THE BLOG
11/02/2012 05:23 pm ET Updated Jan 02, 2013

Medicare and the Election

Anyone who studies the data knows that Medicare delivers comparable benefits at lower cost than private insurance; it is simply more cost-effective. Yet in the name of addressing our budget deficit, candidates Mitt Romney and Paul Ryan say that, if elected, they will hand management of Medicare over to private insurance companies. Privatization is one way for the federal government to limit spending, but only at the price of compromising care for Medicare enrollees and driving up overall health care costs for American families.

Medicare is far from perfect, but it works. I have spent most of my professional life counseling Medicare enrollees and researching and reporting on Medicare and health care policy, and the evidence is robust that Medicare delivers better access to care, at lower cost, than commercial health insurance.

On the cost front, private insurance is on an unsustainable trajectory. Right now, private insurance costs 11 percent more than Medicare for the same benefits, and its per capita costs are projected to rise almost 50 percent faster than Medicare over the next decade. The Congressional Budget Office has said that privatizing Medicare would require typical 65-year-olds to pay 68 percent of the cost of their care by 2030, way more than double the 25 percent they would pay under current law.

Medicare benefits are not lavish today. The typical senior must pay about $4,600 out of pocket for covered health care. Five million enrollees with the greatest health care needs spend more than $11,000 each on health care, from median income of $22,000. Expecting older adults to pay more in a privatized Medicare program would jeopardize their access to care. The tiny percentage of them with incomes over $85,000 already pay as much as three times more in premiums than everyone else.

What about quality? The dominant private insurers, like United HealthCare and WellPoint, consider their performance data -- the quality of the care they make available to their enrollees -- "trade secrets." With little if any meaningful data available on their value proposition, there is every reason to believe that insurers keep researchers and the public in the dark because they do not perform as well as Medicare. All we know are anecdotal horror stories about unaffordable and largely unforeseeable out-of-pocket costs that insurers impose on people with costly needs.

The conservative notion of health care competition in a privatized system controlling medical costs is pure fiction. Most metropolitan areas have only one big hospital or health system, making it nearly impossible for a dominant insurer to curb provider price increases without sacrificing market share to a rival that will pay the higher rates. The hard fact is that the smaller integrated care organizations -- the ones we believe to have superior quality of care -- have virtually no chance of entering new markets while large insurers and hospitals continue to merge, acquire more market power and set take-it-or-leave it prices. Like the quality information, the pricing data is treated as a business trade secret.

In contrast, Medicare wields tremendous market leverage to keep prices in check while pooling and spreading risk across the nation, guaranteeing our parents and grandparents' health and financial security. Medicare data enables us to monitor its performance, to measure access to doctor and hospital services, understand geographic practice differences, test and assess the impact of payment reform on the delivery of services, and improve our health system. Medicare also enables us to monitor hospital quality and provider-specific performance.

And, it's time to bust the myth that Medicare is responsible for the federal deficit today. The bursting of the housing bubble and the wars in Iraq and Afghanistan are to blame for that. Though it's true that Medicare will consume a growing percentage of the GDP in the long-run as baby boomers continue to retire, it's the dysfunction of our overall health care system that is driving up costs significantly. We need to address health care costs writ large through delivery and payment reforms, not simply shift the financial burden to millions of vulnerable older adults and pretend that working people aren't being hurt.

Some fear our polarized politics won't permit smart reforms that improve care and hold down costs, but it's time to put forward bold and sensible ideas. We cannot risk privatizing Medicare for political expedience. We have to put our children and grandchildren first, not saddle them with paying for their parents' and grandparents' care.

Medicare is security for our elders, people with disabilities and all families. It's the model for controlling costs and promoting better care. It's our nation's most powerful tool for driving improvements in the health system. Supporters of private industry should know better than to put blind faith in the marketplace. When it comes to health care, our nation's tried and true Medicare program must remain a large piece of the solution to our nation's challenges.

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