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Why toss out Medicare?

April 26, 2011 - Jim Anderson
I’m confused.

The Republican plan to privatize Medicare (for those now age 55 and under) is advertised as a free market strategy against rising health care costs. Traditional Medicare would be replaced with a federal voucher system.

So why does this “solution” dismantle the main competitor — Medicare itself.

Under the Republican plan, seniors could use the vouchers to purchase health insurance policies from competing insurers in the private marketplace. In other words, there is apparently no “public option” under privatized Medicare.

If Medicare, indeed, is becoming unaffordable as baby boomers approach retirement, perhaps it could be reformed through means testing — wealthy seniors might be asked to pay a share of their premiums. Maybe we need to re-examine coverage for some elective procedures, and have a serious, sane discussion about high-cost end-of-life treatments.

But why throw out Medicare? Many studies show that its administrative costs are lower than private insurance.

We have an impending health care funding crisis that is largely due to demographics, excessive insurance paperwork and debatable treatments. (Including, yes, “defensive” medicine brought on by lawsuit fears.)

Privatizing Medicare does next to nothing to address those issues directly. It only pinches the government’s outlay at the expense of patients. The value of the vouchers, as proposed, would likely fall far short of actual premium costs. The Congressional Budget Office estimates that the average 65-year-old in 2030 would have to pay about 68 percent of their total health care costs compared with 25 percent today.

Again, if there is a valid reason to switch to vouchers, why wouldn’t Medicare itself be a coverage option?

Paul Krugman of the New York Times has gone a step further and suggested the U.S. create a network of hospitals and clinics actually run by the government — a civilian VA, so to speak. Medicare recipients would then have the option of using that system.

“... what would terrify the right, of course, is the likelihood that genuine socialized medicine would actually win that competition,” Krugman writes.

Maybe, maybe not. But it seems a more competitive plan than underfunded “private only” vouchers.



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