Medicare

Medicare Is Doomed

Something's got to give, no matter which party is in power.

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When Democrats accuse Republicans of wanting to "end Medicare as we know it," they are right. But Democrats do too. "Medicare as we know it" is no longer an option.

Leaving aside Medicare's fatal moral defect—that it's coercively funded—the program is doomed. It has tens of trillions of dollars in unfunded liabilities. It threatens working generations with a crushing tax burden. Because of the relative size of the Baby Boom generation, soon there will be only two workers to pay each retiree's medical bills. Younger people might have other plans for their money.

So something's got to give, no matter which party is in power. If the government promises to pay for older people's medical care essentially without limit, one would expect the bill to grow fast. It's the law of demand: as price falls, demand rises. Given that law, and assuming that taxes can't be jacked up, there's only one thing to do, short of abolishing the program: limit what the beneficiaries can buy.

But older people, who vote in great numbers, won't like that. So politicians need to deceive.

President Obama's health care plan would cut over $700 billion from Medicare. (He needs the money for Obamacare.) But he insists this will not reduce benefits. How can that be? The money will be taken from providers (and insurers under the popular alternative, Medicare Advantage), not beneficiaries, he says. But if reimbursements to providers are reduced, how could that not reduce benefits?

Obama replies, "eliminate waste." It sounds nice, but it means that government will second-guess the decisions of doctors and patients.

Obamacare sets up an Independent Payment Advisory Board (IPAB), consisting of 15 presidential appointees (confirmed by the Senate), whose job is to limit spending. Now we run into the law of supply: as the price of a service falls, supply tends to fall also. We can anticipate that fewer doctors will accept Medicare patients and some on-the-edge hospitals will close. Patients will wait longer for services.

Despite assurances that only "unnecessary" services will be eliminated, it is hard to have confidence that something as individualized as medical care can be managed by 15 distant "experts." Medical care "by number" will become the standard in America.

So the choice appears to be between Medicare bankruptcy and increasing government control over retirees' health-care spending.

The Republicans disagree. What do they propose? Mitt Romney and Paul Ryan would change Medicare from a "guaranteed-benefit" plan to a "guaranteed-contribution" plan. Instead of paying whatever bills retirees incur, the government would provide "premium support" to enable them to buy private coverage. Retirees would also have the option of staying in traditional Medicare, but since the Republicans predict that their plan will bring costs down through competition, they forecast that Medicare costs will be controlled without limiting people's choices.

Suspicion is warranted. "There's very little difference between the two [Obama and Ryan] plans," write John Goodman and Thomas Saving of the National Center for Policy Analysis. "There is no important difference in Medicare spending."

Ryan's misidentified voucher plan is not likely to deliver on cost control. The proposal would set up an insurance exchange in which companies offer government-designed policies. We know that providers will lobby the federal government to have their services included under the allowable plans. Moreover, Shikha Dalmia of the Reason Foundation writes, "Insurance companies selling coverage to seniors will have a bigger incentive to lobby harder, since the money will go to them." AARP will have a strong incentive to lobby too.

As a result, there will be more pressure to raise government spending—and we know where that leads.

There's no such thing as a free lunch. Money always has strings, and he who pays the piper eventually calls the tune. Opponents of Medicare warned of all this but were ignored. The welfare state is a snare and a delusion. It creates dependence at the point of a gun, and then, once dependency is achieved, it imposes restrictions that create hardship. All the while, the taxpaying generations bear an ever-greater burden.

It's time for the separation of medicine and state. Mutual-aid associations and other private for-profit and nonprofit organizations can provide for our medical needs—without bureaucratic intrusion and coercion.

This article originally appeared at The Future of Freedom Foundation.

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36 responses to “Medicare Is Doomed

  1. Mutual-aid associations and other private for-profit and nonprofit organizations can provide for our medical needs?without bureaucratic intrusion and coercion.

    At least you acknowledge that we have medical needs, and that the medical needs of old people are not solely to be considered as a financial drain.

    Of course you provide no evidence for this tacked-on assertion, including the extra-ludicrous one that private insurance doesn’t come with bureaucratic intrusion and coercion.

    The “overhead” costs of Medicare are roughly 3 cents on the dollar compared to similar costs in the private sphere at 22-33%. Trashing Medicare will only make the actual cost problem worse. The costs may not be transferred through the US Treasury, but they’ll still be there, and they will be much higher. Every shred of data in the world indicates this to be the case. The only real solution to the healthcare cost crisis in this country is universal single-payer.

    1. The solution is universal single payer? But Medicare ALREADY IS SINGLE PAYER! The government is the single payer who is paying the bill, and they are funded by the taxpayer. The current problem with medicare facing us is that there are too few taxpayers per recipient. Going to single payer doesn’t solve that financial logjam, it only makes it worse.

    2. The only real solution to the healthcare cost crisis in this country is universal single-payer.

      Wrong, as usual:

      http://www.oftwominds.com/blog…..07-09.html

      Everybody’s got an excuse in our current system, and perhaps that’s why it is morally and financially bankrupt. The U.S. (and certainly not Santa Monica) was not a Third World nation in 1952; people did not feel their healthcare was deficient or poor. There was simply no money to pursue marginal returns except perhaps for a few millionaires seeking exotic treatments. Fine, it’s their money; most died right along with the rest of us and at about the same lifespan…

      People save little to nothing for emergencies because they’ve learned to expect someone, somewhere, to pay for their healthcare. (It’s a “right.” Really? At whose expense? The Chinese who buy our debt?)

    3. Of course, Medicare hides its true costs through various accounting gimmicks that would get a private accountant tossed in the slammer and shifts a portion of its costs onto patients with private insurance by stiffing providers.

      1. Isn’t the federal government awesome?

    4. Re: Tony,

      At least you acknowledge that we have medical needs,

      I have sexual needs – where’s my free whore? Fork it out, you miser!

    5. Re: Tony,

      The “overhead” costs of Medicare are roughly 3 cents on the dollar compared to similar costs in the private sphere at 22-33%.

      Your statement tells me in no uncertain terms that you do not know what “overhead” means, which also tells me you’re an ignoramus; or your SOURCE doesn’t know either and you’re unable to know the difference, which makes you a fool.

      The costs are simply being passed to the supplier (the doctors) in the form of smaller payments, which explains why less and less of them are accepting new Medicare patients.

      1. OldMexican| 9.5.12 @ 6:42PM |#
        Re: Tony,

        The “overhead” costs of Medicare are roughly 3 cents on the dollar compared to similar costs in the private sphere at 22-33%.

        Your statement tells me in no uncertain terms that you do not know what “overhead” means, which also tells me you’re an ignoramus;”

        Shithead is certainly an ignoraumus under even the most complimentary definition.
        More importantly shithead is a purposeful, conscious liar. “Sleazy” doesn’t begin to define shithead.

    6. similar costs in the private sphere at 22-33%

      American healthcare costs are 50% to 200% higher then anywhere else in the world.

      The problem is not overhead.

      1. So the problem is a wider availability medical services, and better OTA medications than any other nation on the planet?

      2. So the problem is a wider availability medical services, and better OTA medications than any other nation on the planet?

    7. The only real solution to the healthcare cost crisis in this country is universal single-payer.

      Wrong! Show me one measly example of costs going down in a single-payer system?

      Meanwhile, I can point to every single medical service that is not covered by insurance, like breast implants, lasik, botox, and fertility treatments and you will see a very interesting trend. Over time the procedures become more advanced, the costs goes down, and the consumption by the hoi palloi goes up. Funny how markets work, isn’t it?

    8. You do know of course that Medicare **IS** a single payer system?

      1. Precisely. And a cheaper means of delivering healthcare, on an apples-to-apples comparison, than private insurance. Hence, let’s expand access to the cheaper means.

        1. I really can’t wait until you’ve fucked the wrong butt and end up with AIDS having to deal with Medicaid and Medicare doctors in your old age. I really can’t.

    9. T o n y| 9.5.12 @ 6:09PM |#
      “The “overhead” costs of Medicare are roughly 3 cents on the dollar compared to similar costs in the private sphere at 22-33%.”

      Ignoring the other lies, misdirections and just plain bullshit, prove it, shithead.

    10. The only real solution to the healthcare cost crisis in this country is universal single-payer.

      Which is more or less like saying “Well, fuck it, I’ve stubbed my toe, I might as well cut off both legs.”

  2. But if reimbursements to providers are reduced, how could that not reduce benefits?

    Providers willingly accepted reduced fees in exchange for a far greater number of insured middle-to-lower class.

    They made a business decision they predict will benefit them since write-offs will be greatly reduced.

    1. Re: Palin’s Buttwipe,

      Providers willingly accepted reduced fees in exchange for a far greater number of insured middle-to-lower class.

      “Now, ignoring the Law of Supply and Demand, calculate the following…”

  3. Of course you provide no evidence for this tacked-on assertion,

    I like how you ignore the ponderousness of evidence supplied by the history of mutual-aid association dating back to Ancient Rome.

    But then again, you would have had to have had a good education to be aware of that, which you obviously have not had. Still I won’t deny that you being the first Phi Beta Kappan from the University of Phoenix is a quite an accomplishment.

    1. *preponderousness

        1. Thank you.

          1. Hey, if the evidence is weighty, it still works in the original.

    2. No data about the efficacy of healthcare schemes that predates the modern age is relevant. People haven’t been living to 80 for very long in human history.

      Yes that means healthcare costs as a proportion of GDP will be higher than when people died at 40 and modern medicine didn’t exist. It also necessarily means that innovations have to be made to secure access to healthcare. The alternative is to let lots of old people go without. Oldness is the ultimate preexisting condition private insurance would be incentivized to deny coverage for.

      I’m making an argument for universal public insurance; there is absolutely no credible argument for denying it to old people. There is a horrific delusion at the heart of both free-market fantasies and Republican voucherization fantasies. It just doesn’t work in the market–assuming you define working as having affordable access to healthcare.

      1. While average life expectancy continues to increase with modern understanding of health, maximum lifespan range has not changed much at all in hundreds of years. As average lifespans reach the upper age limits of human body operation, average lifespan will plateau until some extreme organ maintenance and anti-aging procedures become available. Let’s have a look at an old textbook of mine that lists some historical figures and their ages: Galileo Galilei (1564-1642, 78), Robert Hooke (1635-1703, 68), Isaac Newton (1642-1727, 85), John Bernoulli (1667-1748, 81), Leonhard Euler (1707-1783, 76), Coulomb (1736-1806, 70), Clapeyron (1799-1864, 65), Otto Mohr (1835-1918, 83), Hardy Cross (1885-1959, 74). These are all consistent with a reasonable death age today of about 75 to 80. Standard of living, not reputable medical science contributed to these people living as long as they did. Shithead.

        1. You are one of the few people that understand this fact.

      2. …assuming you define working as having affordable access to healthcare.

        Affordable for whom, is the real question. Gold-plated health insurance would cost the mostly-better-off elderly population a hell of a lot less as a percentage of their income or assets than getting raped by the government to pay for their care is going to cost me as a percentage of my income or assets. The horrific delusion is that the gub’mint money is free, growing as it does on the gub’mint money tree.

  4. Sheldon Richman on Why Medicare Is Doomed

    Hell I can can explain that in one sentence:

    “Health care costs in the US are out of control.”

    here is a graph:

    http://ucatlas.ucsc.edu/health…..life75.gif

    1. Re: Corning,

      Hell I can can explain that in one sentence:

      “Health care costs in the US are out of control.”

      “But why is ‘t rainin’, paw?”
      “‘Cause water is falling in fro’ dem there sky, son! Why else?”

  5. Obama replies, “eliminate waste.”

    If he truly believed that, he would get the government out of health care completely. It serves no legitimate purpose.

  6. Reality doesn’t care about your budgets and your vote-grubbing. Medicare will die, just like social security, public union pensions, and everything else that cannot possibly be sustained on the taxes of the working class.

    1. It’s a mistake to underestimate the lifespan of any government initiative.

      CA still has a fucking Strawberry Commission.

      Medicare won’t die a natural death until the US implements a Logan’s Run style age limit. And even then the odds are only fifty-fifty.

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  8. Medicare “as we know it” cannot continue. Now that Congress did allow current law to be enacted as written, ratcheting down provider payment rates cannot be done without consequences for patients. The actuary states, ‘In practice, providers could not sustain continuing negative margins and, absent legislative changes, would have to withdraw from providing services to Medicare beneficiaries, merge with other provider groups, or shift substantial portions of Medicare costs to their non-Medicare, non-Medicaid payers,’ (http://bit.ly/KhlvrI)
    There is another option. Moving Medicare to a premium support model, paired with other reforms, could solve the problems facing the program in a way that is affordable for taxpayers and preserves access to quality coverage for America’s seniors.

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