Michael Cannon at Cato explains this fallacy:
Advocates of a new government health care program also claim that government contains overall costs better than private insurance. Jacob Hacker writes, “public insurance has a better track record than private insurance when it comes to reining in costs while preserving access. By way of illustration, between 1997 and 2006, health spending per enrollee (for comparable benefits) grew…
[But] Hacker’s comparison commits the fallacy of conflating spending and costs. Even if government contains health care spending better than private insurance (which is not at all clear), it could still impose greater overall costs on enrollees and society than private insurance. For example, if a government program refused to pay for lifesaving medical procedures, it would incur considerable nonmonetary costs (i.e., needless suffering and death). Yet it would look better in Hacker’s comparison than a private health plan that saved lives by spending money on those services. Medicare’s inflexibility also imposes costs on enrollees. Medicare took 30 years longer than private insurance to incorporate prescription drug coverage into its basic benefits package. The taxes that finance Medicare impose costs on society in the range of 30 percent of Medicare spending. In contrast, there is no deadweight loss associated with the voluntary purchase of private health insurance.
Read more: Private Insurance Is More Efficient than Medicare–By Far.
The Association of American Physicians and Surgeons describes key problems with Medicare. But of course any kind of “Medicare for All,” or Medicare Part E (E for everyone, get it?!) will have these problems. Of course not.
- It is structured as a Ponzi scheme.
- Its low administrative costs are a mirage.
- It is sustained by the general fund and by cost-shifting.
- Poor access to care, low payments to physicians
- The system is rife with fraud.
For details on each, see the links above and the AAPS’s: Myth 24. Medicare is the model of efficiency and fairness.
Advocates of more government-run health care point to Medicare as successful example. “It’s popular!” they say. Vince Carrol points out one likely reason in his Denver Post column:
“The reason for Medicare’s attractiveness to seniors is not hard to find,” writes Professor Mark Pauly of the Wharton School at the University of Pennsylvania in his book “Markets Without Magic: How Competition Might Save Medicare” (AEI Press, April 2008). “Their premiums amounted to only 10 percent of the cost of the benefit before the advent of Part D and only about 12 percent afterward. This represents an enormous subsidy to seniors, and virtually any product, no matter how imperfect, would be attractive at this kind of discount.”
Mark Pauley also mentioned this figure in his article about means-testing Medicare.
Under “Medicare for all,” everyone in the United States would be paying 10% of the cost of the benefits they get. Hmm. And where does the rest of the money come from? Right now taxpayers are subsidizing health plans for seniors. But who subsidizes everyone? Our kids? I can hear the children now: Stop spending our future!
As it stands, the Associated Press reported earlier this year that “Medicare’s giant hospital trust fund is running out of cash more rapidly and could become insolvent as early as 2016″
Paul Gessing is president of the Rio Grande Foundation has written a good article summarizing some problems with Medicare and why “Medicare for all” would be a disaster. They include:
- “Medicare’s expected future obligations exceeded premiums and dedicated taxes by an astounding $89 trillion. That’s about 5 1/2 times the size of Social Security’s ($18 trillion) unfunded liability and about six times the size of the entire U.S. economy.” See also this post on Medicare insolvency.
- “according to an Associated Press story late last year, the inspector general for the U.S. Department of Health and Human Services found that 70 percent of Medicare payments in 2008 for patient medical supplies for the elderly and disabled should not have been approved.”
- “A news story by MSNBC, based on an investigation by a subcommittee of the U.S. Senate Homeland Security Committee, reported that more than a billion dollars in claims were paid between 2001 and 2006 without valid medical diagnostic codes. The result has been a host of cases involving senseless waste.”
- cost-shifting to those with commercial insurance: “when Medicare does try to cut costs, it usually does so by cutting reimbursements to doctors. This results in cost-shifting from the government onto the backs of private insurers, employers, patients, and most of all, doctors. The most recent data available show that Medicare alone shifted $48.9 billion in costs onto the backs of the private sector one year.” Read more on the cost-shift from Medicare and Medicaid.
Read the whole article, ‘Medicare for All’ Will Bankrupt the United States.
Advocates of “Medicare for All” like to point out that Medicare’s lower administrate costs justify a government-run health insurance program that everyone is eligible for. Even if the costs were lower, it’s a non-sequitur. First off, administrative costs can be good. Medicare pays for just about everything, resulting in much waste. Second, if Medicare is run better, then why don’t its advocates compete in the (unfree) insurance market by introducing an insurance product based on Medicare’s allegedly good practices. (That is, w/o forcing taxpayers to fund it…)
And finally, can one compare administrative costs of Medicare to insurance? Not easily, say the authors of a PricewaterhouseCoopers study, The Factors Fueling Rising Healthcare Costs 2008 (page 8):