Medicare

Forget Paying for Medicare for All—We Can't Pay for the Medicare We Have

A new report predicts Medicare spending will rise faster than private health care spending.

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Bill Clark/CQ Roll Call/Newscom

For the last several years, political conversations about Medicare have revolved mostly around either preserving the program in its current form or expanding it. While campaigning for president as a Republican in 2015 and 2016, Donald Trump repeatedly stated his opposition to any Medicare cuts, and since then has positioned himself as a defender of the federally run health program against the encroachments of "socialism," a rhetorical maneuver that was subsequently adopted by other Republicans.

Democrats, concurrently, have increasingly focused on expanding the program, either by allowing people who are not currently eligible to buy their way in or by using the program (or at least its branding) as the basis for single-payer insurance or something like it. Roughly speaking, Democrats want Medicare for All, while Republicans want Medicare for Those Who Have It Now.

The left side of this debate has been dogged—rightly—by questions of affordability and fiscal soundness. Multiple estimates put the cost of Medicare for All, in the single-payer form envisioned by Sen. Bernie Sanders (I–Vt.), at around $32 trillion. How would a program like this, which even under rosy assumptions would require more than doubling individual and corporate income taxes, be financed?

This is an important question, but for the moment, at least, it remains a hypothetical. This question is not: How are we going to pay for the Medicare program we already have?

This week, Medicare's actuaries released a new report projecting that over the next decade, national health spending will grow 0.8 percent faster than the economy each year, eventually reaching $5.96 trillion. As a result, health spending as a percentage of gross domestic product is set to grow from 17.9 percent last year to 19.4 percent in 2027. Health care spending will then consume nearly a fifth of America's total economy.

That figure accounts for both public and private payers, but the government-run programs are the largest drivers of the growth, with Medicare by far the biggest of the bunch. Over the next decade, Medicare spending is expected to rise by 7.4 percent each year, while spending on Medicaid, the joint federal-state health program for the poor and disabled, is set to rise by 5.5 percent annually. Spending on private health insurance is projected to rise as well—but at 4.7 percent annually, the increase won't be as fast. Increased spending on Medicare (and to a lesser extent Medicaid) is the main factor.

That increase is primarily a result of demographic change as more seniors enter the program. More enrollees means higher costs. But Medicare won't just cover more people. It will increase the average amount it spends on each person—and that increase will be larger than the commensurate increase in private health care spending. Supporters of Medicare for All sometimes argue that although the government cost would be significantly higher, total national health spending would decrease. That only holds under the improbable assumption that health care providers could absorb large reimbursement cuts without service disruption. In any case, these estimates suggest the weakness of attempting to control overall spending growth through Medicare, which is expected to substantially outpace private insurance spending growth.

There are other ways to break down the projected increase: Spending on drugs, hospital visits, and doctor services are expected to rise rapidly over the next 10 years. But Medicare, the nation's largest public payer for health care services, contributes to all of these categories. It is hard to avoid the conclusion that Medicare is the dominant factor in the projected increase in overall spending.

This is not a new phenomenon. Health care spending began its rapid rise as a percentage of the economy around the time that Medicare and Medicaid were introduced. The business and practice of medicine have obviously changed dramatically in the intervening decades; as with any economic transformation, multiple factors are in play. But there has long been a case that, when it comes to rising health spending, Medicare is the primary culprit.

In addition to the program's larger effects on the economy, the program's internal finances are in increasingly dire shape. Last year, the program's trustees projected that its main trust fund (which is itself a kind of accounting fiction) would be depleted in 2026, three years earlier than previously anticipated. The program wouldn't simply stop, but revenues would only be sufficient to cover 91 percent of expenses, a percentage that would decline over the next 15 years. Over the next 75 years, the program faces $37 trillion in unfunded liabilities. Macroeconomic projections are admittedly difficult and prone to mistaken assumptions, but even if the figures aren't precisely right, that provides a sense of the scale of the problem.

Today, Medicare and Medicaid are widely acknowledged as the biggest drivers of the federal government's long-term debt. Broadly speaking, America's biggest fiscal problems are health care spending problems. And America's health care spending problems are largely problems stemming from increasing spending on Medicare.

And those are problems that approximately no one in national politics wants to deal with, or even meaningfully acknowledge. Although national political figures occasionally nod to Medicare's fiscal challenges and their various economic ripple effects, there is now no significant political movement to address them.

I am under no illusion that building such a movement would be easy or immediately popular. Medicare is generally well-liked, which is why Democrats have branded single-payer as Medicare for All. The program so well-liked, in fact, that one of the most effective criticisms of Medicare for All is that it would undermine current Medicare. But independent of whether they are easy or popular, reforms will eventually become necessary. Yet our nation's political class now seems intent on either ignoring the problem or making it worse.

NEXT: Can You Name the Only Republican to Co-Sponsor a Bill Blocking Trump's National Emergency?

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  1. But with Medicare for all, it will be free, so there is no need to pay for it.
    That alone will save enough money to pay for free tuition, right?

    1. Medicare is not free to its recipients.
      “Medicare for all” is code for “the VA for all” but without the private system to fall back on.

      1. Medicare is a government run program?so Medicare for All is Medicare for All.

        1. The Indian Health Service is a government run program.

          Medicare for All will be the IHS for all.

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    3. Medicare is free for us but it costs a lot of money for our country. The fact is that that money are paid by us…

    4. Hey – let’s do a libertarian experiment.

      1. Repeal the laws that allow employers to deduct healthcare insurance/spending

      2. Eliminate all future Medicare and Medicaid eligibility for all those under-65 who are covered by an employer plan.

      My guess is this would solve the Medicare liability hole overnight.
      And create at least 150 million more uninsured by year-end.

      So what would step up to solve the resulting problem more quickly/cheaply/better? The market or politics?

      1. Raising taxes is libertarian?

        How about we extend the deduction to individual purchases of health insurance instead?

        1. Tax deductions distort behavior – and they are all put in place precisely for that purpose. No tax deduction is ever the basis for a free market.

          Why should buying health insurance be deductible but buying food is TAXED?

          I do not accept any form of libertarianism that doesn’t understand what a free market is and that depends on govt to distort its market demand.

        2. The two changes I propose are exactly what currently applies to the Amish. They are exempt from Medicare/SS taxes – and they are not covered by those programs either. Sec310 of Medicare carved out that exemption – and they file Form 4029 to claim/register it. That section was available to every individual in a religious group that agrees to not claim SS/Medicare and where the group demonstrates that it does take care of its sick/elderly/disabled in a way that is acceptable to that group. The Amish are the ONLY denomination that has ever accepted that – govt is not the dumping ground and in exchange no need to pay those govt costs/taxes either.

          All I’m proposing is that that section be amended to expand it to non-religious groups – but the same caveat – no use of govt as the dumping ground.

          My guess is that if no religious group ever felt it had the ability to really take care of its denomination rather than just collect premiums – without govt as the dumping ground – then no profit-oriented group will be able to do it either.

          But hey – surprise me

          1. “where the group demonstrates that it does take care of its sick/elderly/disabled in a way that is acceptable to that group”

            Except it’s not really that way, is it? It’s not what is acceptable to ‘that group’ it’s what is – ultimately- acceptable to the government.

            Tell me more of your so called ‘libertarian’ fairy tales that are ultimately collectivism.

            1. How about solving the problem by eliminating the dumping ground?

              1. So you got nothing except the usual petulant nonsense and BS.

                Wotta surprise.

  2. Once the Democrats are back in the White House and they implement the Koch / Reason immigration agenda, the economy will obviously get stronger. Maybe the new and improved economy will be able to sustain M4A?

    1. Did you enjoy the listening session? Sounds like it was very productive.

      http://hotair.com/archives/201…..disbanded/

  3. Correct.

    Medicare for all will significantly reduce overall spending on healthcare.
    The surplus can then be used to pay for universal childcare.
    Plus we saved $3 Billion in taxes by chasing away Amazon.

    ** This PSA brought to you by Alexandria Ocasio-Cortez and Elizabeth Warren **

    1. It will reduce spending to zero because it’s free.

    2. If “tax cuts are going to pay for themselves” then universal health care can pay for itself, too. Except, this time, it might actually not be lies, and the actual Middle Class would be the beneficiary, with an extra $200-1200 in their pocket every month that otherwise is given to an insurance company. And the cost of employing someone will drop dramatically (no employer health care costs), increasing both employment levels and wages.

      1. And a unicorn in every garage!

      2. Obama Promises To Lower Health Insurance Premiums by $2,500 Per Year

        https://www.youtube.com/watch?v=_o65vMUk5so

      3. Except you know the middle class would have to have large taxes to pay for it.

        Your cute thinking that employment levels and wages would increase. Just like minimum wage to 15!

        AOC is that you?

        1. What large taxes? What part of FREE don’t you understand?

      4. And we can keep our doctors, period?

        1. When healthcare is free you will keep your doctor the same way Crusty keeps his sex partner.

          Locked in the basement.

  4. Blah blah blah. Is there any real difference between the climate apocalyptics and the debt apocalyptics? Both have been say the same thing for thirty years. Both have some substantive basis to their arguments. And both haven’t once made a prediction that’s come true.

    Budget trade-offs only matter if debt matters. And debt only matters when…I’m still not sure I know when. I thought I did, but I’ve been so very wrong with my own predictions that I’ve given up.

    So fuck it. Spend away. Free health care for everyone. The Chinese will pay. The Germans will pay. The Fed will buy more bonds. Fuck it.

    1. Yeah, I get exactly what you’re saying.

    2. The debt apocalyptics have been wrong because as bad as the US approach to spending is, we’re still the best car in the junkyard. That means we’re still hanging on to the ‘currency of last resort’ premium. While that remains true, yeah there’s an argument that debt doesn’t matter because other people will pay.

      That also means, however, that we have little control over (or ability to predict) when debt will suddenly start to matter. As soon as some other major currency gains more credibility than the dollar, the US will lose that premium. It won’t happen overnight but it might happen on as short a timescale as a few months.

      1. It’s not really about whether another currency gains ‘credibility’. It’s about whether another country is actually willing to do the stuff required of a reserve currency.

        A reserve currency has to continually flow into the world markets to meet the needs of global trade. The only way that can be done is to run huge trade/service deficits (where world sells stuff in exchange for money). And those deficits have to be structural. No letting your currency actually adjust sometimes or over the course of a business cycle so your mfrs can export stuff.

        And other countries have to get some service in return for trusting that you can remain in structural deficit without defaulting. For the US and Britain before that, the service was military – freedom of navigation, forcing other countries to see the benefits of open trade via bullets, etc.

        That sort of stuff actually takes decades to develop and can be seen well in advance. No other country is doing any of that stuff to actually replace the US dollar as reserve currency. Countries may want to ‘will’ themselves into being the reserve currency – but that’s not how math works. The closest country to taking over that role is – the last country to have that role and world trade would need to fall by about 80% for the UK to do that. Course if world trade drops by 80%, anything could happen

        1. China is laying the groundwork with it’s Belt Road Initiative. Clinton wanted to pivot to Asia so we could escape failure in Iraq and Afghanistan … (Which are in Vietnam, not Asia) but China got there first. 😉

          1. As long as China wants to (and has to) export stuff, then it is going to be the user of the reserve currency not the producer of it.

            Yes it is trying to move to a consumer-oriented economy, but it’s a long way from that and this first attempt (last 10 years or so) has already created big debt problems for them

    3. It’s the interest payments that upset my apple cart.

      There’s this general rule, see, that even Keynes understood: borrow in bad times only, and only if necessary, pay back when things get better.

      Otherwise the damned interest takes more and more of the budget.

  5. The tax increases the Democrats are calling for won’t even pay for current spending.

    1. Cut Republican spending!

      1. That would be a start. But it won’t get us all the way there.

  6. We can get a billion plus by cutting funding for the wall.

  7. Suderman, we want more cocktail articles. For example, what is the Bernie cocktail? Here is my recipe for a Commune Kickout:

    4 oz lemonade
    1 oz hemp vodka
    1/2 oz patchouli spiced rum
    2 drops of armpit sweat

    Put all the ingredients on the bar and wait for Bernie to get off his ass and mix them. Drink never.

    1. Nicely done

  8. That figure accounts for both public and private payers, but the government-run programs are the largest drivers of the growth, with Medicare by far the biggest of the bunch.

    There are a ton of problems with the current govt-run programs. Enough to provide a lot of evidence that our current govt is uniquely incompetent to even run a socialized medical system. Maybe outsource it to a different govt since they clearly do a better job.

    But there’s also a whole bunch of dishonesty by pretending that govt healthcare is a different universe than private healthcare. Govt is actually the ‘payer of last resort’ for the TOTAL healthcare system.

    Those who are the major utilizers cuz of age – govt pays
    Those who are too poor for private healthcare – govt pays
    Those who are disabled or already have conditions that make them uninsurable – govt pays.

    Unless a market-based solution can actually work to reduce that ‘market leakage’ to the non-market payer of last resort, then there is no market-based solution. And expanding the govt programs does not actually make people sicker or older or disabled.

  9. “Forget paying for Trumps tax cuts–we can’t even pay for the Reagan and Bush tax cuts”

    1. You do realize that taxes are your money…ooops sorry, people that work’s money. So it’s not pay for the tax cuts, it’s cut spending to match. Oh that’s right you don’t know how to stop spending.

  10. Typical dems. White people get to blather and bask in glory. POC have to do all the work holding up the signs.

  11. Since neither Medicare nor SS has any chance of reform (the public is addicted to both as they are), then we have to significantly raise the employee’s portion of the payroll taxes (raising employer’s portion would make employment more expensive…not good). If they want these programs to pay for their retirement, then they damn well have to pay for them.

    1. You sound like you are not public

  12. Well, we only have 12 years to live due to climate change so…..whatevahhh.

    Modern Monetary Theory is a real thing nowadays. The U.S. is going to print money and everything will be free and universal. Good times!

    1. I think it’s down to 11 years now.

  13. The leftists never question the costs or outcomes of their silly pet projects. Damn the torpedoes and full speed ahead. It’s all about power and the desire to control everything. Leftists and their ilk are burnt-out control freaks with minds so filled with hatred, the smoke just pour out of their ears.

    1. Why don’t we cut defense spending on your damn torpedoes?

      1. Military spending is almost $1 Trillion per year. It’s a bit higher than medicare spending. We could kill two birds with one stone by replacing our troops in the Middle East with medicare recipients whom we draft to engage in civil disobedience. Do you really think ISIS has the heart to arrest that many American Baby Boomers signing folk songs in the hills of the Fertile Crescent?

        1. This could work

        2. Given the tolerance for heat, and the rigors of travel to the middle east, how many Baby Boomers would be left to arrest? A few hundred?

  14. Price all medical services/devices/drugs at the average cost of the equivalent item/service in Denmark, Switzerland and New Zealand. Problem solved. The US already spends more per capita public dollars on healthcare than most developed countries … all while delivering inferior care.

    It’s not about who pays, it’s about how much things cost. That is where the conversation needs to start.

    1. We also have a huge segment of the population that pay no taxes.

    2. We could shut down the FDA approval process for new drugs. Most of the cost of medication goes towards recuperating the research costs of developing new drugs. We might have reached a point of diminishing returns. Without any new drugs coming onto the market, major pharmaceutical companies will go bankrupt, but the producers of generic brands will remain.

  15. I would look more to Medicaid as the program draining the coffers. People who qualify for Medicare have to pay for it. Granted, what they pay is not much but people who have Medicaid pay nothing at all – it’s a true freebie.

    And regardless of what is said on the black box (tv) Medicare doesn’t pay all that much towards medications, either. That’s why most people who qualify for, and have, Medicare, also have supplemental policies (not cheap) and also a policy to help cover the cost of their prescription drugs. If you ask me, it’s a damned good reason to limit doctor visits as much as possible and stay off prescription drugs. Most people who take them don’t really need them anyway. Most of those drugs are as useless as the people hawking them.

  16. Compare US to UK population. Compare just Medicare spending to NHS spending. Compare what we spend per procedure to any other country. How is that possible? Seems to me it’s the profiteers in the US healthcare system that are trying to break the system. They know eventually someone is going to have the balls to tell them 1000%+ inflation on simple to make drugs that have been around for a long time will not stand. They also know as long as they get theirs beforehand they’ll be able to buy a position in the corporatocracy.

  17. Actually, we could easily pay for the Medicare we have and quite a few other things several times over, if we ended the state of emergency the country has been in since the Vietnam war and reverted our military to peace-time levels.

    You know those military spending bills Congress treats as a must-pass issue every four years, even to the point of working through government shutdowns? That is Congress stating “We are in a state of national emergency that requires a war-time military, and we expect it to continue for another four years.”

    The majority of the national debt is caused by those enormous expenditures on a war that does not exist.

    1. Very well stated, I could not agree more. And lets not forget the wonderful people who are making all the profits on weapons of mass destruction.

  18. We pay into Medicare for 50 years and then have to pay for supplemental insurance and prescription coverage along with a small premium for Medicare so how would anyone think Medicare for all would be cheap for those that have not paid or paid little into the system? Medicare for all is just a slogan and in reality would not be an inexpensive insurance alternative.

    1. I’m more of a proponent of bringing back McCarthyism and purging progressivism/socialism/Marxism from America. Then we can fix things.

      1. Good point. Few remember that Tail-gunner Joe did found hundreds of communist agents in the US government.

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  21. Medicare can only be well liked for the uniformed. The government’s own Trustee report shows it is 65% short of money needed to pay promised benefits. That is not insurance but insurance fraud. If it were a private company it would be shut down and those running it prosecuted.

    1. No it isn’t insurance fraud. No private insurer has to book future medical liabilities beyond the current year. That’s why we have annual enrollment. Which is itself a very serious structural flaw in our system and drives up costs a lot – but it affects 100% of the system not just the govt stuff.

      1. Yes JF, but private insurers don’t get to make people who are not eligible for the insurance pay for it either. Or collect money for decades in advance claiming you are paying for future benefits.

        Try to keep up!

  22. Lets just leave it like it was before Obamacare. See how that works out for you. This country pays the most and has not got the best for its money. Caveat emptor doesn’t seem to work like it does with cars and boats

    1. Before Emperor Hussein nationalized the health care industry,and the healthcare insurance industry, there were three perceived problems with those sectors of the economy.
      1. Healthcare costs were high for some.
      2. Health insurance costs were high for some.
      3. Those with some pre-existing conditions, and not employed, could not get health insurance.

      None of those were actually eliminated by Obamacare.

  23. Over the next 75 years, the program faces $37 trillion in unfunded liabilities.

    Round that down to $100,000 per American to make the math easier. New Jersey’s share of the liability is over $800 Billion. Former colonies do not take on the debt of the empires they succeed from, and building a wall from the Delaware to the Hudson costs much less than $800 Billion.

    The national debt is now at $22 Trillion. It makes financial sense for New Jersey to succeed from the USA and join NATO based on that figure alone.

    1. What a brilliant post, you suckseads

    2. That’s only $100 per year for a thousand years.

  24. $22 trillion national debt proves that subsidies, entitlements & safety nets shouldn’t be in the hands of the federal government.
    Solution: Phase out all federal safety net programs, states can decide their own safety nets.

  25. Medicare is so ineffective because it became influenced by the same Big Business it sought to reform.

    The ACA has become so ineffective because it became influenced by the same Big Business it sought to reform.

    Medicare for All will become law once the same Big Business tweaks it to their suitability, by making it more profitable for them.

    Neo-“Libertarians” are those whom complain about Big Government, until they use & corrupt that Big Government to their own advantage.

    ‘Libertarianism” has become merely a fadish, meaningless buzz word.
    The party and meaning have lost their true ideologies.

    “Libertarians” have become the primary party of special-interest for Big Business, in their pursuit of CRONY-CAPITALISM.

    PROTECTIONISM AND SPECIAL-INTEREST LEGISLATION ARE NOT TRUE FREE MARKET CONCEPTS.

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  28. And the “Medicare we have” is no good at all, and without private supplemental insurance would have been scrapped long ago.

  29. This was a very poorly reasoned (no pun intended article). There are two reasons the current Medicare system’s costs are growing so fast: 1. They can’t negotiate drug prices and 2. They give doctors a blank check on end of life care. The first is simply a give away to big Pharma that costs the taxpayer over $10 billion per year. In regards to the spending on end of life care, 25% of Medicare spending is for the last 12 months of a patients life. This is radically higher than any other first world country. You fix those and you fix Medicare.

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