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 health care 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 health care 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 the author of Aftershock: The Next Economy and America's Future, now in bookstores. This post originally appeared at RobertReich.org.
However, for profit health insurance as the only option does not seem fair to most of us. We should expand Medicare, group bargain for drugs on the city, state, and federal level, and provide a real public option. We will lose even more family practice doctors by cutting rates, not insurance companies. Given that costs will rise, the conversation should turn toward heroic measures, end of life care, and living wills. That's the third rail. We LOVE heroic measures in this country, at the expense of prevention and reasonable intervention, thus creating undue suffering and useless intervention.
This is the way that I see it, HR 676 - Medicare for all Americans is the solution... smile :-)
How about extending your argument, al la the Victorian age, "what the point of free primary school education... there's only grief in teaching the poor to read and write, and don't get me started on arithmetic... pfft!".
Reich is on about making an investment in your economy's infrastructure. One that Private is incapable of doing. Trickle down economics does not work. That's been obvious for centuries. You ideologues need to get a more balanced perspective. Just expecting a reach-around from the uber wealthy whilst they're doing you just not going to cut it.
Coming at you from that communist paradise Australia. The ONLY economy to grow in the GFC. :P
I'll never understand the paranoia that leads people to object to agencies that try to maintain healthy standards on products, water, chemical dumping, air quality, and our ecosystem in general. Safe roads and bridges? Standards. False advertising or swindles? Standards. After all, we generally have very safe public water systems, yet the 'free market' has convinced the populace that bottled water is worth our money and landfill space.
What was your complaint again?
Should 5,000,000 people support 350million people?
I think I have a health care cost solution here, staring me in the face. Don't you think so?
That would be . . . .
SOCIALISM!!!!
Even worse . . . .
Nobody would get rich!
You know that, I hope.
The Mayo organization had 3,700 staff physicians and scientists and treated 526,000 patients in 2008. It lost $840 million last year on Medicare, the government’s health program for the disabled and those 65 and older, Mayo spokeswoman Lynn Closway said.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aHoYSI84VdL0
http://getbetterhealth.com/medicare-is-bankrupting-doctors-and-hospitals/2010.01.11
"Medicare pays hospitals between 93% and 97% of what it costs them to provide care, while private insurance pays between 115% and 125% of those costs"
http://www.healthbeatblog.com/2009/08/does-medicare-underpay-hospitals-.html
no one in the articles bother to mention that a large proportion of the work they pay for is in admin to recuperate monies. this expenditure of capital to ensure payment is a huge problem as most doctors have to hire multiple assistants just to work in billing. this is one of the underpinning problems is the increased overhead due to our diversity in healthcare systems and their lack of connections with the rest of the systems. providers are paid per service rendered rather than outcomes or paid per patient or paid per time spent etc. hospitals have been caught telling their doctors to order more MRIs because the hospital gets a good reimbursement (private and public) for each one, while doctors call for unnecessary tests to protect themselves from litigation as well. the problem is the entire structure of our healthcare model and oversimplifying the topic by mentioning a single problem within a very broken healthcare system is a fallacious and specious
Are you aware what the Mayo Clinic is doing with Medicare?
The Mayo Clinic, praised by President Barack Obama as a national model for efficient health care, will stop accepting Medicare patients as of tomorrow at one of its primary-care clinics in Arizona, saying the U.S. government pays too little.
More than 3,000 patients eligible for Medicare, the government’s largest health-insurance program, will be forced to pay cash if they want to continue seeing their doctors at a Mayo family clinic in Glendale, northwest of Phoenix, said Michael Yardley, a Mayo spokesman.
The Mayo organization had 3,700 staff physicians and scientists and treated 526,000 patients in 2008. It lost $840 million last year on Medicare, the government’s health program for the disabled and those 65 and older, Mayo spokeswoman Lynn Closway said.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aHoYSI84VdL0