By
Robert Reich
Medicare
turns fifty next week. It was signed into law July 30, 1965 – the crowning
achievement of Lyndon Johnson’s Great Society. It’s more popular than
ever.
Yet
Medicare continues to be blamed for America’s present and future budget
problems. That’s baloney.
A
few days ago Jeb Bush even suggested phasing it out. Seniors already receiving
benefits should continue to receive them, hesaid, but “we need to figure out a way to phase out
this program for others and move to a new system that allows them to have
something, because they’re not going to have anything.”
Bush
praised Rep. Paul Ryan’s plan to give seniors vouchers instead. What Bush
didn’t say was that Ryan’s vouchers wouldn’t keep up with increases in
medical costs – leaving seniors with less coverage.
The
fact is, Medicare isn’t the problem. It’s the solution.
Its costs are being pushed upward by the rising costs of health care overall – which have slowed somewhat since the Affordable Care Act was introduced but are still rising faster than inflation.
Medicare
costs are also rising because of the growing ranks of boomers becoming eligible
for Medicare.
Medicare
offers a way to reduce these underlying costs – if Washington would let it.
Let
me explain.
Americans
spend more on health care per person than any other advanced nation and get less for
our money. Yearly public and private healthcare spending is almost two and a
half times the average of other advanced nations.
Yet
the typical American lives 78.1 years – less than the average 80.1 years in other
advanced nations. And we have the highest rate of infant mortality of all
advanced nations.
Medical
costs continue to rise because doctors and hospitals still spend too much money
on unnecessary tests, drugs, and procedures.
Consider
lower back pain, one of the most common ailments of our sedentary society.
Almost 95% of it can be relieved through physical
therapy.
But
doctors and hospitals often do expensive MRI’s, and then refer patients to
orthopedic surgeons for costly surgery. Why? Physical therapy doesn’t generate
much revenue.
Or
say your diabetes, asthma, or heart condition is acting up. If you seek
treatment in a hospital, 20 percent of the time you’re back within a month.
It
would be far less costly if a nurse visited you at home to make sure you were
taking your medications, a common practice in other advanced nations. But
nurses don’t do home visits to Americans with acute conditions because hospitals
aren’t paid for them.
America
spends about over $19 billion a
year fixing medical errors, the worst rate among advanced countries. Such
errors are the third major cause of hospital deaths.
One
big reason is we keep patient records on computers that can’t share the data.
Patient records are continuously re-written and then re-entered into different
computers. That leads to lots of mistakes.
Meanwhile,
administrative costs account for 15 to 30 percent of all health care spending
in the United States, twice the rate of most other advanced nations.
Most
of this is to collect money: Doctors collecting from hospitals and insurers,
hospitals collecting from insurers, insurers collecting from companies or
policy holders. A third of nursing hours are devoted to documenting what’s done
so that insurers have proof.
Cutting
back Medicare won’t affect any of this. It will just funnel more money into the
hands of for-profit insurers while limiting the amount of care seniors receive.
The
answer isn’t to shrink Medicare. It’s to grow it – allowing anyone at any age
to join.
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.
Meanwhile,
as for-profit insurance companies merge into giant behemoths that reduce
consumer choice still further, it’s doubly important to make Medicare available
to all.
Medicare
should also be allowed to use its huge bargaining leverage to negotiate lower
rates with pharmaceutical companies – which Obamacare barred in order to get
Big Insurance to go along with the legislation.
These
moves would give more Americans quality health care, slow rising healthcare
costs, help reduce federal budget deficit, and keep Medicare going.
Let
me say it again: Medicare isn’t the problem. It’s the solution.
ROBERT B. REICH, Chancellor’s Professor of Public
Policy at the University of California at Berkeley and Senior Fellow at the
Blum Center for Developing Economies, was Secretary of Labor in the Clinton
administration. Time Magazine named him one of the ten most effective cabinet
secretaries of the twentieth century. He has written thirteen books, including
the best sellers “Aftershock" and “The Work of Nations." His latest,
"Beyond Outrage," is now out in paperback. He is also a founding
editor of the American Prospect magazine and chairman of Common Cause. His new
film, "Inequality for All," is now available on Netflix, iTunes, DVD,
and On Demand.