldn't sell water in the desert, for some reason. People laugh at me when I mention the sky is blue. But if there was some real action that could be effective, I have nothing to lose any longer by getting involved. Just, where is it? Somehow I don't think Chris Hedges is going to do it all himself.
All fine and dandy, but while we're communicating, they're stealing the egg money and the eggs. Yes, those scathing posts on the internet sure are making a difference! One wonders if the Berlin Wall would have come down if the East Germans had had the internet.
"phineas"
You have made many good points and "real action" is surely necessary.
The problem, for most of us here, is that we are here writing and venting because the vast majority of people in this nation are STILL not yet at a point in their deluded and desperate lives where they will even consider something as simple as voting for real change, much less even than protesting in the streets.
We here who see clearly are treated as if we are fools by the vast majority. The worst treatment I have received in my community has been the ridicule of liberal, highly educated, democrats who hypocritically work to be on good terms with most republicans while pretending that they are pursuing different goals. They are brainwashed into believing that accumulating monetary wealth is the greatest "right".
Simultaneously, the "blue collar" people in my community have largely been brainwashed by both corporate teams to believe the fault is in themselves and that the idea of "acting out" will only cause them more grief.
I have no way to convince anyone in my typical conservative community of anything. They are proud of their shackles and, to them, nature is primarily a place to make money and get thrills. They love my garden, but then they need to go to Disneyland.
I come to "CommonDreams" as a way to try to keep my sanity (despite the frequency of some less-than-inspiring authors) and (hopefully) develop my communication skills.
My "community" is, for the time being, beyond my physical human community.
I, like many here, can see the simplicity and great rewards of a different path, but we cannot force others on to seek it.
We can only tell our family where they will find us when they realize that they need us.
It's very true that, in general, we haven't reached crtical mass yet and most of the US is convinced they are in the elite class or will be someday, so don't rock the boat. They are also as uninformed as ants.
My neighbor almost had a heart attack when I tried to convince him that when Obama gives tax money to the corporations it is not socialism that is fascism. But how can it be? Hitler and Mussolini were fascists and fascism certainly won't come to the US, but communism and socialism have been knocking on our door for 50 years, it was in all the papers.
Then he complained how he wasn't about to use his tax dollars to pay for someone else's health care. That wasn't fair!
This is what we are up against, people who have been brainwashed into thinking day is night and right is left and war is peace and hate is love, etc.
You are not going to convince these people. Either they are educated, but uninformed and/or non-critical, and think their BS, MS, MBA, PhD will be a one-way ticket to the big leagues, or they are so undereducated they think anyone with a college degreee is an elitist snob who thinks they are better then they are.
I certainly undersand the need for community and the ability to "mind meld" with like-minded people. I'd go crazy if all I had was these stupid sociopaths for neughbors or the terminally apathetic friends to talk to.
But, to really effect change, the only thing left is action, even if it a suicide mission. Obama's administration, if nothing else, should have taught us that. It is the only thing that has ever worked. Remember, those who actually supported the American Revolution were in the minority, those who fought, and died, for the labor movement in the 1900s were in the minority, those who protested the Vietnam War in the 1960s were in the minority.
However, I am coinvinced the time for peaceful protest has come and gone. Ghandi could afford to be non-violent, Indians outnumbered the British 100 to 1. Martin Luther King couldn't afford to be violent, the US government would have simply shot every black man on the street. We don't have the numbers to sit around with our arms locked together. I am not a lover of violence, but when the only thing a sociopath understands is a busted nose, you have to give him one or accept that you're going to be bullied out of your lunch money every day. Sitting around commiserating with the other lunchless won't do a damn thing.
Hey Jennifer! I am from Sweden, and my sister is a MD, with her own practice.
Pleased to meet you and best wishes to your sister as well. :)
Reich is too sensible, something out of favor in Washington ...
I'm afraid Horace that you're off point here. The only reason the nation is bankrupt is because no politician in recent memory has gone after the people and the institutions with all the money. Corporate tax rates are lower in the U.S. than any other advanced nation and as a result our government is starved of money except for 1.2 trillion a year for the military. A country's real security lies in the security of each and every individual and that starts with the health of everyone. The U.S. is the only 'developed' country in the world where people go bankrupt simply because they got sick. That's as sick as it gets.