The Larger Stakes

What’s holding back Medicare solvency?

Forty-eight years ago this month, Lyndon Johnson overcame years of resistance by the medical establishment and signed Medicare into law. It’s as close as this country has ever come to establishing the kind of universal, publicly funded, “single-payer” health care system that prevails in most other industrialized countries. Coming at a time when half the nation’s seniors lived in poverty, its passage quickly demonstrated that it was possible for the federal government to provide health coverage for the costliest section of the population to insure, at a fraction of the administrative cost required by private industry.

Today Medicare’s future is far from certain. Though its overhead continues to be far lower than that of commercial insurers, it has not been immune from the runaway costs of the health care system as a whole. To the deficit hawks in Congress, it’s a classic example of an out of control “entitlement program” that’s bleeding the taxpayers, discouraging individual responsibility, and turning seniors into hapless “wards of the state.” They say fiscal responsibility requires that we cut the program down to size if not do away with it altogether.

But the truth is that most of Medicare’s financial woes are occurring not because there are too many people over 65 getting government handouts, but because Medicare is being privatized on the installment plan. And the real issue is not about reducing the federal deficit. It’s about how much of our public health care dollars will be siphoned off by private corporations.

A study published in the May issue of International Journal of Health Service concludes that since 1985 private plans, mainly Medicare Advantage and prescription drug plans offered under Medicare Part D, have “drained more than $280 billion from Medicare, most of it in the last eight years.” The study points out that the money “could have been used to improve benefits for seniors, extend the life of the Medicare Trust Fund by more than a decade, or reduce the federal deficit.” Instead, it’s serving as an excuse to make seniors pay more for their health coverage — or, even worse, to privatize Medicare entirely, replacing it with vouchers to purchase private insurance.

Politicians call it “entitlement reform,” but who, exactly, is being entitled? Medicare works as well as it does because, despite being compromised by piecemeal privatization in recent years, it remains fundamentally a government-run , publicly funded social insurance program. As such, it’s cheaper, more efficient, and delivers far better care than the private insurance that Americans under 65 must rely on to get access to treatment. But if the proposed Medicare “reforms” go through, a program that exists to provide medical care for seniors could easily degenerate into a taxpayer subsidy of drug houses and insurance companies.

This involves everybody, not just seniors. We could drastically reduce the cost of our health care system, and insure access for all, simply by extending Medicare to the entire population. Instead, we’re being told that we have to destroy Medicare in order to save it — turning more and more of its functions over to the same private corporations that have made a train wreck of the larger health care system. In 2003, the Bush administration turned a badly needed prescription drug benefit into a gravy train for Big Pharma, letting private plans run the new Medicare Part D and requiring the government to pay full market value for drugs they provided. Obamacare phases out the infamous Part D “donut hole,” with its prohibitive out-of-pocket costs, but does nothing to rein in those inflated prices.

Meanwhile Medicare Advantage plans are allowed to be selective about who they enroll, the same way private insurers cherry-pick their under-65 customers. Their marketing strategies lure the healthier people, but they bill Medicare as if they were covering the sickest. This has driven up Medicare’s costs as much as 15 percent. The Affordable Care Act was supposed to address this, but last month the administration decided to raise reimbursement rates instead of lowering them!

If this continues, there is a real danger that Medicare could wind up reproducing the worst features of the larger health care system. Our best defense is to challenge the assumptions under which the larger health care system is run. Health care is not a “consumer good,” like laundry detergent or a new car; it’s a basic, universal human need. We have paid a terrible price for letting the market determine who in our society has access to it, and letting profit-driven corporations, operating in a seller’s market, dictate its costs.

Medicare is proof that a better and more humane system is possible. In defending it, let’s not lose sight of the larger stakes. — Peter Shapiro

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