Why should the US Congress pass Representative John Conyers' HR 676 and extend Medicare benefits to all Americans?
Just ask the lobbying group Medicare for All and they'll tell you:
I love sunshine and beautiful skies as much as the next person, and medical insurance for everyone at a cost reduction of $47 Billion sounds like... sounds like...
A hose job.
In 2005, Medicare covered 42.4 Million Americans, according to the Department of Health and Human Services.
The FY 2006 budget for Medicare, according to OMB, was $325 Billion.
That's an annual cost of $7,665 for each Medicare recipient.
Extrapolated, that means that to have covered all 300 million of us would have cost $2.2995 Trillion in 2006. From that we can legitimately deduct the $325 Billion already being spent on Medicare and the $186 Billion being spent on Medicaid/SCHIP (since those people would now be covered by Medicare). This leaves us with a need for an additional $1.7885 Trillion tax dollars to fund nearly 260 million new Medicare recipients.
Possibly we could pare that number down by cutting some fat out of the Federal budget. I'm all in favor of shrinking the government whenever possible. We can't take it out of mandatory spending (primarily Social Security but a few other items as well) or interest on the national debt, but we still have Defense, Homeland Security, International Affairs, and all other discretionary spending (NASA, for example).
I personally think health care reform is so important that I am willing, at least for the sake of this exercise, to cut ALL Federal discretionary spending by 50%. Ron Paul gets his wish and the troops (what's left of them after the cuts) come home. Since only our presence abroad is stirring up those Islamo-Fascists, we won't need but half as much Homeland Security. Foreign Aid? Who needs it? The planets or weather satellites? Unnecessary adornments when people need Medicare; we'll do weather forecasting the old fashion way, with big jars of bear fat on the porch.
As Jethro Clampett would have said, while ciphering out toward the cement pond, "That's naught, naught, add the naught, carry the naught, and--oh shit, Uncle Jed, I think I done did something wrong!"
Cutting all discretionary spending out of the FY 2006 budget would have netted us $508.5 Billion (not Trillion), which would still leave us on the hook for an additional $1.2035 Trillion new tax dollars. But wait, I forgot to mention that in FY 2006 the Federal government operated at a $248 Billion deficit, and we wouldn't want to have an unbalanced budget--having declared peace, love, and flowers for everyone, would we?
So to balance the Federal FY 2006 budget with Medicare for everyone (even with those draconian budget cuts everywhere else) actually would have required $1.4515 Trillion in new tax revenue.
Since in 2006 the government took in $1.0439 Trillion in income taxes and $353.9 Billion in corporate taxes (total $1.3978 Trillion) we would have had to MORE THAN DOUBLE both income tax and corporate tax receipts to pay for the program.
And remember, because if you don't keep telling Jethro he'll forget, that’s WITH 50% across-the-board cuts in all non-mandatory spending.
But I shouldn't worry, should I, because Medicare for All assures me that, in the end, we'll save $47 Billion in premiums and co-pays you won't have to fork over. And that's only on the front page of the website. When you go to the FAQ page our savings miraculously blossom from $47 Billion to over $300 million. Why? The administrative excesses of the for profit insurance industry, of course. Here's what they have to say:
Jethro, check my math here, but I think that means Medicare for All claims to have an administrative overhead that is between 28-32% LESS than our current system. OK, I'll take that on faith, even though I should point out that if you do a little digging for yourself you'll find out that Medicare administrative costs are often far higher. Still, I'm in an expansive mood this evening.
So what did we spend on health care back in the 2005-2006 ballpark?
According to OECD, in 2004 the US spent $6,100 per capita for health care. That's $1.83 Trillion in health care expenditures. Subtract out the Federal government's contribution for Medicare, Medicaid, and SCHIP, and that leaves you with $1.319 Trillion spent either by State-run health programs or premiums and co-pays to private insurance.
Let's see, Uncle Jed: the US spent $1.83 Trillion in health care expenditures (including Medicare and Medicaid) in 2006 for the existing system, and $2.2995 Trillion to cover everybody on Medicare. No matter how you slice it, that's an increase of $469.5 Billion dollars to cover everyone.
But let's assume that we can cut out 32% of the costs of private insurance (taking our lobbyists at their word) that we'll save by moving to Medicare for All. Again, let's see--32% of $1.319 Trillion is $422.1 Billion. [Note: this is a high estimate of the possible savings, as it assumes that all State-run healthcare programs are as administratively inefficient as private insurance. If they aren't, then the potential savings go down.]
So, Uncle Jed, wait a minute. That means that Medicare for All would actually cost $47.4 Billion MORE than the current system?"
Jed strokes his chin, and says, "Well, yes, boy, it do seem to work out that way. But it won't stay that way."
"Why not, Uncle Jed"
"Because this is a 2005-2006 example, boy. And that's before the Medicaire Prescription Drug benefit kicks in. You know, the one estimated to cost anywhere from $524 Billion to $1.2 Trillion over its first ten years? Now imagine that benefit extended to SEVEN times that many people. Hooo-ee, boy, that's gonna be one big number."
Granted, Medicare for All lobbyists argue that the existing Part D benefit is extremely wasteful and they would be able to negotiate lower prices--take them again at their word. But this does not mean they can wave magic wands and have prescription drugs appear for free, either.
So this is what we'd have to have done in 2006 to extend Medicare to everybody, even without a prescription drug benefit:
Slash all Defense, Homeland Security, International Affairs and other discretionary spending by 50% while doubling income and corporate taxes.
"But still, Uncle Jed, isn't it moral to get rid of all those profiteering insurance companies with their multi-billion-dollar balance sheets?"
"Jethro, did you ever stop and think about how many private pension plans, 401Ks, and IRAs are investing in Aetna, Wellpoint, or United Health? A mighty large chunk of those profits is going right back to the stockholders and mutual fund investors to pay for their retirements. Funny, boy, I never seen any studies by them Medicare for All people 'bout how that might affect the whole economy."
Uncle Jed gets ready to go check on Granny, but then he remembers one last point: "And, boy, don't think this Medicare for All plan would eliminate private health insurance, anyway. There's all kinds of things it won't cover, like in-vitro fertilization, that you'd STILL have to buy supplementary insurance for, like they do in Canada and Europe. You know that 65% of all Canadians and 86% of all the French find it necessary to purchase insurance above their national health care system, at least according to CESifo, the major European economic research consortium."
"Uncle Jed, what's a consortium?"
"I think, boy, it's something like what your Aunt Pearl used to do back of the Opry, consortium with the other musicians and such."
The chase: there is a critical need to address health care reform in the United States. We have a responsibility to do so when 47 million of our fellow citizens are uninsured and possibly that many more have long-term lapses in coverage, or are simply under-insured.
But we need to think clearly about the costs of each method proposed, and steer clear of anybody who starts out the argument with blue skies and flowers rather than facts and figures.
Mine could be wrong. I am sure people will read this and pick my assumptions and calculations apart.
What bothers me is that I had to put this together because nobody who favors HR 676 has to date produced a realistic economic impact study. Representative John Conyer's website is about as close as you can come, and even he admits that to implement the plan in 2010 the government would require an additional $72 Billion above current taxes and health care expenditures out of pocket.
Moreover, the Conyers estimate also admits that, under Medicare for All, there would still be the need for $80 Billion in "Out-of-Pocket Spending" by American citizens.
So let' see: Conyers plans to raise $72 Billion in taxes above what we now pay in taxes and premiums, and still retains $80 Billion in consumer out-of-pocket expenses?
This is a good deal, why?
Oh, by the way, if you want a real laugh, go read his footnotes. I particularly like number 16, wherein he admits that his mechanisms for soaking the rich might interfere with each other and not actually raise the revenue he promises.
I'll wait quietly in my corner to be pilloried now.
Just ask the lobbying group Medicare for All and they'll tell you:
MEDICARE FOR ALL would be like sunshine and a beautiful sky, a grassy field, people relaxing and children playing... To think that we can have guaranteed healthcare - quality healthcare - for every single person in this country - would be free for everyone to enjoy, like a sunny day…
MEDICARE FOR ALL would cost an estimated $47 billion less than we are now spending. Even though millions of us have no health coverage at all, we spend almost twice as much as the other countries that cover every one. We waste hundreds of billions on insurance companies which do not provide any healthcare. In fact, one third of that money is wasted on insurance company salaries, stock holder profits, and marketing. The only way to pay for all of us is to remove the useless waste and profits of the insurance companies.
MEDICARE FOR ALL would provide much better benefits for all of us including both the uninsured and the insecurely insured -- that's all of us.
I love sunshine and beautiful skies as much as the next person, and medical insurance for everyone at a cost reduction of $47 Billion sounds like... sounds like...
A hose job.
In 2005, Medicare covered 42.4 Million Americans, according to the Department of Health and Human Services.
The FY 2006 budget for Medicare, according to OMB, was $325 Billion.
That's an annual cost of $7,665 for each Medicare recipient.
Extrapolated, that means that to have covered all 300 million of us would have cost $2.2995 Trillion in 2006. From that we can legitimately deduct the $325 Billion already being spent on Medicare and the $186 Billion being spent on Medicaid/SCHIP (since those people would now be covered by Medicare). This leaves us with a need for an additional $1.7885 Trillion tax dollars to fund nearly 260 million new Medicare recipients.
Possibly we could pare that number down by cutting some fat out of the Federal budget. I'm all in favor of shrinking the government whenever possible. We can't take it out of mandatory spending (primarily Social Security but a few other items as well) or interest on the national debt, but we still have Defense, Homeland Security, International Affairs, and all other discretionary spending (NASA, for example).
I personally think health care reform is so important that I am willing, at least for the sake of this exercise, to cut ALL Federal discretionary spending by 50%. Ron Paul gets his wish and the troops (what's left of them after the cuts) come home. Since only our presence abroad is stirring up those Islamo-Fascists, we won't need but half as much Homeland Security. Foreign Aid? Who needs it? The planets or weather satellites? Unnecessary adornments when people need Medicare; we'll do weather forecasting the old fashion way, with big jars of bear fat on the porch.
As Jethro Clampett would have said, while ciphering out toward the cement pond, "That's naught, naught, add the naught, carry the naught, and--oh shit, Uncle Jed, I think I done did something wrong!"
Cutting all discretionary spending out of the FY 2006 budget would have netted us $508.5 Billion (not Trillion), which would still leave us on the hook for an additional $1.2035 Trillion new tax dollars. But wait, I forgot to mention that in FY 2006 the Federal government operated at a $248 Billion deficit, and we wouldn't want to have an unbalanced budget--having declared peace, love, and flowers for everyone, would we?
So to balance the Federal FY 2006 budget with Medicare for everyone (even with those draconian budget cuts everywhere else) actually would have required $1.4515 Trillion in new tax revenue.
Since in 2006 the government took in $1.0439 Trillion in income taxes and $353.9 Billion in corporate taxes (total $1.3978 Trillion) we would have had to MORE THAN DOUBLE both income tax and corporate tax receipts to pay for the program.
And remember, because if you don't keep telling Jethro he'll forget, that’s WITH 50% across-the-board cuts in all non-mandatory spending.
But I shouldn't worry, should I, because Medicare for All assures me that, in the end, we'll save $47 Billion in premiums and co-pays you won't have to fork over. And that's only on the front page of the website. When you go to the FAQ page our savings miraculously blossom from $47 Billion to over $300 million. Why? The administrative excesses of the for profit insurance industry, of course. Here's what they have to say:
[Medicare for All] eliminates the high (up to 33 percent) overhead cost of multiple private, for-profit insurances by including coverage for everyone in a single-risk pool reducing administrative costs to that of Medicare: 1-5%.
Jethro, check my math here, but I think that means Medicare for All claims to have an administrative overhead that is between 28-32% LESS than our current system. OK, I'll take that on faith, even though I should point out that if you do a little digging for yourself you'll find out that Medicare administrative costs are often far higher. Still, I'm in an expansive mood this evening.
So what did we spend on health care back in the 2005-2006 ballpark?
According to OECD, in 2004 the US spent $6,100 per capita for health care. That's $1.83 Trillion in health care expenditures. Subtract out the Federal government's contribution for Medicare, Medicaid, and SCHIP, and that leaves you with $1.319 Trillion spent either by State-run health programs or premiums and co-pays to private insurance.
Let's see, Uncle Jed: the US spent $1.83 Trillion in health care expenditures (including Medicare and Medicaid) in 2006 for the existing system, and $2.2995 Trillion to cover everybody on Medicare. No matter how you slice it, that's an increase of $469.5 Billion dollars to cover everyone.
But let's assume that we can cut out 32% of the costs of private insurance (taking our lobbyists at their word) that we'll save by moving to Medicare for All. Again, let's see--32% of $1.319 Trillion is $422.1 Billion. [Note: this is a high estimate of the possible savings, as it assumes that all State-run healthcare programs are as administratively inefficient as private insurance. If they aren't, then the potential savings go down.]
So, Uncle Jed, wait a minute. That means that Medicare for All would actually cost $47.4 Billion MORE than the current system?"
Jed strokes his chin, and says, "Well, yes, boy, it do seem to work out that way. But it won't stay that way."
"Why not, Uncle Jed"
"Because this is a 2005-2006 example, boy. And that's before the Medicaire Prescription Drug benefit kicks in. You know, the one estimated to cost anywhere from $524 Billion to $1.2 Trillion over its first ten years? Now imagine that benefit extended to SEVEN times that many people. Hooo-ee, boy, that's gonna be one big number."
Granted, Medicare for All lobbyists argue that the existing Part D benefit is extremely wasteful and they would be able to negotiate lower prices--take them again at their word. But this does not mean they can wave magic wands and have prescription drugs appear for free, either.
So this is what we'd have to have done in 2006 to extend Medicare to everybody, even without a prescription drug benefit:
Slash all Defense, Homeland Security, International Affairs and other discretionary spending by 50% while doubling income and corporate taxes.
"But still, Uncle Jed, isn't it moral to get rid of all those profiteering insurance companies with their multi-billion-dollar balance sheets?"
"Jethro, did you ever stop and think about how many private pension plans, 401Ks, and IRAs are investing in Aetna, Wellpoint, or United Health? A mighty large chunk of those profits is going right back to the stockholders and mutual fund investors to pay for their retirements. Funny, boy, I never seen any studies by them Medicare for All people 'bout how that might affect the whole economy."
Uncle Jed gets ready to go check on Granny, but then he remembers one last point: "And, boy, don't think this Medicare for All plan would eliminate private health insurance, anyway. There's all kinds of things it won't cover, like in-vitro fertilization, that you'd STILL have to buy supplementary insurance for, like they do in Canada and Europe. You know that 65% of all Canadians and 86% of all the French find it necessary to purchase insurance above their national health care system, at least according to CESifo, the major European economic research consortium."
"Uncle Jed, what's a consortium?"
"I think, boy, it's something like what your Aunt Pearl used to do back of the Opry, consortium with the other musicians and such."
The chase: there is a critical need to address health care reform in the United States. We have a responsibility to do so when 47 million of our fellow citizens are uninsured and possibly that many more have long-term lapses in coverage, or are simply under-insured.
But we need to think clearly about the costs of each method proposed, and steer clear of anybody who starts out the argument with blue skies and flowers rather than facts and figures.
Mine could be wrong. I am sure people will read this and pick my assumptions and calculations apart.
What bothers me is that I had to put this together because nobody who favors HR 676 has to date produced a realistic economic impact study. Representative John Conyer's website is about as close as you can come, and even he admits that to implement the plan in 2010 the government would require an additional $72 Billion above current taxes and health care expenditures out of pocket.
Moreover, the Conyers estimate also admits that, under Medicare for All, there would still be the need for $80 Billion in "Out-of-Pocket Spending" by American citizens.
So let' see: Conyers plans to raise $72 Billion in taxes above what we now pay in taxes and premiums, and still retains $80 Billion in consumer out-of-pocket expenses?
This is a good deal, why?
Oh, by the way, if you want a real laugh, go read his footnotes. I particularly like number 16, wherein he admits that his mechanisms for soaking the rich might interfere with each other and not actually raise the revenue he promises.
I'll wait quietly in my corner to be pilloried now.
Comments
Must sleep now, or my insurance company will cancel my policy. :)
Yes, Medicare does deal with the aged, but the rest of the population doesn't necessarily average that much lower in terms of the cost of health care.
Most high=cost oncology care, for example, goes to people under age for Medicare, and while high-risk neo-natal care goes to fewer people it is so expensive that it raises the average significantly. I'll give you a personal example:
During my wife's pregnancy with twins--twelve years ago, I might add--she developed cervical incompetence and had to go in for Level-2 ultrasounds twice a week for three months. The head of neo-natalogy at Christiana told us that as many as 20% of women pregnant with multiples had to undergo similar procedures, which amounts to about 4% of all pregnant women.
The cost for these procedures (again, this is 1995) was over $275,000. Delivering the kids by C-section added another $14,000.
Those kind of numbers drive up the averages for a lot of other people (like me) who use almost no medical care.
Then, too, you have to remember that the overwhelming majority of trauma care is for people under 65 as well: everything from gunshot wounds to automobile accidents.
i suspect, on the other hand, that pharmaceutical use IS much higher among the elderly.
Here's my final argument (I'm tired of too much Iowa as well): if Medicare spending per capita worked out to $7665 and total US healthcare spending worked out to $6100 that would seem to support the idea that elderly people cost more, right?
I thought so, too, but then remember that the $6100 figure for the whole population is amortized across the 47 million people without insurance and the 50 million under-insured, who we know spend much less per capita on health care, and should be spending more.
I grant you its all imprecise, but if someone wants to argue that a total-population risk pool is less expensive, then rather than just assert it I'd like to see numbers.
See what you can find.
Thanks for responding.
Liberalgeek,
Here’s current statistics: I couldn’t find 2006 for this right quick offhand, but I think these will do it:
Medicare and Medicaid serve 87 million people at a total cost of about $605 million (source: http://www.kff.org/medicaid/upload/Key%20Medicare%20and%20Medicaid%20Statistics.pdf), which is $6,954 per capita, indicating that Medicaid does pull the cost of $7665 per capita for Medicare down, but….
Remember that by comparison Medicaid is a much more limited program than Medicare in terms of what it will cover, AND that according to John Conyers the States spend another $348 million of their own on Medicaid.
If you add that in, $605M Federal plus $348M State for 87 million people that works out to an average of $10,954, which is probably too high because it includes other programs. Still, it will bring the averages up.
Then go back to John Conyers, who tells us that $1.417 Trillion is spent on private expenditures. If you take his figures, which total $2.776 Trillion for all health care expenditures amortized over 300 million people, you get a per capita cost of $9253, which is also arguably way too high according to OECD figures. Let’s assume that we should discount the private expenditures by 33% to allow for private administrative costs and place these figures on the same footing as Medicaid (which I don’t personally think is valid, but I’ll do it anyway).
That drops the private expenditures figure to $947 Billion. Add that to the $1.305 Trillion the government spends on Medicare/Medicaid and you get $2.252 Trillion and a per capita cost of $7,506.
This means that even AFTER you take out the private insurance administrative costs and BEFORE you talk about covering $47 million people with no current coverage the Medicare population averaged $7665 and the entire American population averaged $7,506. To me a $159/year difference given the roughness of these calculations is not a strong argument that non-Medicare patients are a lot cheaper.
I am laying out all these figures and my calculations because I genuinely want to find the most accurate figures, and I want you to be able to poke holes in them if you can.
Still, I think they are pretty compelling and challenge the idea that Medicare for All is necessarily cheaper than the current system. It may be something that ethically we need to do, but I am increasing convinced that it is disingenuous for its advocates to claim it will be cheaper.
No matter how inefficient private insurance may be, when you start crunching the numbers, it is incredibly difficult to argue that expanding coverage to include 47 million uninsured and improve the coverage of 50 under-insured is going to be cheaper.