Is Medicare Really an Albatross?

Regardless of political leanings, no one can deny that the country is in the midst of a budget and deficit mess, and serious cuts need to be made.  And few would deny that some of those cuts need to be made to Medicare, which in 2010 cost $732 billion, or around 13% of the federal budget. The disagreement is how to streamline (a much friendlier word than "cut") Medicare to reduce its costs while still providing care to the country's seniors, and is anything short of a near dismantling of the program going to be enough to make a dent in the deficit?

Right now Medicare is a fee-for-service program which itself pays for health care for most beneficiaries. Under the GOP plan drafted by Rep. Paul Ryan, it would become a program which subsidizes the purchase of private health insurance by individuals.  When an individual enrolls in Medicare, he or she would receive an annual sum from the federal government, based on health needs, income, and regional health care costs, which would be used to purchase a policy on a health insurance exchange - sort of a "supermarket" of insurance plans competing for customers' business.  If this sounds familiar, in fact it is quite similar to the insurance exchanges in the Patient Protection and Affordable Care Act, aka ObamaCare.  The exchange for seniors would be highly regulated, according to Ryan, and insurers would have to promise to cover, with at least a minimum level of standardized benefits, all seniors seeking coverage.  (I will, for purposes of brevity, ignore the irony of a Republican Congressman actually promising that anything will be regulated.)

In theory, this may seem like a sound idea, but it relies upon the assumption that the free market - i.e., insurance companies competing for seniors' business - will drive costs down.  But what insurance company is going to compete for the business of people older than 65, the population with the greatest health risks, which represent potentially huge losses for chronic and acute care?  Notoriously profit-hungry insurance companies will be more likely to run from such a population rather than lower prices to attract them.  If required to provide coverage for seniors, insurance companies will charge as much as they can simply to cut their losses.

Other than the price issue, one of the biggest potential glitches in the plan is that it makes Medicare a voluntary program.  Poorer seniors who can't or don't want to chip in for their health insurance may go without.  And there go your cost savings, as uninsured seniors show up at emergency rooms or clinics needing care.  They'll either end up on Medicaid or flood charity hospitals, who will be reimbursed by the federal government at a later time. 

My parents both received stellar medical care - and a vast quantity of it - at the end of their lives, and nearly every penny was covered by Medicare, or Medicare Advantage, to be exact.  It was a huge relief to our family to not worry about whether this or that test or procedure was going to be covered.  But frankly, my parents could have paid more for their care.  Not out-of-pocket prices, but they definitely could have afforded higher co-pays, and many wealthy seniors could afford even more.   I don't think a sliding co-pay scale is unreasonable, and could bring in millions of dollars annually to help fund the Medicare kitty.  But with the aging population of the United States, I'm sure that won't be enough. What's my point?  Well, health care is a complex beast (and a big f**king deal, in the immortal words of VP Joe Biden).  Addressing all of the issues involved in a major to Medicare would fill a month's worth of blogs, and I've considered doing just that, but not today.  I don't claim to have the solution, but I'm not certain that completely dismantling Medicare - a program that since 1965 has brought health insurance to millions of seniors who otherwise might not have had it - is the answer.  They say if it ain't broke, don't fix it, but that doesn't mean that if it is broke, you should destroy it.

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