What's wrong with Medicare?

[bascule]

Medicare is a single-payer system, albeit not a universal one. Thus it is relevant to the debate as to whether the US should consider a universal single-payer system.

 

The majority of those with private health care are satisfied, while medicare, medicaid et al seem to be going broke requiring more funding or cutbacks in programs and sometimes both.

 

Yes, Medicare is not doing well. Not well at all. This graph from the conservative Heritage Foundation illustrates the problem nicely:

 

 

So navigator is correct (about Medicare, not Medicaid). Medicare spending is set to increase enormously over time, to unsustainable levels.

 

If that's the case, why would we consider a universal single-payer system? Wouldn't it suffer from the same explosive growth in costs?

 

You might notice that Medicare's explosive growth doesn't match the previous trend. So why happened? Why did Medicare become so much more expensive?

 

The answer is that Bush and the Republicans created a new entitlement program with the Medicare Prescription Drug, Improvement, and Modernization Act. This program massively increased Medicare costs by offering Medicare recipients a prescription drug benefit, however the program prevented Medicare from buying prescription drugs in bulk, instead having the government foot the bill for full retail price as charged at a pharmacy. It was effectively a huge handout to the pharmaceuticals, and one America cannot afford.

 

It would seem the costs of Medicare have little to do with it being a single-payer system and much more to do with the Republican prescription drug entitlement program. Other single-payer systems in other countries, such as Health Canada, do not have this problem as these organizations are able to negotiate bulk discounts with pharmaceuticals. It's for this reason that we used to have seniors flocking across the borders to buy cheap Canadian drugs, but now they can get drugs at expensive retail prices on the government's dime instead.

 

When talking about Medicare in the context of the larger healthcare reform debate, it's important to keep this in mind.

[Pangloss]

You might notice that Medicare's explosive growth doesn't match the previous trend. So why happened? Why did Medicare become so much more expensive?

 

The answer is that Bush and the Republicans created a new entitlement program with the Medicare Prescription Drug' date=' Improvement, and Modernization Act.

[/quote']

 

Only if you ignore the baby boomers, who are hitting the books at exactly the same period of time. The prescription drug benefit exacerbates the problem. It didn't create it.

 

There's more than enough blame for the situation to go around. When solving health care in America, finding fault with Republicans is not, in my opinion, "important to keep in mind".

[bascule]

Only if you ignore the baby boomers, who are hitting the books at exactly the same period of time. The prescription drug benefit exacerbates the problem. It didn't create it.

 

There's more than enough blame for the situation to go around. When solving health care in America, finding fault with Republicans is not, in my opinion, "important to keep in mind".

 

This was not the reaction I expected from you, given your past concerns over entitlement spending.

 

The Republicans increase entitlement spending by $1.2 trillion over 10 years and they just get a bye from you, especially on a program that could've been considerably cheaper had it not been designed as a government handout to big pharma?

 

Would you at least agree that this piece of Republican policy needs to be changed?

[Pangloss]

Sure, I'd support removing that piece of legislation. But just because I'm opposed to a massive new entitlement program doesn't mean I'm going to support you misleading people about its effect.

 

You said you want to talk about what's wrong with Medicare, and then you told us that what's wrong with it is the prescription drug program. Okay. Why do you feel that the prescription drug benefit program has a bigger impact on Medicare than the dawn of retiring baby boomers?

[John Cuthber]

The "baby boom" was on its way out when I was born (1965). So the babyboomers will retire about 2030. If they live to be 80 (most won't) they will be dead by 2045.

That graph predicts a "problem" in 2050.

Since practically all the babyboomers will be dead by then and most of them will have died long before then, I don't see how they can (directly) be the cause of the problem predicted for 2050.

 

Of course there's every chance that the regulations will have changed by then.

The most obvious solution is to raise the retirement age which should increase tax revenue and reduce social care spending.

It doesn't matter if the healthcare costs are met by a nationalised healthcare scheme like the NHS or Medicare or by private healthcare insurance. The costs of an aging population will rise. New developments in medicine will often also increase the bill.

Somebody has to foot the bill, and arguing about the relative merits of public or private insurance is like rearranging the deck chairs on the Titanic.

[bascule]

I've been doing quite a bit of reading on Medicare Part D (the prescription drug entitlement), including that recent costs are actually below projections, and there's a "donut hole" wherein recipients get a certain amount of drugs free, then must pay for the costs themselves, then they receive full coverage (awfully reminiscent of my HSA).

 

My opinion has changed since posting this and I'll get back to you once I better understand the situation.

[Pangloss]

The "baby boom" was on its way out when I was born (1965). So the babyboomers will retire about 2030.

 

No, the baby boomers (at least in the US) are a WW2 thing. They're retiring right now.

 

I don't recall the specifics, but I think it's an early option at 63 and a better (bigger payment) if you wait until you are 65 to apply. I think that's Social Security, with Medicare not kicking in until 65, but I'm not certain about these details. At any rate the graph shows the curve sweeping upward around 2015.

Edited August 16, 2009 by Pangloss

[Mokele]

How accurate are those figures and that graph?

 

I'm not just say it b/c it's a conservative think-tank - look at the graph. The actual, real data (past), just sort of dodders along nicely, rising slowly, and actually more slowly than in the past for the last 20-odd years. Then, all of a sudden, the line takes a HUGE upward trajectory starting about Thursday of next week.

 

Now yes, the baby boomers will be getting older, but treatments are also getting cheaper due to new technology. I did some poking around at the Congressional Budget Office site and found in one of their reports (admittedly from 2005) that most of the rising cost has been due to rising per-patient spending since 1970 (with increasing enrollment also playing a factor) due to better medical technology.

 

The thing is, will costs per patient keep rising at this rate? I mean, yes, we're developing new technology all the time, but 95% of patients have something simple, like the flu or cutting their arm open with a kitchen knife, and I don't see the cost of tamiflu or sutures rising that fast. And once a drug's been out for seven years, IIRC, generics can come out, lowering the price. New cures and techniques come out, but there's only a finite range of health problems.

[bascule]

Personally I would love to see the CBO projections decomposed into the relative costs of the four entitlements of the Medicare program so we can properly ascertain which ones are most problematic.

 

If anyone can find such a graph I'd love to see it.

[John Cuthber]

"No, the baby boomers (at least in the US) are a WW2 thing. They're retiring right now"

That's debatable, the peak seems to be in the 60s.

http://en.wikipedia.org/wiki/File:Birthratechart_stretch.PNG

 

More importantly, if you are right, then they will be even more convincingly dead by about 2050 when the magic graph hits some arbitrary number.

 

I still think this is focusing on the wrong issue. Our population is aging; how do we pay for pensions and old folks homes?