Medicare and the Health Care Debate

We’re in the heat of battle, so to speak, on health care reform, and the rhetoric is flying. Lots of untruths are flying too, many intentional (see “propaganda”). Here are some facts, with links, to help clarify this critical care issue.

Specifics of the cost / benefit comparison. The data is from the Medicare Payment Advisory Commission, a Congressional research service set up under GW Bush as a part of Medicare modernization. This data below is from their March and June 2008 reports to Congress, available (pdf) from MedPAC

Medicare pays doctors 19% less than private insurers, yet 97% of doctors (and nearly all hospitals, which are paid 25% less) accept new Medicare patients, virtually the same percent (no statistically significant difference) that accept private PPO patients. That is solid, numerical proof of concept.

Thus it is possible for a big payer to negotiate lower prices, which has to be a part of  “cost containment” in health care, and our government has done better than any other (domestic) source. Plus, they have succeeded with the highest risk patient population in the business, the elderly. A common response from public health care opponents is that providers shift costs to private payers, but no one has offered proof. As disproof, my Medicare-accepting doctor is not allowed to charge private insurers any more than my Medicare-denying doctor friend. If private insurers are picking up the tab for Medicare patients, that’s their problem. They’re unable to negotiate a price that meets what our government can.

Another common talking point is that if we don’t pay too much, we’ll strangle “innovation” in health care. With respect to insurance, insurance company “innovation” such as “new products” does nothing to improve health care. With respect to big pharma, they have not felt the heat nearly enough to lower costs. They lie constantly about how they need big profits to drive innovation, but the truths are: first, they need government to drive innovation, and second, they are no more innovative than their European and Asian rivals, who now dominate the pharma market (4 of the top 5). On the first point, look at taxol, one of our newest chemotherapy agents. Discovered by government grants to an academic researcher, the development was funded by NIH, yet Bristol Meyers Squibb got the patent and then wants top dollar from the very people, “we the people” who gave them the drug in the first place.

Then opponents veer off into the Friedmanite mantra “privatize, deregulate” saying if we just give insurers more slack (less regulation) they’ll compete by lowering prices and becoming more efficient. The “free market” argument is propaganda.

Health Care for America Now (HCAN), uses data compiled by the American Medical Association to show that 94 percent of the country’s insurance markets are defined as “highly concentrated,” according to Justice Department guidelines. Predictably, that’s led to skyrocketing costs for patients, and monster profits for the big health insurers. Premiums have gone up over the past six years by more than 87 percent, on average, while profits at ten of the largest publicly traded health insurance companies rose 428 percent from 2000 to 2007.  LINK

For those who think government can’t run an insurance program, take a look at the national flood insurance program. Insuring people in flood plains is just too risky for private insurance, so the government has to do it, and does it well. Same thing with Medicare. The expensive risk pool of over 65 Americans is too risky for private insurance, yet the government runs the program at MUCH lower cost than private insurance manages with the easier risk pool. Plus, private insurers take advantage of and use the work of millions of staff hours of federal work (like their diagnosis system) and still private insurers and their adherents pretend that the free market is so efficient and the government so inept.

Malpractice is another boogey man of the right. If only patients harmed by negligence, corruption or incompetence couldn’t sue, the cost of health care would plummet, they contend. So tort reform over the objections of “trial lawyers” (another boogeyman to the right) would save the day.

Reality chack: Malpractice is actually a tiny part of health care cost, around 2%, and doctors who are crooked or incompetent deserve judgments against them. Malpractice *insurance* is costly, but that’s the same insurance industry that is responsible for other out of control costs. A Dartmouth College study destroyed the idea that insurers raised malpractice rates to cover lawsuit costs. In fact, they were covering losses due to their bad investments.

Researchers found that payments grew an average of 4 percent annually during the years covered by the study, or 52 percent overall since 1991, but only 1.6 percent a year since 2000. The increases are roughly equivalent to the overall rise in healthcare costs, said Amitabh Chandra, lead author and an assistant professor of economics at the New Hampshire college…

Meanwhile, malpractice insurance premiums for internists, general surgeons, and obstetricians have skyrocketed since 2000, jumping 20 to 25 percent in 2002 alone…

It has been proven repeatedly that “caps” and other “tort reforms” do not work. States that have enacted so-called “tort reform” have only seen their insurance rates continue to shoot up after passing severe liability limits. ” In all states with severe caps “insurers have continued to increase insurance rates.”

Another common talking point is that a government run program will be a horror story because “big government” is so bad and evil, run by “heartless bureaucrats” and will be worse than private. That’s a scare tactic. Government already covers almost half of health care in the US, so it’s not a speculative exercise of how bad they could do. There is fully as much data on government paid health care as there is for privately paid health care. Medicare wins hands down. Not sure? Name a single other insurance policy, outside of a government one, that has these features:

no eligibility requirements or physical
no exclusion of pre-existing conditions
no cancellation for excess use of services
no penalty for moving or changing jobs
no re-applying for coverage if moving or changing jobs
a stable, mature program known to both physicians and patients
no marketing cost
no sales cost
no commissions
no bloated executive salaries
no palatial executive suites
no corporate jets or limos