MEDICARE for all ages as the "Public Option" alternative for health care????

[Dueller]

I intentionally did not post this in PARF as health insurance questions pop up here frequently without degenerating into partisan political diatribes. So try to keep it in that vein if you can.

One congressman is proposing the idea of expanding Medicare coverage to all ages as the public option alternative. At first blush it appears to be a nutty idea given the shaky financial status of the Medicare trust fund. But let's look at it for a moment to see if it is not such a hairbrained idea.

First, for those not familiar with Medicare, a little thumbnail primer of the program. Medicare coverage has three parts: A--Hospital coverage; B--Outpatient coverage and D--Drug coverage. Current eligibility requirements are at age 65 or after 24 months of being on Soc Security disability. There are some other ways to become eligible such as chronic renal failure, but the main way is age 65 or disability. Also to be eligible you generally have to have worked and paid Medicare taxes for at least half of your working life or be married to someone who has worked in Medicare covered employment.

Premiums: If your are 65 or disabled and meet the work history requirement, Hospital coverage (Part A) comes premium free. Otherwise the "buy in" premium is around $250-400/month. Optional outpatient coverage (Part B) is about $96 per month and is not premium free for anyone. Part D, drug coverage is optional at about $60 per month.

Deductibles are roughly 1100 for hospital, 135 for outpatient at which time Medicare picks up 80% of approved charges (a problem for providers because Medicare does not normally approve charges as high as most providers charge...as a result some doctors/providers will not accept Medicare assignment). Additionally, after 61 days of hospitalization the coinsurance jumps up quite a bit something like 300+/day).

So basically Medicare is a catastrophic coverage type of insurance. Because of this and the deuctibles/approved charge issues/ etc, may seniors who can afford it get Medicare supplement policies from private sources.

But I digress...Is it really hairbrained to think Medicare coverage for all ages as an OPTION is a viable alternative? Make those under 65 pay the premium on the coverage they elect? Keep the private carriers happy selling supplemental policies. Keep in mind, something like 90% of your lifetime health care expenses occur on average in the last few years of your life. Perhaps premiums collected for younger workers seeking catastrophic coverage would shore up the dwindling Medicare trust funds....but I'm no actuary.

What say ye?

[turbo6bar]

The Medicare approved charges would actually help system costs by forcing practitioners to ration care. Everyone would have access to basic care, but if you want better than bare bones, you pay privately or have private health insurance. The primary drawback I see is the fact the government oversight (administrative and funding) would grow dramatically. Could it be worse than 'for-profit' models? jurgen

[myamoto1]

Jim - have you read their website? It reeks of finger pointing, fear mongering and snake oil sales.

// HOME PAGE // - HR676.org

Maybe if they had a less fanatical approach to the solution, the program might stand a chance. I think the folks pushing for this are so rabid at the mouth, they have no idea what they're saying. They contradict themselves and resort to scare tactics and lies to gain followers.

Plus, I'd be a little hesitant to buy into a plan based on, "the expansion and improvement of the current and extremely successful Medicare system, widely recognized as one of the most cost efficient medical management systems in the world..."

Especially when several paragraphs earlier they state, "the basic Medicare model, which has recently been so badly watered down by an ultra conservative administration in favor of even more corporate profits, nothing of any kind has been accomplished. In the meantime every other modern industrialized country in the world has passed us by..." So tell me again why basing this on the Medicare model is good?!?! And if every other industrialized nation has passed us by, why are we (Medicare) recognized as having one of the most cost effective systems in the world?

In my world 1+2 = 3, not 3.14159265358979323846.... I'm not sure what kind of math they're using, but it doesn't add up in my book

[Rikao4]

sounds like Germany..
you have goverment care..
AND folks buying Ins. on top that plan..
so you are taxed heavy for first plan..
and then pay extra if you want clean sheets..

Rika

[jyl]

Healthcare providers would probably fear this as they can charge higher prices outside of Medicare. If many under-65 y/o's chose Medicare coverage, the healthcare industry would be forced to become more efficient and some people would make less money.

But ultimately healthcare prices have to come down. Healthcare inflation is 2-3X overall GDP, we spend up to 2X what other developed countries spend on healthcare per capita, healthcare costs are a big burden on businesses (fastest-growing expense, exceeds business profits) and on individuals (leading cause of bankruptcy). The status quo will eventually break us, never mind any hope of getting more people covered. So I think the healthcare industry will have to take its medicine, as it were. The trick will be to make sure the impact is less on the parts of the industry that really heal people and more on the parts that don't.

[Hugh R]

Not too sure, but doesn't Medicare already have unfunded mandates that are potentially many times greater than Social Security already? I've read, somewhere that in 20 years or so that the entire Federal Budget, as currently projected, would be consumed by Social Security, Medicare and Medicaid. Let alone anything else. That to fund all these pie-in-the-sky programs, AND the rest of the Federal budget, that taxes could go to 70% or more.

[turbo6bar]

Hugh, remove the government from health care, and we're still faced with an unsustainable rise in costs. These costs are directly borne by businesses and employees. The static 65 yr old target for retirement/Medicare and rising life expectancies raises the hurdles further.

Society must decide which is more important, 1) basic health care for most/all Americans, or 2) pills for guys with limp ding-a-lings. Eventually, we must decide, because we can't afford it all.

[Dantilla]

My number one requirement:

Make congress sign up for whatever they pass for the rest of us.

[Dueller]

Originally Posted by Dantilla

My number one requirement:

Make congress sign up for whatever they pass for the rest of us.

How 'bout letting us sign up for what they pass for themselves?

[sammyg2]

The less government the better.

[jyl]

Rikao, in Germany 90% of people choose to be covered by their choice of among 200 different non-profit, govt-regulated "sickness plans". If the person is working, his sickness plan premium is paid by employee and employer contributions. If the person loses his job, he keeps his coverage. 10% of people choose to be covered by for-profit, private medical insurance. Compared to the sickness plans, the private medical insurance premiums are cheaper for younger people, more expensive for older people, and if you lose your job no-one pays your premium. There are restrictions preventing people from freely switching back and forth between sickness plan and private insurance, so that you can't take advantage of the lower private premium when you are young, then jump over to the sickness plans when your private premium rises or you lose your job (otherwise called freeloading). The system works for most people, in the sense that, as a country, Germany spends far less on healthcare while enjoying equal or better health, compared to the US. It also gives you a choice, you can choose fully private insurance if you want to. There are losers, of course. German medical insurance is a relatively smaller industry than in the US, German doctors earn less on average than US ones, and the health care industry doesn't make as much profit per life from Germany as from the US.

[myamoto1]

I think the insurance industry is being villanized more than it should. I don't disagree that there are some "greedy bastards" out there, but when you look at the average profit margins for healthcare insurance, it's only around 3 - 4%. Even then, CIGNA is the highest at just under 10%. The healthcare insurance industryt ranks 86th overall out of 215 industries ranked. Drug companies are in the 16%+ profit margins, why is noone attacking them? Who do you think is paying for your designer drugs? Right, your healthcare insurer. Like turbo6bar said, it's a choice that has to be made. The thing everyone forgets is, it's the consumer that has to make that choice - not the insurance company.

[jyl]

Hugh, yes I think health care cost is on an unsustainable path in the US. It is not just Medicare. Look at the growth rate of health care costs outside of Medicare. I posted a bit about that above. Employers' health care costs are growing far faster than their other costs, which is not sustainable.

Medicare has some issues that employer-provided healthcare does not, like unfavorable demographics (more people over 65 y/o, and they are living longer). And Medicare doesn't have the option that employers do, which is to simply stop providing health coverage.

But either way, Medicare or private, the current US system is headed for a breakdown. Either the cost of healthcare will go too high, or the availability of healthcare will go too low.

[jyl]

Josh, the issue is, how do they get to 4% profit margin? In other words, where does the other 96% of premiums paid go to? Only about 80% goes to actually pay medical bills. In the early 1990s, that was 90%. So the medical insurance industry is not consuming just only 4% of premiums paid to it. It is consuming around 20%. Appx 16% goes to the companies as administrative overhead, appx 4% goes to the shareholders. Does the medical insurance industry provide enough actual benefit to justify its its 20%?

Wonk Room » Health Insurance Industry Fudges Data To Downplay Its Astronomical Profits

Medicare's administrative overhead is <5%. Yeah, I've read all the stuff about how Medicare's overhead per person covered is actually higher. Considering that the average 65+ y/o is generating many, many times more treatment and bills than the average younger person (what's that factoid - 90% of your lifetime healthcare cost is generated when you are elderly?), Medicare's administrative overhead is, in fact, pretty darned low.

[The Gaijin]

Look into that 16% overhead. It is a very people intensive industry. People cost money. A big chunk of it is in fraud detection and investigation. Something medicare hardly spends much less on and it being looted by criminal gangs...

[jyl]

Oh, and I think that currently, the "consumer" aka patient doesn't usually make a "choice" on whether to take an expensive drug. You're sick with cancer or whathaveyou, you go to the doctor, with his decades of training and experience he says you must take XYZ drug if you hope to recover, and under your plan that will cost you $25/month co-pay. What are you supposed to do - say no thanks, doc, I stayed in a Holiday Inn last night so I know that ABC drug is preferable? And why do you have any rational reason to play doctor like that, to save $25/month? The system is not designed to give the consumer a big incentive to hold cost down, and he doesn't have the knowledge required anyway. The system is also not designed to give the doctor, the hospital, the lab, etc a big incentive to hold cost down either. I would argue the system is also not designed to give the insurer a big (enough) incentive to hold cost down, not when they are able to pass on annual healthcare cost inflation of 2-3X GDP and still make 4% net profit. The player who has the most incentive to hold cost down is the ultimate payor - for the most part, employers and Medicare. As you'd expect, their ability to do that is proportional to their size and muscle. Medicare, the biggest payor, does the best job of holding costs down - obviously, since healthcare providers complain about making the least money on Medicare patients. The big employers have some ability to hold costs down - they have some bargaining power with medical insurers. The small employers have little ability to hold costs down - and the facts bear that out, healthcare costs for small employers is rising faster than for large ones. The individual who buys his own medical insurance has the least ability to hold costs down - he either sacrifices in other parts of his budget, or goes without healthcare coverage, or buys less of it (a catastrophic policy rather than a full-coverage one, exclusions for pre-existing conditions), or finds ways to freeload on others (go to the ER, etc).

[Dueller]

Along the lines of what you're saying, John, I was discussing this with a doc and an insurance guru......they both agreed the only way to reel in healthcare costs was for the consumer to have some skin in the game. I have to spend my healthcare dollars in my HSA very carefully...e.g., when wife had to have outpatient surgery we negotiated cash discount with doc/anestesiologist, had the surgery done in a surgical clinic rather than hospital ($1100 vs $9000. etc)...when I had a shoulder injury I had an xray but didn't spring for a $1900 MRI...and gues what? I recovered just fine. Always asking for generics since prescriptions aren't covered. Shop "specials" at clinics for routine BPP/cholesterol etc checkups.


But I felt like a cheap bastage or beggar when doing this. And in the process saved $10K.

I have a buddy who has a Cadillac plan thru his employer. He had a heart attack and quad bypass surgery. 8 days in hospital. Tab? $450,000. Paaid about $5K out of pocket. Happens to me? Told my wife to drive me staright to the crematorium.

[Dueller]

One other point about the adminstrative costs/inept administraion/ efficient adminstartion/waste/yadadada of Medicare (I've seen so many arguments both ways I don't know who/what to believe)....keep in mind claims administartion is largely private contracts with private companies...usually BCBS or Aetna on a state by state basis. And you can bet those for profit companies aren't doing it as altruistic corporate citizens.

there is just so damn much money being made by big pharma/big insurance/HMO industries/for profit hospitals in this country I don't know how we can unring that bell.

[myamoto1]

John, I agree that $0.96 - $0.97 of every dollar isn't being paid out in claims. Like The Gaijin said, I'm not sure that 16% is going into overhead across the board. I've done a ton of searching and can only find medical-benefit ratio (medical-loss ratio) stats for the "big 5" which are the greedy bastards I eluded to earlier. The MBR for those companies is closer to 80%. I also wasn't able to find any stats on what percentage of the market the big 5 had, so it's hard to determine if that can be applied across the industry or just the top earners. I also don't think the stats being thrown around include the balance provided by the non-profit insurance companies, and there are quite a few of those.

The problem we're facing now is accuracy of data. With HC being such a hot topic, it's nearly impossible to find data that hasn't been slanted one way or the other. Until I can find more unbiased data, I will say that I don't know enough to be certain in anything other than your data isn't accurate. Actually, let me clarify - It's accurate under the parameters in which it was created, not in how it's being used to "benchmark" the industry.

[The Gaijin]

Indeed. Even common sense proposals get drowned in the lobbying and media agendas.

Don't worry - coming fuel taxes and VATs will raise more Trillion$ to pay for all this.